Tane Waterman & Wurtzel, Principal
The client’s tale. A co-op and a condo I represent each had to take a hard line and litigate against a shareholder or unit-owner. In both instances, the buildings were faced with stubborn owners who took unreasonable positions. The first was a shareholder who denied the co-op access to his unit during a building-wide bed bug eradication. The second was a condo owner who withheld substantial common charges following minor water damage in his unit. All reasonable offers to resolve their claims were rejected, and both buildings were forced into litigation to enforce their rights. Both boards sought to resolve these problems early on but were stymied by the owners’ unreasonable positions. Both cases went to trial. The court ultimately awarded the condo unit-owner, who represented himself, a very small offset for his damages, but awarded the condo corporation a judgment for nearly all its outstanding common charges. The shareholder in the co-op was found to have acted without justification in denying access. Having found in both instances that the boards acted reasonably, the court awarded both buildings nearly all their legal fees.
The lawyer’s take. When faced with a difficult owner, the board must continue to act reasonably and in furtherance of its obligations under the governing documents. The board, its agents, and its attorneys should communicate with these owners, attempt to reason with them, and explain the owner’s obligations and the harm that their conduct is causing. Owners should be told that further recalcitrance will lead to litigation and the building will seek to recover the fees incurred. If this tactic doesn’t succeed, the board needs to weigh its litigation options. Some boards will not enforce their rights because of their legitimate and substantial concern about incurring heavy legal expenses.
Other boards may discount an owner’s good faith concerns and issues and proceed with litigation on the assumption that they will recover any fees. These boards are sometimes surprised to find that they were denied attorney fee recovery at the end of the lawsuit because they did not even consider the unit-owner’s concerns (or worse, failed to fulfill their own obligations). However, boards that do all they can reasonably do to avoid a fight but are forced to do so because of the owner’s unreasonable positions will often find the court sympathetic to their conduct and will be compensated for their legal fees.
Case closed. Boards should not capitulate to unreasonable demands out of fear of legal expenses. So long as the board acts reasonably (and the governing documents allow), the courts will rule against an owner who is not fulfilling his obligations under the lease, especially when such conduct jeopardizes the health, safety, or welfare of the other owners.