Schneider Buchel LLP Blog

Thursday, July 21, 2016

What to do When a Resident Doesn’t like Your Co-Ops New Rules

What would you do if a member of your co-op was allowing friends, family members, and guests to stay at their apartment while they were away on long business trips? What if that member’s residence had been the subject of noise complaints in the past? Would you change the rules to prevent apartments from being occupied when the owner is not present? One Central Park West co-op did just that, and now they are being sued by their unhappy member… Madonna. 

According to the NY Daily News, the co-op Madonna is a part of, Harperly Hall, recently changed its rules to prevent apartments from being occupied when their owner is not present. Madonna is asking a court to exempt her from the new rule so other people can live at her apartment while she is on tour, or is otherwise not present.

These Lawsuits are in “Vogue”

Madonna is not the only co-op resident in New York City and the surrounding area that is upset about rule changes. We regularly represent co-ops who are being sued by residents who are unhappy the rules they live by are changing

We are actually seeing a lot of these suits right now as co-ops amend their rules to address emerging problems. For example, many co-ops are making new rules that bar residents from renting out their apartment on Airbnb. Others are dealing with the thorny issue of where to draw the line when it comes to support animals.

Make Sure You Know How to “Express Yourself” Properly  

Co-op boards should realize that when they tackle a tricky issue, they are going to have to deal with people who are upset with the outcome, and that will often mean fighting a lawsuit. So, take a step back and think, “What evidence do we need to win a lawsuit over this decision?” and work your way backwards from that point.

There are basically three things that you are always going to want to have:

  • A copy of the co-op policy governing rule changes
  • Documents/video/whatever showing that the policy was followed
  • Copies of communication between the co-op board and the residents

Madonna’s suit is a good illustration of why these elements are important. She is claiming that rule changes have to be made by a two-thirds vote of all shareholders, but that she, as a shareholder, was not informed of the vote. She also claims that when she asked for information about the vote that had been held, only got part of the information she requested.

Even If You Get Sued, There is a “Ray of Light”

Getting sued for making tough decisions is no fun. It’s a huge hassle, and it can be a huge expense. However, most co-op boards will also have put fee-shifting rules in place so that residents who unsuccessfully sue the co-op are on the hook for all the legal fees - theirs and the boards. (There is evidence of this in Madonna’s case as well, since she is asking the court to waive the fee provision currently in place.)

Putting fee-shifting provisions in place discourages litigation because residents know unless they have a slam dunk case, they could be spending a lot of money to take their arguments with the co-op to court. This can help speed up the settlement of even the most contentious disagreements. 

 






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