Case Notes
Case Notes provides insight on one particularly relevant co-op or condo case—clearly explaining what happened, why it’s important, and what lessons can be learned within.
Category
- Access
- Alterations
- Appeals
- Arbitration
- Assessment
- Attorney Fees
- Attorney-Client
- Authority to Sue
- Balcony/Terrace Rights
- Bike Lane
- Board of Directors
- Books and Records
- Breach of Lease
- Business Judgment Rule
- Bylaws
- Bylaws/House Rules
- Certificate of Occupancy
- Charges/Fees
- Commercial Unit
- Common Element
- Common Elements
- Companion Animal
- Constitutionality
- Construction Defects
- Contracts
- Conversion
- Defamation
- Discovery
- Discrimination
- Due Diligence
- Easement
- Elections
- Estate
- Eviction
- Eviction/Termination
- Fiduciary Duty
- Fines
- Foreclosure
- Fraud
- Governance
- Gym
- House Rules
- Indemnification
- Indemnification/Subrogation
- Injunction
- Insurance
- Labor Law
- Liability of Directors
- Licenses
- Liens
- Maintenance
- Malpractice
- Management
- Mechanic's Lien
- Mediation
- Misrepresentations
- Motion Practice
- Motion Practive
- Negligence
- Notice of Pendency
- Nuisance
- Occupancy Agreement
- Ownership
- Parking
- Partnership
- Personal Injury
- Pets
- Property Damage
- Proprietary Lease
- Reasonableness
- Receivership
- Release
- Repairs
- Representations
- Sales
- Service of Process
- Sponsor
- Statute of Limitations
- Stock/Shares
- Stocks/Shares
- Sublets
- Succession Rights
- Tax
- Third-Party Liability
- Transfers
- Trespassing
- Trial Practice
- Violations
- Warranty of Habitability
- Yellowstone Injunction
- Zoning
First published: Apr 2023
Arbitration Rather Than LitigationThis case can revolutionize condo litigation. The arbitration clause in this case has appeared on commonly copied forms of bylaws for the past 40 years and has not generally been interpreted as it has in this case. Until now, practitioners have been satisfied that if the provisions in traditional condominium documents specifically direct that disputes on the respective provisions be arbitrated, the general arbitration clause had no effect. This is no longer a safe practice. Arbitration may become the new norm. This case has not yet been cited in any reported decision. Nor has a timely notice of appeal been filed within 30 days from the date of entry of the decision.
Read full articleFirst published: Mar 2023
Access: How Much Are You Offering?When sidewalk bridging (or other protection or scaffolding) must be installed on adjacent property, the property owners must negotiate an access agreement. But if the parties cannot agree on the terms of the agreement, the law permits the party needing access to bring a special proceeding under RPAPL §881, and the court will then decide what is reasonable. In light of the fact that no one can predict what a judge might do, it is best for both sides to be reasonable and to work hard towards an agreement that is fair to both parties. This is especially true when the value of property is easily ascertained, as was the case here, and where the monthly rent received was certainly a good indication of the value of the property per month.
Read full articleFirst published: Feb 2023
Attorney Fees: Who Will Foot The Bill?The specific language relating to attorney’s fees in proprietary leases matters! If the language in the proprietary lease only provided for fees when prosecuting a shareholder default (and not, as here, defending a shareholder claim) or such fees were not explicitly categorized as additional rent, it is very possible this case could have gone the opposite way and the bank would have priority over the cooperative. If your board has not reviewed the attorney fee language in your co-op’s proprietary lease recently, it would be wise to have your attorney do so. You want to make sure it maximizes protection for the co-op.
Read full articleFirst published: Feb 2023
The Unbearable Sound of NoiseThere are at least two important points to make about this unusual decision. First, the courts recognize the inherent noisiness of living in New York City and are not inclined to find a public nuisance just because the children in the apartment upstairs run around a lot. Second, condominium boards have broad powers and discretion when it comes to enforcing its own rules, but a board that effectively abdicates its enforcement responsibilities may not be protected from legal consequences. Taking the two lessons together, while it is reasonable for condominium boards to treat noise complaints skeptically as a general rule, they still need to take them seriously enough to show that the complaints were investigated.
