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.

319 results
Category
Author
Select Year
First published: Dec 2024
The Do-Over That Didn’t Work

TAKEAWAY A court will not give a defaulting unit owner a free pass and will not allow the revocation of a settlement agreement presumably made in good faith. A “do over” will also not be permitted by a court when, in the “glaring light” of hindsight, a delinquent shareholder changes his mind about a settlement agreement. A promise made by a shareholder to pay an agreed upon monetary amount for the violation of the cooperative’s bylaws and occupancy agreement can be reasonably relied upon by a board of directors. That promise, if broken, can also be the basis for liability and a monetary judgment.

Read full article
First published: Nov 2024
Nightmare On Astor Place

TAKEAWAY Courts tend to take discrimination claims very seriously. Boards and managing agents should diligently and repeatedly instruct all staff members to not conduct themselves in a manner that may reasonably be deemed to constitute harassment (sexual or otherwise), and the awareness of any inappropriate conduct by any staff member must be immediately reported to a supervisor, the managing agent, or the board. Further, all persons in a supervisory position, after being on notice of inappropriate conduct by a staff member, must immediately notify their supervisors and must take necessary and appropriate actions to cause the discountenance of such inappropriate conduct.

Read full article
First published: Nov 2024
The Battle Over the Super’s Apartment

TAKEAWAY Many condominiums and cooperatives have apartments that are dedicated as residences for the resident manager during the term of his or her employment. Boards should be careful to have agreements in place with their superintendents that specifically provide for the permitted occupancy to be incident to the continued employment of such person in that position. The ultimate eviction of a former superintendent may take several months, and sometimes an eager board will opt to enter into a stipulation of settlement with a terminated superintendent with respect to the ultimate delivery of possession of the apartment. However, it is important for boards to reserve all rights to recover damages for any unpermitted use and occupancy. In this case, the condominium board entered into a stipulation of settlement with the defendant as part of the eviction proceeding, but then later brought the unjust enrichment claim seeking recovery of its expenses after the superintendent vacated the unit.

Read full article
First published: Nov 2024
Court Grants Access to Adjoining Properties for Necessary Repairs

THE LESSON FOR BOARDS Enacted in 1968, RPL 881 was designed to address the needs of building owners who need access to a neighboring property in order to perform improvements or repairs to their property. When that can’t be agreed upon amicably or a request isn’t even acknowledged, as was the case here, RPL 881 provides a legal framework for obtaining court orders to gain access to a property. Note that Columbus House began requesting access in May 2022, and finally received a court decision granting it nearly 15 months later, underscoring the need for boards to pay attention to FISP timetables, particularly if an access agreement is necessary.

Read full article
First published: Oct 2024
‘Death Of Lessee’ Provision Pitfalls

TAKEAWAY The central legal issue here is over the meaning of a lease provision known as the “Death of Lessee” provision. The Death of Lessee provision in this proprietary lease is a typical variant that provides that if a shareholder dies, “consent shall not be unreasonably withheld to an assignment of the lease and shares to a financially responsible member of the Lessee’s family.” There are several potential interpretative pitfalls in this provision, two of which are at issue in this case. First, what is the meaning of the phrase “member of the Lessee’s family”? Does a niece qualify? Complicating matters is that, while “family member” is not defined here, a different provision of this co-op’s proprietary lease limited use of the apartment to shareholders and their “children, grandchildren, parents, grandparents, brothers and sisters.” Does the fact that this other provision does not include nieces mean that “member of Lessee’s family” should also be read to not include nieces? Or does the fact that the Death of Lessee provision not specifically list immediate family members imply an intent to read “family member” more broadly? Second, the parties disagreed over what it means for the co-op to “not unreasonably withhold” consent. According to the co-op, this means nothing more than it could not act unreasonably in denying consent. In this case, the co-op contended that Stauber had engaged in a “pattern of disruptive behavior” and showed “an utter lack of judgment and inability to get along with others,” which provided a basis for rejecting her application. According to Stauber, however, the reasonableness standard must be confined to the elements specifically identified in the text of the provision – whether she is “financially responsible” and whether she is a “member of the Lessee’s family.” Thus, in Stauber’s view, the alleged behavior identified by the co-op is legally irrelevant because it has nothing to do with whether she is a financially responsible member of Cohen’s family. By denying summary judgment in favor of additional discovery, the court deferred resolving these ambiguities. For co-op boards looking to avoid these problems in the first place, the lesson here may be to consider amending your “Death of Lessee” provision to resolve these two potential sources of conflict.

