Trouble at the Top

Not a done deal. I was involved in a key case where a condo board had signed leases with two different companies allowing them to put cellphone towers on the roof without notifying the unit-owners in advance. A group of them banded together and brought a lawsuit seeking to rescind the leases, claiming that the condo’s governing documents did not allow the board to enter into the agreements. Indeed, the court found that the board had acted outside the scope of its authority because the condo had no commercial units, and that absent approval from the owners, none of the building’s space could be changed from residential to commercial.

A different scenario. That was more than 10 years ago, and since then there’s been a legion of similar suits brought against boards. Based on existing case law, boards at buildings that do have commercial tenants — be it a pizza joint, laundromat or what have you — and enter into cellphone tower leases without notifying residents are more likely to be protected by the business judgment law. 

Best defense. But even if your governing documents allow that, boards should notify owners first. It doesn’t involve much additional work, and giving people the opportunity to have their voices heard can prevent a successful lawsuit from angry owners later on. While notifying owners might mean that you have to wait a month or two before signing a lease, it will ultimately head off owner protests that could result in court costs and legal fees. It would be very hard for unit-owners to come in after the fact and say the board did anything wrong.