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Co-Op Board Co-Opted by Joe Capobianco

October 9, 2014 Posted in: Our Blog

As some of us may have learned the hard way, cooperative boards are like the Wizard of Oz hiding behind the curtain of the “business judgment rule” to justify their sometimes head-scratching decisions. A Manhattan Supreme Court, however, recently held that the proprietary lease trumped the business judgment rule and enjoined a board from barring a resident from making certain renovations to his Park Avenue apartment. The subject proprietary lease provided that alterations such as those contemplated by the resident required the Board’s “prior written consent” which consent could not be “unreasonably withheld.” The court went on to find that the Board failed to fulfill its obligations not to unreasonably withhold consent to the resident’s proposed plans. In a further rebuke to the co-op board, the Court strongly criticized the Board for failing to even seriously consider such plans.

Perhaps, this is the start of a trend by courts to remove a co-op board’s cloak of invincibility?