Cooperatives & Condominiums

In co-op shareholder's article 78 proceeding challenging the board's modification of its requirement that affected shareholders consent to construction of terraces, shareholder appealed from Supreme Court's denial of the petition and dismissal of the proceeding. The Appellate Division reversed and granted the petition, holding that the board's action was not protected by the business judgment rule.

The co-op corporation owns a complex of 2,904 apartments. Shareholder owns shares associated with eight of those apartments, and does not live in any of them. In 2004, the co-op board promulgated a rule requiring any second-floor shareholder to obtain the consent of a first-floor shareholder before building a terrace or deck above a first-floor window. In 2014, shareholder Haffey, who owns an apartment above one of petitioner-shareholder's eight apartments, sought permission from the board and from petitioner-shareholder to build a terrace for her second-floor apartment. Petitioner-shareholder re- fused, and the board enacted a resolution dispensing with the consent requirement whenever the first-floor apartment is not occupied by the shareholder or any family member of the shareholder. The board's resolution was accompanied by an economic analysis determining that the presence of a terrace had no impact on the value of first-floor units. Petitioner-shareholder then brought this article 78 proceeding challenging the board's determination. Supreme Court denied the petition and dismissed the proceeding.