A recent case decided by the New York Supreme Court (390 Riverside Owners Corp. v. Stout) underscores the importance of shareholders granting access to their apartments for necessary repairs, and actions that property managers and coop boards can take when shareholder-proprietary tenants do not do so.
The Issue:
- A co-op board requested access to a shareholder’s apartment to repair a leak affecting the unit below. Shareholders refused, disputing the source of the leak and the necessity of the board’s proposed repairs.
The Court’s Ruling:
- The court ruled in favor of the co-op board, ordering the shareholders to grant access. The key points:
- Proprietary Leases are Critical: These leases typically grant the co-op board broad access rights for maintenance and repairs.
- Business Judgment Rule: Decisions on repairs made in good faith by the board are protected by the business judgment rule, limiting judicial interference. Management did a good job laying the foundation with an expert plumber and investigation into the need for the repair in this particular invasive way.
Lessons for Property Managers and Co-op Boards:
- Document Your Case: Gather evidence, such as professional plumber or engineer reports, to substantiate the repairs’ necessity.
- Follow the Lease: Adhere to the procedures for requesting access and repairs laid out in the proprietary lease.
- Act Reasonably: The board must show it exercised good faith and followed reasonable procedures when requesting access.
- Communicate Clearly: Transparent communication with shareholders about the reasons for repairs can help avoid disputes.
Why Shareholders Should Grant Access
- Prevent Further Damage: Refusing access can worsen the situation and lead to increased costs and damage to other units.
- Fulfilling Obligations: Proprietary leases place a duty on shareholders to allow necessary repairs.
- Avoiding Costly Litigation: Denying access could result in legal action and the responsibility to pay the co-op board’s legal fees. In this case, the Court awarded the coop legal fees and set the matter down for a hearing on the amount to award.
Read the case here.