Read full articleFirst published: Jan 2023
The Condo Checkmate ManeuverThe takeaway. This case is a reminder that statute and case law require that a condominium be sued in the name of its president or treasurer, and that those individuals be served on behalf of the entity. Many times, condominiums are not properly named or served, and often do not move to dismiss on that basis; one theory being that, particularly if there are no statute of limitation issues, the plaintiff will just do it correctly at a later date, wasting time and money for everyone. What is interesting here is that without any indication as to why, the court ordered that costs and disbursements be awarded to the condominium. While that is likely not a large sum, it makes one wonder if the court was disturbed by the failure of the plaintiff to comply with well-settled law.
Read full articleFirst published: Jan 2023
Tomfol Owners Corp. v HernandezIt should be noted that although the eviction action in this case was unsuccessful, it was rejected for technical reasons. It’s extremely important to remember that eviction is an extreme and drastic remedy, and that every step required by the lease must be followed. Even today, some 20 years after the Pullman decision, lawyers are very careful when they attempt to evict a shareholder based upon objectionable behavior. Following every step outlined in the lease, and even going beyond the requirement to establish that there was no bad faith involved in the process, is essential to winning a Pullman eviction action.
Read full articleFirst published: Dec 2022
A Big To-Do Over Small DollarsSo far this is a typical skirmish over discovery. But once again we see a board that has entangled itself in costly and distracting litigation, this time seizing a potential legal loophole in a quest for a little additional income. The motion practice threatens to overwhelm the fundamental issues. The typical strategy of the parties at this stage also does not help to solve the problem. The board may be trying to bleed the Gobins so as to compel a settlement, and the Gobins may be maintaining their discrimination claims to raise the risk to the condo of their being awarded legal fees. And every dollar spent raises the stakes in a potential settlement.
Read full articleFirst published: Dec 2022
The Well-Documented Process WinsThe famous Pullman case, decided by New York’s Court of Appeals in 2003, confirmed a co-op’s right, as contained in most proprietary leases, to terminate a shareholder for objectionable conduct. Termination sometimes requires a vote by shareholders but other times only the vote of the board, as occurred here. Provided that all necessary steps in the process are followed, that there are facts showing objectionable conduct, and that there are no other indications of chicanery (a board motivated by personal gain, or acting in a legally discriminatory manner such as racial bias), the business judgment rule will insulate from judicial review the termination of a shareholder’s lease. Here, the plaintiff tried to get the court to stop the process from moving forward, which was denied. The hallmark of co-operative living is that all members of the community have agreed, by binding contract, to follow the rules or suffer the consequences, one of which is removal from the community. Whether the co-op’s termination of the lease is upheld remains to be seen, but things are not looking good for this shareholder.
Read full articleFirst published: Nov 2022
My Leaking Doors, Your Cost To FixThis fact pattern is fairly common in cooperatives. A shareholder will undertake an alteration, and the alteration agreement with the cooperative will state that the shareholder is responsible for the repair and maintenance of the new fixtures, walls, etc., and that subsequent owners will also be responsible. But decades later, when repairs are required, there is no agreement with the new shareholder in which he assumes the obligations under the alteration agreement. To make matters worse, management may not even have a file on this matter (since management often changes over the decades). Unless the proprietary lease has precise language binding the shareholder, there is little to do. It should be noted that some cooperatives require a purchasing shareholder to sign an Assumption Agreement of the prior lease, as well as executing a brand new proprietary lease. Some Assumption Agreements include language which states that the new shareholder assumes not only the old lease, but also any other agreements between the (selling) shareholder and the cooperative. This might be enough to hold the new shareholder responsible for problems with a prior alteration, but at this time the courts have not reviewed this issue.
Read full articleFirst published: Nov 2022
Fix My Condo!Newly constructed condominiums often have construction defects, and it is not uncommon for newly constituted condominium boards to sue their sponsor for contract and non-contract claims (such as fraud and fiduciary duty claims). It is equally common for the sponsor to move to dismiss those claims. In particular, sponsors and their representatives are often successful in dismissing fraud claims on the theory that those claims are really just duplicative of contract claims, but phrased in more “intimidating” language. The plaintiffs in this case were able to survive the motion to dismiss because they described specific building defects that the sponsor and its representatives were actually aware of and actively concealed or failed to address.
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