April 14, 2023

Condo Board Can Deny Use of Amenities to Induce Unit-Owners to Pay Up

Home / Condo Board Can Deny Use of Amenities to Induce Unit-Owners to Pay Up

When Steve Martin’s hit comedy series about life inside an Upper West Side co-op, Only Murders in the Building, runs its course, here’s fodder for a possible follow-up: a tragedy about life inside an Upper East Side condominium. A fitting title would be Only Lawsuits in the Building.

The lawsuits have been dragging on for years at the Promenade, a 209-unit luxury tower in Lenox Hill overlooking the East River. This protracted legal brawl pits two unit-owners against the condo board over such familiar issues as arrears, alteration agreements, bylaw violations, objectionable conduct, liens and foreclosure. The latest ingredient in this toxic mix is a dispute over the board’s move to block the unit-owners from enjoying the building’s amenities until they pay the money the board claims it’s owed.

And this legal war involves a lot of money — about $700,000, and counting. (cont. below)

A quick recap: Robin and Elena Eshaghpour own several apartments in the Promenade. When the Eshaghpours performed alterations to their apartments, the board, claiming that the alterations violated the bylaws, assessed the Eshaghpours $175,000 and brought a lien-foreclosure action against each unit. The Eshaghpours countered that the board was liable for damages for interfering with work that was permitted under an existing alteration agreement. The board brought a third action, claiming Robin Eshaghpour engaged in threatening and abusive conduct toward an employee of the condominium’s property management company that caused her to fear for her safety.

Amid this skirmishing, the condo adopted a bylaw amendment providing that if a unit-owner is in arrears for more than 60 days, the board may restrict the unit-owner from use of the building’s amenities and nonessential services.

The board then informed the Eshaghpours that they owed $700,000 — for the bylaw violations, the cost of hiring additional security guards because of Robin Eshaghpour’s allegedly harassing behavior, plus the board’s legal fees and interest and late fees — and that if they failed to pay, the board would restrict their access to building amenities and services. These include a heated pool, roof deck, gym, sauna, party room, children’s playroom, parking garage and 24-hour doorman. (cont. below)

The Eshaghpours — surprise! — filed another legal action, seeking to block the condo board from denying their access to the condominium’s extensive amenities. The court denied the request.

This is not the first time a board’s power to withhold access to amenities has been argued in court. In a 2014 case, an Upper West Side condo board denied use of amenities to a unit-owner who had failed to pay common charges for several years. In her ruling, state Supreme Court Judge Cynthia Kern wrote: “Pursuant to a house rule passed by the board…the board had the authority to deny (the defendant) these services based on her failure to pay these common charges. (The defendant) has failed to establish that the board did not have the authority to pass this house rule or that the board acted in bad faith or in a way that did not further the legitimate interests of the condominium.” In other words, the Business Judgment Rule prevents the courts from second-guessing a co-op or condo board that acts within the scope of its powers, which include denying the use of amenities.

“This provision is fairly common in the governing documents of condominiums and homeowners associations,” says Marc Schneider, the managing partner at the law firm Schneider Buchel. “It’s a valuable tool. If the property has amenities, denying their use may induce unit-owners to pay what they owe.”

Andrew P. Brucker, a partner at the law firm Armstrong Teasdale, recently addressed this issue in the pages of Habitat: “It should be clear in the governing documents that if a unit-owner is in arrears, nonessential services, including the use of amenities (such as a gym or pool or rooftop garden), will not be available to that unit-owner.”

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