Don’t Misbehave

This is a piece about respect. Specifically, about respect for the rights of the residents of a building to “quietly enjoy” their homes. To “quietly enjoy” is a legal right that boards of co-ops and condos are required to enforce. Many have one or more residents who create problems: making noise late at night or early in the morning; disturbing neighbors with their chronic smoking; and, less obviously, not paying their maintenance, common charges, or assessments. Any of these actions can have an adverse effect on the other residents while creating a nightmare for the members of the board who are trying to keep the peace.

These kinds of problems never go away or get easier; if ignored, they will get worse. Some boards do not want to make waves and try to placate the troublemakers, but that just feeds the problem. In these situations, the board must react aggressively. When the bad behavior starts – and continues – it’s a warning sign.

Although cooperatives and condominiums may seem similar, one of the advantages of cooperatives is that the board of directors has the ability to terminate the leases of shareholders who misbehave, cancel their shares, and get them out (sometimes with a required vote of the other shareholders, and sometimes without, depending on the requirements of the proprietary lease). Before the court decision in 40 West 67th Street Corp. v. Pullman, the decision of whether a shareholder’s conduct was objectionable was left to the court to decide, but Pullman changed the law by holding that, under the Business Judgment Rule, the decision of whether the conduct was objectionable should be made by the board of directors.

In the 12 years since the Pullman decision, however, only a handful of shareholders have lost their apartments through the objectionable conduct procedure. That’s primarily because the sending of the notice usually causes the troublesome shareholder to visit a lawyer and learn that, after one more strike, he or she is out. In fact, although my firm may send four or five notices of objectionable conduct a year, we have not had to terminate more than two difficult residents in the last eight years. The objectionable conduct notice seems to solve the problem. The board’s ability to terminate the proprietary lease has apparently caused many difficult shareholders to change behavior.

Unfortunately, there is no objectionable conduct provision available for condominiums. The different nature of the relationship between boards and residents in co-ops and condos prevents an objectionable conduct provision for condos. One way to deal with delinquent or rule-breaking condominium unit-owners is to begin a lawsuit. Unfortunately, litigation is expensive, time-consuming, rarely results in a complete victory, and takes on a life of its own. Sometimes, litigation is necessary but, when it is not essential, it should be the last resort.

Another way of dealing with a difficult owner is by ceasing to provide the occupant of the unit (unless the resident is rent-regulated or a debtor in a bankruptcy) with non-essential services. (This naturally assumes that there are non-essential services that can be curtailed; see the list below.) However, an examination of the services listed below may provide some that are contained in every building. A unit-owner’s access to non-essential services could be curtailed by the board enacting the following house rule:

The following non-essential services will not be provided to those Unit-Owners who (a) are more than sixty days in arrears in the payment of their Common Charges, assessments or other charges, or (b) have violated a House Rule and/or policy twice in the last twelve months; in which case said services will be reinstated upon written request by the resident, but only after management is convinced the violation will not recur. Specifically, the following services will not be tendered to all residents of the Unit, whether Owner or tenant: 1. Housekeeping and/or maintenance requests that are a Unit-Owner’s responsibility (which could have been performed by the staff and billed back to the Unit-Owner as an additional charge) will not be provided. 2. Fax and Xeroxing services will not be provided. 3. Concierge services will not be provided: (a) No visitors, guests, delivery or service people will be allowed beyond the desk unless personally escorted by the resident, nor will the concierge call the apartment to advise them of their arrival. (b) Visitors will have to call from outside the building to announce their arrival. (c) No authorization to enter or to release keys will be honored. (d) No packages or deliveries of any kind (except prescription medication) will be accepted by the concierge. (e) The concierge will not order limousines, make restaurant reservations, or arrange tickets for the theater, or any other form of entertainment. (f) No service calls will be provided to the apartment except for emergencies or essential services.

The board cannot stop providing heat, plumbing, electricity, elevator service, or fire protection without a court order but, except as indicated above, non-essential services do not fall into the same category. Naturally every condominium is different, so there may be specific items available in some buildings that are not included in this list.

If a unit-owner fails to pay common charges and assessments even though he or she is profiting by leasing the unit, the condo can exercise rights under Real Property Law Section 339-kk to collect the rent from the tenant, retain an amount equal to its common charges and assessments, and remit the balance to the unit-owner.