Cooperatives & Condominiums

Adult Child of Decedent Has No Right to Possession Of Co-Op Apartment

Estate of Fernanders

NYLJ 2/25/10

Surr. Ct., N.Y. Cty.

(Glen, J.)

In a proceeding by the board of a housing co-operative against the adult child of the shareholder, the board sought to recover possession of the apartment. The court awarded possession to the board, holding that the child had not established a right to occupy the apartment.

Unit owner died in 2001, survived by two sons and a daughter. Nine years earlier, in 1992, unit owner had surrendered an original share certificate to the Department of Social Services as an assignment of her ownership interest incident to her receipt of public assistance. One of the sons nevertheless asserted a right to occupy the apartment.

In rejecting the son's claim and awarding a warrant of eviction to the housing board, the court started by noting that the public administrator, not the son, was serving as the estate fiduciary. As a result, the administrator, and not the son, had authority to exercise the right to possession of the apartment. The court then noted that a shareholder's child has no legal right to remain in possession beyond a reasonable time after decedent's death. Finally, the court dismissed the son's claim based on a letter allegedly written by decedent before the surrender of certificates issued to the Department of Social Services. The court emphasized that the letter, which purported to transfer decedent's interest to her son, had not been signed by the decedent. moreover, the assignment had not been accompanied with the formalities that are ordinarily required to assign an interest in co-op shares. As a result, the court held that the co-op corporation was entitled to possession.

Lease of Roof Space to Cell Phone Provider Exceeds Condominium Board's Authority

Kaung v. Board of Managers of Biltmore Towers Condominium Association

NYLJ 3/1/10, p. 27, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In an action by unit owner for a declaration that a lease of roof space is void, and for injunctive relief, the condominium association appealed from Supreme Court's order and judgment declaring the lease void as in excess of the association's authority.

In 2007, the condominium board entered into a lease with a cell phone service provider authorizing the provider to build cell phone antennae and equipment on the roof of the condominium building. According to the condominium bylaws, the roof constitutes one of the building's common elements. The condominium bylaws restrict the common elements to uses for which they are suited and which are incidental to the residential use of the individual units. Unit owners brought this action, contending that the lease to the cell phone service provider exceeded the scope of the condominium board's authority. Supreme Court agreed and enjoined installation of the equipment on the roof. The association appealed.

In affirming, noted that the business judgment rule applies to decisions by a condominium board only when those decisions are within the scope of the board's authority. In this case, unit owners had established that the cell phone equipment is not incident to residential use of the units, and therefore exceeds the scope of authority for which the board can execute leases of the common elements. As a result, Supreme Court had properly enjoined installation of the equipment.

Two-Thirds Of Mitchell-Lama Unit Owners Must Support Dissolution

East Midtown Plaza Housing, Inc. v. Cuomo

NYLJ 3/16/10, p. 41, col. 5

Supreme Ct., N.Y. Cty.

(Goodman, J.)

In an article 78 proceeding, a private housing finance company sought to compel the Department of Housing Preservation and Development (HPD) to approve its plan to privatize a Mitchell-Lama development, and to compel the state Attorney General to accept its amended plan for filing. The court dismissed the petition, concluding that the private housing finance company had not obtained the vote necessary to approve the plan.

The company has sought to dissolve and reconstitute itself pursuant to provisions in the Mitchell-Lama law permitting dissolution after 20 years. Dissolution, however, requires a two-thirds vote of shareholders. In 2005, HPD accepted the results of a dissolution vote in which two-thirds of the shares voted to dissolve, even though those shares did not represent two-thirds of the units. The Attorney General, however, rejected the co-operative offering plan on a variety of bases. HPD then notified the company that it would have to conduct a revote, and now took the position that approval required a vote of two-thirds of the units. On a revote, the company once again obtained the approval of two-thirds of the shares, but not two-thirds of the units. When HPD refused to issue a “no objection” letter, and the AG refused to accept the amended plan for filing, the company brought this article 78 proceeding.

In dismissing, the court first rejected the company's contention that the AG's approval was not necessary because the amended plan did not contemplate an exchange of shares. The court noted that because the company was offering unit owners interests in a new private entity, the offering was a public offering of securities that required AG approval. The court then turned to the voting requirement, and relied on the certificate of incorporation, which provided that each holder of shares was entitled to one vote, regardless of the number of shares, “except as otherwise provided by statute.” The owner had argued that Business Corporation Law section 612, which provides for voting by shares “unless otherwise provided in the certificate of incorporation” negated the one-unit, one-vote provision in the certificate, but the court disagreed. The court held that BCL 612 and BCL 1001 both made it clear that a corporation could provide for one-unit, one-vote elections. Therefore, the certificate of incorporation controlled, and the vote was inadequate because fewer than two-thirds of the unit owners had voted in favor of dissolution.

