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They cannot charge you for their own legal fees unless they have prevailed in a court action. Just thought I should remind people of this.
Join the Conversation Comments (2)It does not relate to my point.
I apologize. Could you restate your point so I get it? Maybe offer an example?
Thanks.
No apology is necessary but I don't want to confuse readers.
This concerns legal fees being art arbitrarily placed on a shareholder maitenance statement that are otherwise the responsibility of the coop - fees that may relate to issues concerning that specific apartment but are not because of an actual default with a court determination. Thsi could otherwise lead to abuse and misuse by the coop. If a shareholder consults an attorney because they have a bad board or the coop is discriminating against them or that are being harassed by staff, etc. then those fees are the responsibility of the shareholder. Unless the shareholder commences a full court action and prevails.
"The general rule in New York is that each party to a litigation is responsible for its own legal fees, unless otherwise provided by statute or contract. The typical co-op lease’s reimbursement clause limits the coop’s recovery to reasonable attorneys’ fees and disbursements incurred in instituting an action or proceeding based on a default by the shareholder, or while defending or asserting a counterclaim in a proceeding brought by a shareholder.
Unless the recovery of attorneys’ fees and disbursements is specifically provided for in the lease clause, courts have held that a co-op does not have a right to recovery. It is common for a board to incur legal fees relating to a shareholder default or a violation of a lease without ever beginning any legal action. Legal fees for consultation with counsel, preparation of demand letters, and counsel’s communication and negotiation with a shareholder or a shareholder’s attorney may all occur before a lawsuit begins. However, these pre-litigation fees and costs are not recoverable under the standard lease provision.
There are also legal disputes that do not involve defaults and may not even necessarily arise from a shareholder’s wrongdoing. Unfortunately, boards are not able to recover legal fees for these either under the standard lease provision.
Even if legal fees are incurred in a litigation, and even if they arise from a shareholder’s default, New York courts require that the co-op be the prevailing party in the proceeding in order to recover legal fees. This requires the successful party to win on the central claims in the litigation in order to obtain substantial relief, even in a settlement."
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If a co-op incurs legal fees during the normal course of their operations, and the board votes a onetime assessment in the amount of those legal fees, I believe the board has the authority to collect the pro-rata amount of the assessment from each unit in the form of a debit on the monthly maintenance invoice.
Prevailing or not in the legal action has no effect on the board's power to authorize and collect an assessment.
If your Proprietary Lease says different, the board must follow the terms of the lease.
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