Boards

The recent case of Board of Managers of the 48-54 West 138th Street Condominium v. Flora Burdock highlights the complexities that arise when an individual unit owner’s behavior impacts the health, safety, and well-being of a condominium community. In this case, the condominium board sought legal intervention to address a severe hoarding situation within Ms. Burdock’s apartment.

The Case at a Glance

The plaintiff, the condominium’s board of managers, alleged that the defendant, Ms. Burdock, had created a hoarding situation so severe that it posed safety risks and generated complaints from other residents. The board presented evidence of potential fire hazards, health code violations, and unpleasant odors emanating from the unit. After repeated attempts to work with Ms. Burdock failed, the board sought and received a court order compelling the defendant to grant access for cleanup.

Key Takeaways for Condominium Boards and Residents

This case underscores several important points:

• Condominium Bylaws: Condominium governing documents often contain provisions that give the board authority to enforce rules and regulations designed to protect residents’ safety and preserve the value of the property. These bylaws likely include clauses about maintaining units and common areas in a sanitary and safe condition.
• The Power of Legal Intervention: When communication and attempts at resolution fail, condominium boards have the right to pursue legal action to address problems like severe hoarding. Courts can intervene to protect the interests of the larger community.
• Balancing Rights: While individual residents have ownership rights, these rights must be balanced against the collective rights and well-being of the community. Creating unsafe conditions or significant disturbances violates the rights of other owners to reasonably enjoy their homes.

Preventive Measures

Ideally, issues like hoarding should be addressed before they escalate and require legal action. Proactive measures by condominium boards can include:

• Clear Policies: Establish clear rules and regulations regarding sanitation, noise, and the proper use of units and common areas.
• Early Intervention: Address potential problems early by communicating with residents showing signs of difficulty in maintaining their units. Offer support resources if needed.
• Education and Awareness: Provide residents with information on fire safety and the potential consequences of behavior that could endanger others or create unsanitary conditions.

The Importance of Legal Counsel

Addressing complex issues such as hoarding necessitates careful analysis and the guidance of an experienced attorney. Navigating the legal nuances is essential to ensure compliance with housing laws, protect the rights of all parties, and achieve outcomes that benefit the entire condominium community.

Read the Court’s decision awarding a reimbursement of legal fees, but declining other relief sought by the condo in order to prevent future occurrences.

Coop, Condo, and HOA boards and their management should pay close attention to insurance coverage when faced with lawsuits. It’s not always a guarantee that insurance will cover all damages. A recent case ( E. S. et al – v. – Windsor Owners Corp. et al; NY Sup Ct, NY Co., Index No. 159133/2017) found a coop liable for lead poisoning in an infant resident, and the case is now entering the damage phase. This is a stark reminder that having general counsel advise on legal matters early on can make all the difference. Don’t wait until it’s too late. Here is a link to the court decision (https://www.nycourts.gov/reporter/pdfs/2022/2022_34688.pdf) which was just upheld on appeal.

Condo Boards and their Property Management Companies play a crucial role in maintaining harmony within residential communities. A recent legal battle involving the Sky House Condominium sheds light on the importance of meticulous governance to avoid potential pitfalls.

Background:
The Sky House Condominium Board of Managers found themselves entangled in a lawsuit initiated by a dissatisfied former board member and unit owner. The individual alleged a breach of fiduciary duty, bad faith, and sought an injunction, monetary damages, and punitive damages due to delays in processing an alteration application, resulting in significant financial burdens.

While the court dismissed several claims against individual board members and clarified the lack of fiduciary duty owed by the property management company and manager to the unit owner, it allowed a breach of fiduciary duty claim against the Condo Board, and an aiding an abetting a breach of fiduciary duty claim against the property management company and individual property manager, to proceed. The court identified potential evidence of bad faith, including acrimonious dealings and vague rejection of the alteration plans.

The Lesson:
Clear documentation and minutes to support decision-making processes is critical. Board decisions lacking transparency may be susceptible to legal challenges. Condo Boards should proactively seek legal advice when facing contentious issues to mitigate the risk of legal repercussions.