Read full article
First published: Oct 2024
Good Faith

TAKEWAY Once again, boards should take comfort in the fact that as long as they act in good faith within the scope of authority, lawsuits against them will fail. The business judgment rule provides broad protection and it is a high hurdle for plaintiffs to get past in order to try to impose liability. Managing agents and attorneys should also take comfort in the fact that the court recognized that their fiduciary responsibility is to the whole entity and not any individual unit owner (or shareholder). Attempts to expand liability in lawsuits beyond the basic breach of contract claim against the co-op or condo entity are often expensive and unsuccessful.

Read full article
First published: Oct 2024
Court Dismisses Shareholder's Attempt to Dismiss Lawsuit over Apartment Leak

THE LESSON FOR BOARDS While it was probably worth the shot at moving to dismiss based on what seemed to be fairly damning emails that there was no leak damage in apartment 4E coming from 5E’s bathroom, ultimately courts are often hesitant to rely on board emails in a motion to dismiss as documentary evidence. Here, maybe if a moisture expert, or even a plumber, had undertaken the same testing as the super and issued a report, it is possible such would have been more appropriately relied upon as documentary evidence on a motion to dismiss. Still, the shareholders of Apt. 5E face an uphill battle, as the proprietary lease plainly provides the co-op access to examine the pipes in apartments in order to find and fix leaks.

Read full article
First published: Sep 2024
From $674,240 to $67,200

TAKEAWAY Litigators are good at making fine distinctions between words, and surely the condominium was justifiably unhappy about a sweetheart deal that gave the commercial unit owner a 90% discount on repair work. Ultimately the condominium could chart no satisfactory path around the words of the declaration. And yet, given the dollars at stake for the repair job, as well the prospect of future repair costs, it is perhaps too easy to say the condominium’s board should have taken the “L” without a fight. Sometimes parties need the courts to settle an argument, and at this condo at least, the argument is now settled, albeit in favor of the commercial unit owner.

Read full article
First published: Sep 2024
Shades of Levandusky

TAKEAWAY What happened here is a repeat of the famous court decision Levandusky v. One Fifth Avenue Apartment Corp, which found actual alteration work did not follow the signed alteration agreement. Boards can take action when a unit owner violates an alteration agreement and makes changes affecting other residents or impacting common areas. These actions are subject to the Business Judgment Rule, which gives boards broad discretion as long as they do not act beyond their authority and decisions are made in good faith. And as established in the Levandusky case, such decisions are not subject to second-guessing by the courts.

Read full article
First published: Aug 2024
Rules for Thee But Not for Me

TAKEAWAY: While a jury or judge will decide if there was unlawful racial discrimination here, this case highlights the complications that may arise when a first-floor cooperative or condominium unit, previously utilized as a doctor’s office, becomes vacant. Substantial renovations may be necessary to convert a medical office back to residential use, and such renovations would likely necessitate an amendment to the building’s certificate of occupancy. In the course of that process, the NYC Department of Buildings may inspect the entire building, and any resulting violations or required updates will result in extra costs to all unit owners or shareholders. In this case, however, the board’s decision to deny a medical office lease to an otherwise qualified African-American applicant while simultaneously allowing two other medical offices to operate in similar units exposed the condominium and the board to liability for unlawful racial discrimination.

Read full article

© 2022 The Carol Group, Ltd. All rights reserved