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Legal Roundup

A few decisions just came out that you should know about.

The Board is Wrong: Power has its limits – that’s the lesson of the ruling just handed down by the Appellate Division, affirming the decision of the lower court that a condo board exceeded its authority in entering into a lease allowing construction of cell phone antennas and tower on the roof of the building against the will of the owners.  Since the bylaws restricted common elements of the building to purposes incidental to residential use of the individual units, the board had exceeded its authority in allowing the installation of the tower and was not protected by the business judgment rule.  Result: the lease is void and the owners win. Kaung v. Board of Managers of Biltmore Towers Condominium Assn., 2010 NY Slip Op. 01620, Feb. 23, 2010, App. Div. 2d Dept.

The Sponsor Should Sell: Here’s good news for shareholders still stuck in their buildings due to sponsors who continue to sit on large piles of apartments.  The Appellate Division agreed with the court below that resident shareholders of a Bronx co-op had a valid claim against the entity that had acquired the remaining 80%  to sell the shares and turn over majority control of the board to them.  Shareholders have shown irreparable injury in “the form of potential destruction of their coooperative lifestyle,” if the sponsor doesn’t sell.

Cole v. 1015 Concourse Owners Corp., 2010 NY Slip. Op. 01591, Feb. 25, 2010, App. Div. 1st Dept.

The Shareholder Must Go: I’ve cautioned that you’d better be good because if you’re BAD the board could decide to evict you for engaging in objectionable conduct. (See, How Bad Do You Have To Be?) But when the board at the Vermeer had to deal with a troublesome owner it didn’t declare her objectionable (though the court said it could have), but brought a holdover proceeding saying she had violated the proprietary lease, which prohibits shareholders from letting unreasonable odors escape into the building or doing anything that would annoy anyone else.

As a result, instead of an abbreviated in-house board determination there was a full blown trial.  Practically every witness, from management to neighbors, said there were odors coming from the apartment variously described as: cats and fecal matter, excrement and vomit, urine and cats’ smell, like a homeless person. And the place was a cluttered mess, plus there was a moth infestation, so many the creatures congregated in the hallway and flew into other people’s apartments. Just about the only person, other than the owner, who didn’t perceive a problem was a neighbor who had two cats and two dogs, plus dirty litter boxes and lots of overflow moths, but the court didn’t buy her version, figuring she was immune to the smells by virtue of her own living arrangement.

A social worker came to check things out, but the shareholder wouldn’t let her in.  Even the court came to inspect, after giving her time to make the place presentable.  Although the inspectors didn’t notice obvious odors, they did notice that every window was open, as was the terrace door, wind was whipping up an air purifying storm, and the air conditioning was on.  The moths seemed to have found temporary shelter elsewhere, but there were telltale insect traps and the place was so cluttered it was a fire hazard.

Based on all the evidence, the court found the owner had breached her lease, and the board was entitled to possession.

Can’t say the result is a surprise given what went on, apparently for years.  That doesn’t mean there aren’t questions:

  • Why did the board opt to let the court decide when it could have – unless the building’s regime didn’t allow it to declare owners objectionable?
  • How bad does the person have to be before individual ownership rights are superseded by the rights of everyone else to live hassle free?
  • Is this the best mechanism to deal with older residents in obvious need of help – an issue becoming more challenging for buildings?

Vermeer Owners, Inc. v.  Messer, 2010 NY Slip Op. 50275(U), Feb. 24, 2010, Civ. Ct. N.Y. Co.

Vermeer Owners, Inc. v. Messer, 2009 NY Slip Op. 51741(U), Aug. 11, 2009, Civ. Ct. N.Y. Co. (round 1 in the saga.)

To access these cases, go to Search NY Slip Decisions, and under Search By Citation enter the case date and number.

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