Can Co-op and Condo Boards Recover Attorneys’ Fees When Their Decisions Are Challenged?

A New York Co-op & Condo Board’s Guide to Attorneys’ Fee Recovery

Protecting a cooperative or condominium’s finances begins well before a board decision is challenged in court. When a board enforces rental restrictions, reviews a purchase application, or addresses alterations affecting common property, its governing documents should be examined for both the authority to act and the right to recover the legal expenses of enforcement or defense.

Even a co-op or condo board that prevails can leave the building responsible for substantial attorneys’ fees. Those expenses compete with repairs, maintenance, and other obligations to the community. Boards can better prepare by working with counsel to identify gaps in existing provisions, determine which agreements require revision, and follow the procedures necessary to preserve a potential claim for reimbursement.

Co-op and condo board disputes before New York courts show how the language of governing documents and related agreements can determine whether a building recovers its attorneys’ fees. Woods Lonergan’s recent representation of a Brooklyn cooperative community provides one example.

How Did the Auction Terms Protect the Cooperative’s Right to Attorneys’ Fees?

In September 2026, Woods Lonergan’s co-op and condominium practice group represented the Brooklyn cooperative in an appeal arising from a co-op foreclosure auction. The bidder had submitted an incomplete purchase application, failed to cure identified deficiencies, and sued the cooperative for breach of contract.

In Druzhinsky v. Trump Village Section 4, Inc., 2026 NY Slip Op 05164 (2d Dept 2026), the firm secured reversal of a six-figure judgment against the cooperative, dismissal of the bidder’s complaint, and a ruling establishing the cooperative’s entitlement to reasonable attorneys’ fees under the terms of sale. The matter was remitted to Supreme Court, Kings County, to determine the amount of reasonable attorneys’ fees.

In that case, the auction terms required the bidder to submit a complete purchase application within five days. The transfer agent identified missing authorizations and financial documents in writing, but the bidder did not correct the deficiencies. That record supported the cooperative’s defense. The terms of sale also provided for reimbursement of the cooperative’s attorneys’ fees if the bidder sued it over the auction or sale.

The distinction matters when boards review their own agreements. Purchase requirements, alteration conditions, and other obligations may be clearly stated, yet the documents may say little about who pays when enforcement or defense requires legal work. Counsel and the board should examine whether the applicable provisions address both the obligation and the legal expenses arising from a dispute over it.

The cooperative’s appellate victory offers a useful lesson for boards reviewing their own agreements: the provisions supporting the board’s decision and those supporting reimbursement of its legal expenses serve different purposes.

The application requirements and written record supported the cooperative’s defense. A separate provision in the auction terms established its right to reasonable attorneys’ fees. Boards should examine their agreements for both protections before a dispute arises.

Read more about Woods Lonergan’s appellate victory for the Brooklyn cooperative.

When a Condo Board Stops a Violation but Cannot Recover Attorneys’ Fees

A different outcome in Board of Managers of the 207-209 East 120th Street Condominium v. Dougan, 2022 NY Slip Op 31491(U), shows how costly a gap in fee protection can be for a building. Here, the board obtained an injunction against unauthorized short-term rentals, but in a May 4, 2022, ruling, Supreme Court, New York County, denied its renewed request for a default judgment on its attorneys’ fee claim.

The board sought $37,741.85 in fees and expenses. The bylaws allowed the board to take legal action to stop a violation and recover certain expenses of correcting it. But permission to bring a lawsuit did not establish that the owner had to pay the board’s attorneys’ fees. Nor did language covering the cost of correcting a condition necessarily cover the legal work required to obtain a court order. Even though the owner failed to answer the lawsuit, the board still had to establish a right to recover those fees under the bylaws.

As discussed in our earlier analysis of the decision, a board’s authority to enforce a restriction does not necessarily carry with it the right to recover the attorneys’ fees incurred in doing so.

The gap in fee protection may lie in what the documents mean by “costs.” Paying to correct a condition and paying an attorney to obtain a court order are different expenses. A provision covering the first should not be assumed to cover the second.

Dougan is a trial-level decision, rather than binding appellate authority. Its value for boards is concrete: a provision addressing removal of an unauthorized structure or correction of a condition should not be assumed to cover the attorneys’ fees incurred obtaining a court order.

For boards, the question is specific: if an owner violates the building’s rental or alteration rules and legal action becomes necessary, do the governing documents authorize recovery of the fees incurred in enforcing those rules? The ability to stop the violation and the ability to recover the cost of doing so must each have support in the applicable provisions.

What Should Co-op and Condo Boards Review with Counsel Before Enforcement?

New York ordinarily leaves each party responsible for its own attorneys’ fees unless an agreement, statute, or court rule authorizes recovery. Winning the underlying dispute does not itself establish a right to reimbursement. Courts closely examine contractual claims: in Sage Systems, Inc. v. Liss, 39 NY3d 27 (2022), the Court of Appeals rejected reliance on broad indemnification language that did not establish the required clear intent to cover litigation between the contracting parties.

