Shareholders Face Eviction for Objectionable Behavior in New York City Apartments

Apartment living in New York City has its own set of challenges, with residents living in close proximity and sometimes crossing paths in ways that lead to friction. In most proprietary leases, there’s a conduct clause stating that if there is repeated objectionable behavior by a shareholder or by a guest of a shareholder, then either the board or other shareholders can take action.

BALANCING ACT  When complaints about objectionable conduct arise, the first step is to make sure the proper notices are given. Generally before it even gets to counsel, management or the board will send a letter or email asking for the behavior to stop. The more notices in writing the better, but be sure you are being reasonable in your approach to the problem. We typically give a 30-day notice to the shareholder and explain in great detail everything that's going on and how their behavior is adversely affecting the building. During that time, we’ll monitor the situation.

NEXT STEPS  If the objectionable conduct continues, we’ll call a special meeting for the board. We often invite the shareholder, explaining that they are welcome to bring counsel and that we want to hear their position on these allegations. At the meeting, we let the person tell their side of the story, giving them as much time as they need to answer. Then we excuse the shareholder from the meeting and continue the discussion with the board on how it wants to go forward. If the shareholder’s answers weren’t sufficient and the board doesn't think they've corrected the problem, we'll have the board take a vote on eviction. I always like to see a unanimous decision in these cases, but the governing documents often say two-thirds is enough. 

THE PROPER PROCEDURE   We had a court case recently that illustrated the complexity of this issue. A shareholder was harassing the staff in various ways — bringing frivolous lawsuits, creating noise problems, having board members followed, creating confrontations. There was also an extermination business being run out of the apartment with chemicals being delivered in bulk to the building. In this case, we had the letters and emails sent to the shareholder, we had a board member willing to testify. We went through the whole process step-by-step. It came down to the reasonableness of the board, how much notice was given and how many opportunities were provided to correct. The shareholder didn't even appear at the meeting we called to give her side of the story. We quickly received the judgment of possession and served the papers. There was a subsequent appeal, which we won, and we were actually able to evict her from the apartment. 

BOARD PROTECTIONS  In cases like this, boards are covered by the business judgment rule, which shields board members from liability if they are acting in good faith and in the interest of shareholders. Once the board votes to evict, a notice of termination is sent to the shareholder. The ultimate goal in these cases is termination of the proprietary lease and the eviction of the shareholder, which is a very, very extreme situation. The courts don't take these types of cases lightly. They look for every opportunity to side with the tenant shareholder to keep them in their apartment.