A significant—and perhaps not uncommon—problem for co-op boards can come in the form of a disruptive unit owner or tenant. Perhaps the resident has not done any “one” thing that appears severe enough on its own to take action against the tenant but instead has done a series of nuisances over a certain period of time.
How Can Co-op Boards Get Rid of Tenants Who are Nuisances?
Until recently, the legal answer may have been nothing. However, a recent case in New York state court, Haimovici v. Castle Village Owners Corp., Supreme Court, New York County (August 2022), has perhaps outlined a legal pathway for a co-op board to terminate a proprietary lease due to nuisance-like behavior over a longer period of time.
More specifically, the state court held that the business judgment rule can serve as protection over a co-op board’s decision to terminate a tenant’s proprietary lease after a series of objectionable behavior by the tenant where the board gave sufficient warning to the tenant.
In Haimovici v. Castle Village Owners Corp., the tenant plaintiff was seeking a preliminary injunction after the defendant’s co-op board terminated his proprietary lease. The termination came after a series of reported conduct by the tenant, including, on numerous occasions, using profanities toward residents and near children, taking a photo of a three-year-old child when the child had not been wearing pants, harassing residents and building staff, yelling at pregnant women, and threatening residents that he was restraining himself from “break[ing] their heads.”
The court held that the business judgment rule—the common law rule that states that the court will defer to business leadership, including co-op boards, decisions so long as they are made “for the purpose of the cooperative, within the scope of its authority, and in good faith.”
In this case, the court emphasized (and rebutted the defendant’s contention that the board was acting in a retaliatory manner) that the co-op board offered a sufficient warning to the defendant. The co-op board warned and sent letters to the tenant that his behavior was disruptive and stated that should he fail to change his conduct, action may be taken; the board also held a special meeting in which the board voted to terminate the lease—one where the plaintiff was able to present his case to the board.
The combination of a repeated and documented series of conduct by the tenant and the sufficient warning provided to the tenant by the board led the court to follow the business judgment rule and not second guess the co-op board’s decision to terminate the proprietary lease.
The Takeaway for New York City Co-Op Boards
A long and documented history of objectionable behavior by a tenant leaseholder combined with the board’s sufficient warning and time (such that the tenant may change her behavior but does not) is likely strong grounds to terminate a proprietary lease—and afterward, be protected in state court by the business judgment rule.