The court’s decision to uphold the “Aiding and Abetting Breach of Fiduciary Duty” claim against the property management company and manager raises questions due to the earlier rejection of their fiduciary duty to the unit owner. This inconsistency underscores the need for precise legal arguments and challenges to ensure all relevant parties are appropriately addressed in legal proceedings.

The court rejected the application of the business judgment rule as a defense requiring dismissal at this early juncture, citing the persuasive nature of allegations of bad faith. Some boards think the business judgment rule will save them, and it is true where there is good governance that is well documented. In this case, it wasn’t according to the Court.

Takeaways for Condo Boards and Property Management Companies:

1. Document Decisions: Thoroughly document all decisions and maintain clear minutes of meetings to establish a transparent decision-making process.
2. Seek Legal Advice: Proactively consult legal counsel, especially when facing contentious issues, to mitigate potential legal risks.
3. Ensure Consistency: Ensure legal arguments and claims are consistent and aligned throughout legal proceedings to avoid potential loopholes.
4. Ethical Decision-Making: Adhere to ethical standards, as decisions lacking transparency or showing signs of bad faith may invite legal challenges.
5. Understand Legal Duties: Clarify and understand the legal duties of all parties involved, avoiding unnecessary complications in legal proceedings.

The recent legal dispute serves as a cautionary tale for Condo Boards and Property Management Companies, emphasizing the need for proactive governance, transparency, and ethical decision-making. By learning from this case, these entities can enhance their practices, ultimately avoiding lawsuits like this one.

Read the decision here.

The court’s decision in 157 W 18 OWNER, LLC v. THE BOARD OF MANAGERS OF THE SLATE CONDOMINIUMS provides clarity on the interpretation of RPAPL 871 and the enforcement of Building Code requirements in construction-related disputes. The ruling underscores the importance of demonstrating a substantial encroachment and balancing equities when seeking injunctive relief for property disputes.

In a recent legal battle between 157 W 18 OWNER, LLC (the petitioner) and THE BOARD OF MANAGERS OF THE SLATE CONDOMINIUMS (the respondent), the court rendered a decision that has significant implications for property rights and construction regulations. The petitioner sought to compel the removal of a sidewalk shed erected by the respondent on a public sidewalk in front of the petitioner’s building. The court, however, denied the petitioner’s motion, granted the respondent’s cross-motion, and dismissed the converted complaint. This article explores the background, arguments, and rationale behind the court’s decision.

The petitioner, owner of a building at 157-159 West 18th Street in Manhattan, contested the placement of a sidewalk shed by the respondent, the owner of the adjacent building at 163-165 West 18th Street. The shed was erected as part of a Façade Inspection Safety Program (FISP) repair project initiated by the respondent. The petitioner claimed that the shed encroached onto the public sidewalk in front of its building, adversely affecting its use and the operation of a leased ground-floor restaurant.

Initially filed as a special proceeding under CPLR article 4, the court decided to convert the case into an action under RPAPL 871 in the interest of justice. The petitioner sought injunctive relief to compel the removal of the sidewalk shed, citing encroachment on its property. The respondent countered, arguing that the shed was necessary to comply with the Building Code, protecting pedestrians during the FISP repair work.

The court addressed several key points in its decision:

1. Conversion of the Proceeding:
   The court converted the special proceeding into an action, allowing for a comprehensive review of the matter. This conversion enabled the court to consider cross motions for summary judgment.
2. Encroachment Claims:
   The petitioner failed to establish a prima facie case that the sidewalk shed encroached upon its property. The respondent, through expert testimony, demonstrated that the shed was entirely on the public sidewalk and did not impede access to the petitioner’s building.
3. Building Code Compliance:
   The court recognized that the respondent was obligated by the Building Code to extend the sidewalk shed beyond its property line to ensure pedestrian safety during the FISP repair work. Compliance with these regulations justified the shed’s placement, even if it extended onto the public sidewalk.
4. Balance of Equities:
   The court considered the balance of equities, emphasizing that the benefit of compelling removal did not outweigh the harm to the respondent and the public. The petitioner failed to demonstrate a significant encroachment or harm justifying injunctive relief.

Read the decision here.

Condominium associations often deal with a variety of issues during the transition process from developer control to homeowner control. One common challenge is holding “sponsor members” accountable for problems that arise during the construction or sale of units. Sponsor members are typically developers, builders, or other entities that establish the condominium and retain a level of control during the initial phases. 