The presence of the words “attorneys’ fees” somewhere in a document is therefore only the beginning of the inquiry. Counsel and the board should review the following before a dispute arises:

• Which document provides the right to recover fees? Is the attorneys’ fee provision in the proprietary lease, condominium bylaws, auction terms, alteration agreement, or another contract? Does that document govern the dispute the board is facing?
• Which disputes does the provision cover? Does it authorize fees only for collecting unpaid maintenance or common charges, or also for enforcing rental and alteration restrictions? Does it cover the cost of defending a lawsuit challenging a board decision?
• Who must pay, and who can recover? Do the applicable provisions require the shareholder, unit owner, auction bidder, or other contracting party to pay attorneys’ fees? Do they give the cooperative or condominium the right to recover those fees in the dispute at hand?
• What must happen before the building can recover fees? Does the provision require the building to prevail in litigation, or does it cover legal expenses incurred because an owner breached a lease or bylaw obligation? Counsel and the board should identify the applicable trigger and any required notices or opportunity to cure. A board should not assume that incurring legal expenses is enough to make them chargeable to the owner.
• Which legal expenses do the provisions cover? Do they cover investigating a violation, preparing a default notice, and negotiating compliance before a lawsuit is filed, or does recovery depend on commencing an action or proceeding? Counsel and the board should also examine coverage during litigation and on appeal, and whether the provisions expressly authorize the additional fees incurred in establishing or collecting a fee award. A right to recover fees in the underlying dispute should not be assumed to cover the cost of pursuing the fee award itself.

An attorneys’ fee provision should identify who must pay, who may recover, and the specific disputes and legal expenses it covers. Counsel and the board should also examine the conditions for recovery and whether the language covers work before a lawsuit is filed, during litigation, on appeal, and in pursuing a fee award.

Documents to assemble for counsel’s review

• Current governing documents and amendments, including the declaration or certificate of incorporation, bylaws, proprietary lease where applicable, and relevant rules.
• Agreements governing the matter, such as auction terms, alteration agreements, commercial leases, sublease consents, or access agreements.
• The written record: notices and proof of delivery, management correspondence, approvals, and any pleadings or prior orders.

These questions also inform settlement decisions. A potential fee claim can affect the economics of a dispute, but entitlement, the reasonable amount, and actual collection remain separate considerations.

A fee provision may cover the cooperative’s defense costs only when the dispute arises from a shareholder’s breach of the proprietary lease. If a shareholder challenges a board decision without breaching the lease, that provision may not require the shareholder to reimburse the cooperative, even if the cooperative successfully defends the lawsuit.

In Dupuis v. 424 E. 77th Owners Corp., 32 AD3d 720 (1st Dept 2006), a shareholder sued over neighboring noise and the cooperative’s alleged failure to address it. The First Department rejected the cooperative’s fee claim because the clause required a shareholder default, and none had been alleged. The practical inquiry is whether the event that triggers fee recovery actually occurred, not simply whether the board incurred legal expenses.

Can a Co-op or Condo Board Win Part of a Case Without Recovering Fees?

Yes. Where recovery depends on prevailing-party status, the court considers the central relief sought and the overall result. Success on one significant issue does not necessarily establish that the board prevailed for purposes of the fee provision.

In Gordon v. 476 Broadway Realty Corp., 248 AD3d 684 (1st Dept 2026), the cooperative obtained possession, but the shareholders also secured substantial maintenance abatements for prolonged leaks. The First Department concluded that neither side had prevailed overall and therefore denied the cooperative’s request for prevailing-party attorneys’ fees. A smaller abatement might not have prevented recovery, but the shareholder’s relief here was significant enough to affect the outcome.

For boards, the practical question is how the competing claims could affect the financial outcome. Counsel and the board should assess the likely outcome of the case as a whole before relying on fee recovery to justify further litigation. Success on the board’s principal claim may not secure reimbursement if the owner also obtains substantial relief. That possibility should inform both the litigation budget and settlement discussions.

How Can Co-op and Condo Boards Add or Strengthen Attorneys’ Fee Provisions?

Boards should work with counsel to review their governing documents and related agreements for gaps in attorneys’ fee protection. Counsel can recommend provisions addressing the cost of enforcing obligations and defending board decisions, identify the appropriate documents to amend, and guide the board through the approvals required to make those changes effective.

The amendment process depends on the building’s ownership structure:

• Condominiums. Real Property Law §339-v addresses required bylaw contents, including the method of amendment; it does not itself authorize fee recovery. Counsel and the board should review the declaration and bylaws together to determine the necessary owner vote, any additional consents, and recording requirements.
• Cooperatives. Counsel and the board should review the proprietary lease, bylaws, and certificate of incorporation to identify the appropriate amendment procedure and required approvals.

