Condo Coop HOA

Condo Boards sometimes have to access the inside of units. There are a variety of reasons including repairs to common elements, access to shut off valves, inspections relating to repairs in other parts of the condominium building, or a myriad of other valid, legitimate reasons. The trouble is that governing documents like the condominium’s Declaration and Bylaws may not require such access and even if it does, a unit owner may refuse to grant the access.

Condo Boards sometimes have to bring suit for Court help with access. One condo, the Carriage House Condominium, found itself is such a situation. The Board there required access to Ms. Healy’s unit in order to to make repairs to AC condensers located in her unit that service other units in the condominium.

The Supreme Court ruled that upon one day’s notice, Ms. Healy had to allow HVAC workers performing repairs or services into her unit to perform necessary HVAC maintenance and repairs, and that any such HVAC workers be accompanied by an individual associated with the managing agent for the condominium.

Healy didn’t stop there. She appealed and on appeal the First Department affirmed the Supreme Court’s decision finding no abuse of discretion.

So, the Carriage House Condominium Board had to first try to get access to make the prepare through management. After that failed, they had to retain counsel to bring the lawsuit. The Condominium incurred legal fees to bring the suit and then make the motion and then fight the appeal because the unit owner wouldn’t cooperate. That’s a lot of legal fees, cost and time.

In the end, many condominiums find themselves having to employ the same course of action to obtain access to a unit. Most condominium Declaration and Bylaws provide for reimbursement of legal fees and costs for collection of common charges and other assessments, but not for the type of legal fees incurred for accessing a unit. There may be an end around with fine imposition (assuming a Board has the power to enact and impose such fines) but the valid fines typically will not cover the legal fees and costs.

Knowing all of this, Condominium Board should consider amending their Bylaws to change the legal fee provision and allow them to recover for situations other than just collection of common charges and assessments. It is important to do this correctly and in the end, after a unit owner vote is properly secured according to the bylaws and law, the amended bylaws will have to be recorded against the unit in the public land records before the amendment will be legally effective. This is yet another expense that will likely be well worth it. While a Board is amending the Bylaws, it ought to get the most bang out of its buck by considering other amendments that can be made at the same time as the costs associated with the amendment will be similar whether it is one or a few amendments being done at the same time to the bylaws.

Read the Carriage House Condominium v. Healy, Court decision here.

Community associations are quasi governments which can make their own rules provided that they don’t run afoul the law. Whenever changing rules, coop, condo, HOA and other community association boards must make sure that their good intention rule changes aren’t going to get them into trouble. With a litigious owner (especially one who is an attorney, “professional plaintiff”, a person without financial constraints or maybe just with strong principles), a board could end up in litigation which spans years and even after the board members are no longer even board members.

A good example of rule making gone wild happened in a New York cooperative called Woodstock Owners Corp. The coop enacted a no sublet policy but only with respect to owners who bought after a certain date (in that case October 2002). Bianca Razzano, a shareholder, was not allowed to sublet under that rule and she sued in 2009 and continued litigating, appealing, discovering, and fighting on and on for years. Eleven years later, the parties were still litigating with an order just being issued this year in 2020. She sued the coop Board, the management company and an individual board member.

On one appeal, the Court struck down the sublet policy, declaring it violative of Business Corporation Law Section 501(c) which essentially prohibits unequal treatment of shareholders. The litigation continued with Ms. Razzano trying to expand her case to include emotional distress damage claims. The Court put a stop to that, but this was years after the genesis of the dispute.

It is not clear whether the cooperative obtained legal advice regarding its sublet policy but it should have. In some instances, boards try to avoid incurring legal fees on rule making and take a let’s do it and see if anyone objects strategy. This is not advised. Experienced community association counsel should be able to advise a board and keep it out of trouble like the trouble experienced by the Woodstock cooperative got into, without incurring substantial legal expenses. The legal expenses that the cooperative, management and board member in the Woodstock case experienced, pales in comparison to the expenses of experienced legal advice.

Read the Bianca Razzano v. Woodstock Owners Corp. decision here and keep your board out of similar trouble. Don’t let matters spiral out of control.

Right before the pandemic started and we weren’t compelled to quarantine and stay closer to our neighbors for longer period of time, a Federal Court made a decision that makes it’s harder for cooperative boards to stay out of neighbor-neighbor disputes without risk of liability.

The case involved Kings Park Manor, a rental building owner, and complainant, Donahue Francis. The bickering between Francis and his neighbor Raymond Endres was unbelievable. The Court described it as a “brazen and relentless campaign of racial harassment, abuse, and threats.” In the parties’ words, according to the Court, “Francis heard Endres say ‘Jews, fucking Jews,’ while standing in front of their apartments Endres then called Francis, who is black, a ‘fucking nigger’. It got worse and worse and the building owner decided to stay out of it and directed management (who also ended up sued) to do the same.

The lawsuit was in Federal Court and ended up on appeal where the Second Circuit in Manhattan issued a decision which should make coop boards think twice before deciding not to intervene in disputes between shareholders; or at least ones that rise to the level of the Francis-Endres dispute. If a coop board decides to stay out despite the Court decision it ought to create a proper and thorough record vetted by counsel so that it can defend it if sued.

In the Kings Park case the Court ruled that the Fair Housing Act requires a landlord (like a coop) to take racial harassment as seriously as it takes other tenant misconduct, and that it constitutes intentional discrimination for a landlord to selectively ignore misconduct. The court held that the act covers discrimination not only when renting an apartment to a tenant but also extends to the relationship after the tenant moves in. Thus, a landlord is not allowed to harass or otherwise discriminate against a tenant because of race by failing to address complaints. The court reasoned that the landlord had remedies, such as terminating the lease, and it should have taken action rather sticking its head in the sand.

Read the decision here.

Most lawsuits challenging the propriety of decisions by cooperative and condominium boards are subject to a four-month statute of limitations. So if a complainant doesn’t start a lawsuit within four months of the board decision, they are time barred. Thus, boards have a solid statute of limitations defense unless a plaintiff acts really quickly. If sued past the four months, the board can move for dismissal and if presented properly, the lawsuit should be dismissed. It is critical for boards to maintain substantial records of such business decisions in minutes so that the timing for the four month start can be established and when suit is filed, help counsel present an effective dismissal motion.

The vast majority of complaints by aggrieved shareholders and unit owners challenging the propriety of board decisions are presented as actions for declaratory judgment. Crafty plaintiff’s lawyers probably do so because they do not specialize in condo/coop and business law, or they are trying to lawyer around the short statute of limitations. The New York Court of Appeals, however, has decreed that, regardless of how styled, if an action could lawfully be commenced as an Article 78 Proceeding, then the four-month statute of limitations applicable to these proceedings applies, as set forth in CPLR Section 217 (1). Armed with this knowledge and well-documented board business decisions, an aggressive condo/coop attorney should be able to effectively put an end to a lawsuit.