Cooperatives and Condominiums

In modifying, the court dismissed the petition against the individual board members because the petition included no allegations requesting relief against any of the board members as individuals. In otherwise affirming, the court concluded that the board's failure to make a determination on shareholder's request, or even to respond to his letter, was the equivalent of a refusal because further efforts to obtain a response would have been futile. The Appellate Division then noted that on appeal, the board had only argued that the Article 78 proceeding was not ripe and had not argued that the court's substantive conclusions were erroneous. As a result, the court affirmed the order directing the board to sign off on shareholder's application.

Comment

When a co-op board has no discretion over a determination that requires preparation of formal paperwork, an Article 78 proceeding will lie to compel the board to issue the paperwork. In R & L Realty Associates v. 205 West 103 Owner's Corp., 98 A.D.3d 421, when a co-op board refused to cooperate in issuing stock certificates and proprietary leases that were necessary for a co-op shareholder to effectuate a bulk sale of his 25 apartments, the First Department granted shareholder's Article 78 petition to compel the board to issue the certificates and leases. The court held that the board had an obligation to perform the ministerial act of preparing, executing and delivering the formal paperwork. The board's inaction qualified as an obstruction of sale that was not permissible because the shareholder had a legal right to the paperwork in order to make a sale.

Although there have been no decisions indicating how quickly a co-op board must act when a shareholder makes a request, statutes provide time limits in analogous situations. For instance, when a property owner applies to a village planning board for preliminary plat approval, Village Law sections 7-728((5)d) and (e) generally require the board to hold a public hearing within 62 days from the time it receives the completed application, and to make a decision within 62 days after the close of the public hearing. See also, Town Law section 276(4). Moreover, these statutes provide a remedy for the municipality's failure to act promptly: default approval of the application. See, Village Law section 7-728(8).

The Second Department has upheld a strict interpretation of the statute's default approval provision. In Di Stefano v. Miller, when the village planning board took no action to reply to a property owner's application within the 60-day period because the plans did not comply with the applicable zoning ordinance, the court nevertheless granted an Article 78 petition and the deemed the plan was approved by default as a matter of law. 116 A.D.2d 575.