A board should not assume that adopting a resolution or adding an attorneys’ fee provision to the house rules creates an enforceable payment obligation. If the change requires an amendment to the proprietary lease or bylaws, the applicable voting, consent, and other amendment requirements must be followed.

The drafting should respond to the identified gap. A collection provision may need to address enforcement of rental or alteration restrictions. An agreement covering the initial lawsuit may need separate consideration of appeals or the legal work required to obtain a fee award. The language should state the intended protection clearly and remain consistent with the rest of the building’s documents.

Broader language is not always stronger protection. In Kasowitz, Benson, Torres & Friedman, LLP v. JPMorgan Chase Bank, N.A., 237 AD3d 499 (1st Dept 2025), the court found a residential proprietary-lease provision unenforceable as unconscionable. The provision required shareholders who sued the cooperative to pay its defense costs without conditioning that obligation on a shareholder’s lease violation or whether the lawsuit had merit. Counsel and the board should distinguish enforceable fee protection from language that improperly burdens a shareholder’s right to bring a legitimate claim.

Can a Co-op’s Fee Provision Require It to Pay a Shareholder’s Attorneys’ Fees?

A cooperative’s attorneys’ fee provision can protect its right to reimbursement while also creating an obligation to pay a shareholder’s legal fees. Where Real Property Law §234 applies, a qualifying fee provision in a residential proprietary lease can support a shareholder’s recovery of reasonable attorneys’ fees in two circumstances:

• The shareholder successfully defends a qualifying action or proceeding brought by the cooperative arising out of the lease.
• The shareholder incurs qualifying legal expenses because the cooperative failed to perform its own obligations under the lease. This exposure can arise when the shareholder brings the claim.

A fee provision intended to protect the cooperative can also benefit a shareholder. Where Real Property Law §234 applies, a shareholder who successfully defends a qualifying proprietary lease dispute may recover attorneys’ fees from the cooperative. Boards should consider that reciprocal exposure when evaluating enforcement and settlement.

In Southgate Owners Corp. v. Esposito, 247 AD3d 553 (1st Dept 2026), the cooperative sought maintenance payments based on a retroactive allocation of additional shares. But the proprietary lease permitted maintenance on those shares only from their issuance. The First Department rejected the cooperative’s claim and upheld the shareholder’s entitlement to attorneys’ fees under Real Property Law §234. The lease language defeated the cooperative’s demand, while its fee provision supported reimbursement of the shareholder’s defense costs.

For boards, the lesson extends beyond whether a fee clause is reciprocal. Before pursuing a claim, counsel and the board should consider:

• Does the lease support the specific demand? Authority to allocate shares or collect maintenance does not necessarily authorize the particular charge or period claimed.
• What would an unsuccessful claim cost the building? The exposure may include both its own legal expenses and the shareholder’s recoverable fees.
• How should that exposure affect settlement? A proposed resolution should be evaluated against the realistic financial outcome of continued litigation, including potential liability for the other side’s fees.

Attorneys’ Fee Protections for Co-op and Condo Boards in Mixed-Use Buildings

Commercial space can bring a board into disputes over how premises are used, what work is permitted, who maintains shared systems, and who pays when obligations are not met. The board may need to act even when it has no lease with the business occupying the space. Fee recovery depends on identifying who owes the obligation to the building and which agreement makes that party responsible for the related legal expenses.

Counsel and the board should distinguish among three common arrangements:

• A separately owned commercial condominium unit. A board may pursue the unit owner over unauthorized work or damage to common areas, or face a claim challenging its restrictions on the commercial space. If a tenant operates the business, counsel and the board must identify whether the relevant obligations belong to the owner, the tenant, or both. They should then examine the declaration, bylaws, and any alteration or consent agreement for provisions covering the condominium’s costs of pursuing or defending that dispute. A fee clause in the commercial lease may protect the unit owner as landlord without giving the condominium a right to reimbursement.
• Commercial space held through cooperative shares. When a dispute concerns a business operating in the space, counsel and the board should examine the proprietary lease, any sublease, and consent agreements to identify the shareholder’s responsibilities and any obligations owed directly by the occupant. The review should also determine whether the cooperative can recover the costs of pursuing or defending the particular claim.
• Space leased directly by the cooperative. Here, the cooperative acts as the commercial landlord. Counsel and the board should review the lease, riders, amendments, and any guaranty to determine who is responsible, which notice and cure requirements apply, and whether fee provisions cover the cooperative’s enforcement or defense costs.

For example, a commercial tenant’s renovation may damage a shared building system. The condominium’s right to require repairs does not necessarily establish its right to recover attorneys’ fees from either the unit owner or the tenant. The governing documents and any alteration agreement must be examined separately for each party’s obligations and the expenses covered.

