Case Notes in


First published: Feb 2022
Nelson V. Board Of Managers Of The 32 East 1st Street Condominium

WHAT YOU NEED TO KNOW Unlike a co-op shareholder, a condo owner is not a lessee under a proprietary lease, and is not protected by the statutory warranty of habitability. Under this protection, a co-op shareholder can withhold rent if his or her apartment becomes unlivable due to damage, but a condo owner does not have that right. The condo owner can't withhold common charges, even if there is a damage claim for alleged water leaks. But note that the Judge, by holding the money judgment in abeyance, essentially gave the unit-owner a reprieve on paying common charges while the lawsuit was pending, undercutting the principle that was supposedly being exalted. It is a curious decision, one that properly states and applies the law but then, in a twist of fate worthy of M. Night Shyamalan, undoes it all in the penultimate sentence.

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First published: May 2020
Tomfol Owners Corp. vs. Walker

In this case, the court relied on two new statutes. Specifically, the Business Corporation Law, under which many cooperatives are formed, recently added a provision that allows boards to permit shareholders to participate in meetings electronically. (This article is being written while there is an executive order in place that, among other things, bans annual meetings from taking place in person.) It used to be that only board members could join board meetings by conference call or video. Now, if the board allows it, shareholders can come to meetings electronically – and ballots can be cast electronically. Many buildings use what are called “directed proxies,” that is, a proxy in which the shareholder checks off the candidate(s) he or she wants the proxy holder to vote for. Some have proxies that allow the proxy holders to vote any way they choose. Either way, proxies can always be revoked by the shareholder attending the meeting and issuing a ballot. The new statute allows boards to accept electronic ballots so that shareholders do not have to be physically present at the meeting. Another new statute invoked is the Housing Stability and Tenant Protection Act, which, unless it is amended as to cooperatives, allows eviction proceedings to be commenced for “rent” but not for any other monies that a tenant, or shareholder, may owe. This means, as was the case here, that if the shareholder owes rent in addition to fines, the cooperative will have to make a choice. It can either maintain two separate actions: one for rent in housing court, where, if the court determines rent is owed but remains unpaid, a judgment of eviction can issue; and another in a separate court seeking money damages for the non-rent portion of what the cooperative claims is owed. Alternatively, cooperatives can commence one non-housing-court action for all monies due, including rent, but without the threat of eviction. It seems that these decisions will need to be made on a case-by-case basis by the board after consulting with counsel, and they may depend on the amount and duration of the arrears.

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First published: Apr 2017
Bluff Point Townhouse Owners Assn., Inc. v Kapsokefalos

It appears from the decision reported here, and from other cases concerning these parties both at the lower court and the appellate level, that the two sides continue to litigate in part because of a personal incident. Where there are personal disputes in an association setting, it is important that the parties try to keep them in perspective. Homeowners should not take action merely to flout the rules, nor should a board implement rules solely directed at an owner as a result of a personal animus. Condominiums, cooperatives, and homeowners associations require people to live together and comply with the rules, which are presumably implemented for the benefit of all owners. While the motion discussed here was a “preliminary injunction,” we suspect that, if the matter proceeds to conclusion, Bluff Point would probably receive the injunctive relief it seeks, assuming the rules were promulgated in accordance with Bluff Point’s governing documents. This is because it has long been the law that when one buys into a community such as a cooperative, condominium, or homeowners association, one submits to the governance of that community.

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First published: Jul 2008
Pello vs. 425 East 50 Owners Corp.

This case teaches us that it is important that boards read both the proprietary lease and the bylaws in order to determine how the building is to be governed. If, after looking at these documents, it should turn out that one imposes a higher burden than the other, then the cooperative may well be required to meet that higher burden. What this case also teaches is that, even in a small building, the board cannot act informally. Compliance with the corporate documents is necessary in order for the actions of either the board or the shareholders to be deemed legally binding and enforceable. Here, the board did not follow the lease requirements and the outcome was predictable.

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First published: Apr 2008
Residential Comm. of the Bd. of Mgrs. of the Sycamore v. 250 E. 30th St. Owners, LLC

The offering plan disclosed that, even though the condo would be responsible for maintaining the storage bins, all of which were located in an area controlled by the condominium, it was the sponsor that was entitled to reap the financial benefits of selling licenses to the storage bins. The court applied standard rules of contract interpretation when construing all of the documents, found that the documents were unambiguous and that they did not contradict one another and concluded that it had no choice but to hold the parties to their terms. The condominium’s argument that the offering plan, itself, was irrelevant because the conversion had taken place was rejected, at least in part because many of the unit-owners purchased from the sponsor and entered into purchase agreements which adopted and incorporated the terms of the offering plan.

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First published: Jun 2007
Estate of Angela Schiller

If the amounts sought in this case were not disputed, or at the least easily calculable under some specific provision of the co-op’s bylaws or proprietary lease which give the co-op the right to impose a specific item, for example, a late fee, a sublet fee, or a transfer fee, the court would have upheld such payment as a precondition to the transfer. However, in this case, where the amounts were unliquidated, speculative, and disputed, the court refused to give the co-op an advantage by requiring the requested payment. This will require further legal action. The issue might be changed in the future by a proprietary lease amendment giving the board specific authority to charge amounts in certain disputes with shareholders.

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First published: Dec 2006
Blumberg vs. Albicocco

This case is consistent with a number of prior co-op and condo decisions holding that a board’s power to fine a cooperative or condominium unit-owner for not paying or other objectionable conduct must be expressed in the governing documents of the entity – usually the proprietary lease or bylaws –- and will not be implied by the court. The solution is to amend the governing documents by the requisite vote of unit-owners to give a board the power to fine in specific instances.

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First published: Nov 2004
Robinson v Mansfield Gardens Inc.

Most co-op shareholders do not pay late fees until there is a resolution of the non-payment issue which invariably gave rise to the late fees. If, however, a shareholder decides to pay late fees before there is a resolution of the arrears issue, the payment should be marked “paid under protest.” This reservation should preserve the shareholder’s claim to recover such fees when there is a settlement.

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