Unreasonable Conduct

40 West 67th Street v. Pullman

In this landmark 2003 ruling, the State Court of Appeals upheld a co-op board’s right to terminate a proprietary lease for objectionable conduct by a shareholder. The ruling affirmed that co-op boards are protected by the Business Judgment Rule, which says the courts will not second-guess board decisions, provided they’re made “in good faith and in honest judgment in the lawful and legitimate furtherance of corporate purpose.”

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"If you have a troublesome resident who’s causing havoc in the building, you do have a remedy: you can seek eviction. It causes distress within the building, and it causes uncertainty, but if you follow the rules you can successfully evict the troublesome tenant. The law gives your board the ultimate power to do so, and adhering to the proper procedures may allow you to get rid of this person without going to trial and presenting live testimony by witnesses."

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