Before pursuing a commercial property dispute, counsel and the board should establish both the basis for requiring compliance and the basis for reimbursement. Counsel and the board should also check whether the governing documents or applicable agreements expressly permit the commercial use, access, or alterations at issue. Those rights may affect whether the board has a valid claim. Fee recovery requires a separate review: in a purely commercial lease, a provision allowing the landlord to recover attorneys’ fees does not automatically give the tenant the same right under Real Property Law §234.

Counsel to Co-op and Condo Boards: Governance, Transactions, and Litigation

Every legal dollar a board spends is accountable to the community. Reviewing fee provisions before a claim arises is part of the steady governance work that helps a building prepare for larger disputes. When litigation becomes necessary, the same review connects the board’s objectives with the available remedies, likely expense, and practical prospects for reimbursement.

For more than 30 years, Woods Lonergan has served cooperative and condominium boards across the New York metropolitan area, from pre-war buildings to new construction. Our partner-led counsel is calibrated to each building’s needs, with coordinated governance, transactional, and litigation support. We advise boards on document review and amendments, handle transactions, and defend board decisions through litigation and appeal, with an emphasis on attentive service and sensible, transparent billing.

Woods Lonergan is ranked by Chambers USA: Spotlight New York for Real Estate and Litigation: General Commercial, and the firm’s lawyers are recognized by The Legal 500 United States (New York Elite: Commercial Disputes), Martindale-Hubbell (AV Preeminent), and Super Lawyers. Our attorneys’ commentary on co-op and condo governance has appeared in The New York Times, The Washington Post, Brick Underground, Habitat, and The Cooperator.

Our work includes:

Co-op and Condo Board Governance and Transactions

Disputes, Litigation, and Appeals

If you are a co-op or condo board member with a governance question, an upcoming transaction, or a dispute to address, contact us for a confidential consultation.

Further Questions on Attorneys’ Fees and Board Governance

Can a co-op or condo board charge an owner’s account for attorneys’ fees before a court awards them?

In some circumstances, the governing documents permit an assessment before a court determines entitlement. But recording the charge does not establish that the owner owes it. In Board of Managers of Amherst Condominium v. CC Ming (USA) Ltd. Partnership, 17 AD3d 183 (1st Dept 2005), the bylaws allowed an assessment before a judicial determination, while the owner retained the right to contest the alleged breach supporting it. Before directing management to post a charge, counsel and the board should confirm the contractual basis, required notices, and whether the proposed collection method is authorized.

How do courts determine the amount of attorneys’ fees a board can recover?

Courts evaluate the reasonable value of the legal work covered by the applicable fee provision or other authority, rather than automatically reimbursing the board’s invoices. Relevant considerations include the time reasonably spent, rates, complexity, and results obtained. Billing records should explain the work and its connection to covered claims; litigation involving both covered and uncovered claims may require allocation. For budgeting purposes, the board should distinguish what it owes its attorneys from what a court may require the opposing party to reimburse.

How should co-op and condo boards address attorneys’ fees in a settlement?

The settlement should expressly resolve the fee claim or preserve it for a later determination. Counsel and the board should decide whether fees are included in the overall payment, paid separately, left for the court to determine, or waived by each side. The release and dismissal documents should reflect that choice. A board should not accept a settlement amount on the assumption that it can pursue additional fees afterward; that expectation needs to be addressed in the agreement before it is signed.

Can a board strengthen its fee provisions after a dispute has begun?

A board can consider amendments during a dispute, but should not assume that new language will cover the existing claim or expenses already incurred. Counsel and the board must examine amendment authority, required approvals, effective dates, and the effect on existing contractual rights. Improving protection for future disputes is different from establishing entitlement in the current one. The board should budget and evaluate settlement based on the provisions that actually govern the pending matter, rather than anticipated amendments.

Does a board’s attorneys’ fee provision cover an appeal?

It may, depending on the provision’s scope and the law governing the claim. Counsel and the board should assess whether the language reaches appellate work, whether the board must remain the prevailing party, and how the appellate result could affect entitlement. An award for work in the trial court does not, by itself, establish the amount recoverable for an appeal. Before pursuing or defending an appeal, the board should budget for that work separately and assess the basis for seeking reimbursement.

Can a board recover the additional legal expense of obtaining or collecting a fee award?

Not automatically. Preparing a fee application, litigating the amount, and pursuing payment can generate additional expenses beyond the underlying dispute. Recovery of those expenses, often called “fees on fees,” requires its own support in the applicable contract or statute; a general reference to attorneys’ fees should not be assumed to cover every stage. Counsel and the board should assess the particular work, governing language, and relevant decisions before budgeting for recovery. The likely additional expense and practical prospects of collection should also inform whether to negotiate the fee claim.

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