Under most state condominium laws, sponsor members owe certain legal duties to the association and unit owners. These duties relate to completing construction properly, providing adequate funding for reserves, and disclosing all relevant information about the property’s condition. If sponsor members breach these duties, the condominium association may have valid legal claims against them. 

There have been many cases across the country where condo associations have pursued legal action against sponsor members for construction defects, budget deficits, or incomplete turnover documentation.

In a recent case, we were able to tie up the sponsor with an injunction claim and motion from dissipating its assets. It is critical to hold the sponsor and its members responsible as early as possible before they transfer assets and liquidate the sponsor entity. Even if the sponsor can’t be stopped, associations can still go after the sponsor members and others who have responsibility.

For example, the Board of Managers the 443 Greenwich Street Condominium sued its sponsor’s members who were designated as board members of the condo during the control period. Like all board members, sponsor members have a fiduciary duty to act in the best interest of the condo and not the sponsor. The 443 Greenwich Street Condominium averred that the sponsor board members fraudulently passed on to the unit owners the costs of construction and maintenance disguised as condominium common charges, and that they deliberately cut corners when renovating the building by making the renovations in a manner departing from the operating plan and calculated to save the sponsor money. The Appellate Division First Department upheld the trial court’s refusal to dismiss the claims of breach of fiduciary duty against the sponsor board members. The Court held that the business judgment rule does not foreclose the cause of action for breach of fiduciary duty. At the pleading stage, the allegations are sufficient to overcome the business judgment rule, as plaintiff has alleged that the sponsor’s principals acted in bad faith and that their actions were tainted by conflict of interest and fraud. See the decision.

When problems arise, it is critical for condo boards to consult experienced legal counsel to review their options. An attorney can help determine if the sponsor member violated any legal duties and whether a lawsuit or settlement demand is warranted. The condo’s governing documents and state laws must also be carefully examined, as they may impact what claims are viable. With proper guidance, condo associations can potentially hold sponsor members financially accountable for their actions.

In the intricate realm of community associations, addressing the process of compelling a vote to remove a board is a crucial but often overlooked aspect. One of the primary challenges arises when the sitting board refrains from calling a special meeting, necessitating potential litigation funded personally by the owners or shareholders. In such scenarios, it becomes imperative for both the dissidents seeking change and the incumbent board to engage legal counsel, ensuring the association’s proper representation and protection.

A prevailing issue within associations is the absence of a clear mechanism for compelling a vote to replace the board when the existing leadership remains resistant to a special meeting. The default resolution often involves legal action, with the onus of funding such litigation falling on the individual owners or shareholders. This financial burden can pose a significant obstacle for those seeking change within the community.

For the sitting board, navigating through these challenges requires legal guidance to ensure that the association is not only properly represented but also shielded from potential vulnerabilities. Boards must recognize that while members may change, the entity remains, and the overall interests of the community need to be secured. Proper legal counsel becomes a cornerstone in safeguarding the association’s stability during periods of transition.

Dissidents advocating for a board change must understand the legal avenues available can empower dissidents to navigate the process more effectively and peacefully, appreciating that their own self interest may be important to them, but if they prevail, that self interest must be set aside and the board has a fiduciary duty to make decisions that are in the best interest of the community as a whole.

Regardless of the prevailing sentiments towards the current board, it is paramount that all parties involved, including incumbents, dissidents, and the professional management team, prioritize fairness and compliance with the organization’s bylaws and applicable laws. Fostering a transparent and equitable environment during this transition is crucial to maintaining the community’s reputation and ensuring a smooth evolution of leadership.

During periods of contention, when ownership interests are at stake, proper management and legal counsel play pivotal roles in guiding the organization through tumultuous times. The emphasis should always be on preserving the integrity of the community, creating an atmosphere where both dissidents and incumbents can navigate change without compromising the overall health of the association.

In the ever-evolving landscape of condo board dynamics, addressing the challenges of compelling a vote to replace the board requires a multifaceted approach. Engaging legal counsel, understanding the available resources, and prioritizing fairness are essential elements in ensuring a smooth transition that upholds the best interests of the community at large.