Adult Child of Decedent Has No Right to Possession Of Co-Op Apartment

Estate of Fernanders

NYLJ 2/25/10

Surr. Ct., N.Y. Cty.

(Glen, J.)

In a proceeding by the board of a housing co-operative against the adult child of the shareholder, the board sought to recover possession of the apartment. The court awarded possession to the board, holding that the child had not established a right to occupy the apartment.

Unit owner died in 2001, survived by two sons and a daughter. Nine years earlier, in 1992, unit owner had surrendered an original share certificate to the Department of Social Services as an assignment of her ownership interest incident to her receipt of public assistance. One of the sons nevertheless asserted a right to occupy the apartment.

In rejecting the son's claim and awarding a warrant of eviction to the housing board, the court started by noting that the public administrator, not the son, was serving as the estate fiduciary. As a result, the administrator, and not the son, had authority to exercise the right to possession of the apartment. The court then noted that a shareholder's child has no legal right to remain in possession beyond a reasonable time after decedent's death. Finally, the court dismissed the son's claim based on a letter allegedly written by decedent before the surrender of certificates issued to the Department of Social Services. The court emphasized that the letter, which purported to transfer decedent's interest to her son, had not been signed by the decedent. moreover, the assignment had not been accompanied with the formalities that are ordinarily required to assign an interest in co-op shares. As a result, the court held that the co-op corporation was entitled to possession.

Lease of Roof Space to Cell Phone Provider Exceeds Condominium Board's Authority

Kaung v. Board of Managers of Biltmore Towers Condominium Association

NYLJ 3/1/10, p. 27, col. 6

AppDiv, Second Dept.

(memorandum opinion)

In an action by unit owner for a declaration that a lease of roof space is void, and for injunctive relief, the condominium association appealed from Supreme Court's order and judgment declaring the lease void as in excess of the association's authority.

In 2007, the condominium board entered into a lease with a cell phone service provider authorizing the provider to build cell phone antennae and equipment on the roof of the condominium building. According to the condominium bylaws, the roof constitutes one of the building's common elements. The condominium bylaws restrict the common elements to uses for which they are suited and which are incidental to the residential use of the individual units. Unit owners brought this action, contending that the lease to the cell phone service provider exceeded the scope of the condominium board's authority. Supreme Court agreed and enjoined installation of the equipment on the roof. The association appealed.

In affirming, noted that the business judgment rule applies to decisions by a condominium board only when those decisions are within the scope of the board's authority. In this case, unit owners had established that the cell phone equipment is not incident to residential use of the units, and therefore exceeds the scope of authority for which the board can execute leases of the common elements. As a result, Supreme Court had properly enjoined installation of the equipment.

Two-Thirds Of Mitchell-Lama Unit Owners Must Support Dissolution

East Midtown Plaza Housing, Inc. v. Cuomo

NYLJ 3/16/10, p. 41, col. 5

Supreme Ct., N.Y. Cty.

(Goodman, J.)

In an article 78 proceeding, a private housing finance company sought to compel the Department of Housing Preservation and Development (HPD) to approve its plan to privatize a Mitchell-Lama development, and to compel the state Attorney General to accept its amended plan for filing. The court dismissed the petition, concluding that the private housing finance company had not obtained the vote necessary to approve the plan.

The company has sought to dissolve and reconstitute itself pursuant to provisions in the Mitchell-Lama law permitting dissolution after 20 years. Dissolution, however, requires a two-thirds vote of shareholders. In 2005, HPD accepted the results of a dissolution vote in which two-thirds of the shares voted to dissolve, even though those shares did not represent two-thirds of the units. The Attorney General, however, rejected the co-operative offering plan on a variety of bases. HPD then notified the company that it would have to conduct a revote, and now took the position that approval required a vote of two-thirds of the units. On a revote, the company once again obtained the approval of two-thirds of the shares, but not two-thirds of the units. When HPD refused to issue a “no objection” letter, and the AG refused to accept the amended plan for filing, the company brought this article 78 proceeding.

In dismissing, the court first rejected the company's contention that the AG's approval was not necessary because the amended plan did not contemplate an exchange of shares. The court noted that because the company was offering unit owners interests in a new private entity, the offering was a public offering of securities that required AG approval. The court then turned to the voting requirement, and relied on the certificate of incorporation, which provided that each holder of shares was entitled to one vote, regardless of the number of shares, “except as otherwise provided by statute.” The owner had argued that Business Corporation Law section 612, which provides for voting by shares “unless otherwise provided in the certificate of incorporation” negated the one-unit, one-vote provision in the certificate, but the court disagreed. The court held that BCL 612 and BCL 1001 both made it clear that a corporation could provide for one-unit, one-vote elections. Therefore, the certificate of incorporation controlled, and the vote was inadequate because fewer than two-thirds of the unit owners had voted in favor of dissolution.