“The tradition in our co-op has been that all shareholders can offer their apartment for film/TV shoots and the co-op has never indicated otherwise,” a shareholder writes in a recent “Board Talk” online. “There is one large apartment on the first floor that gets almost all filming deals. Recently, an upstairs shareholder was contacted by a location scout and the board president told the scout no upper-floor apartments are permitted [to be used in films] and gave them the first-floor owner’s contact info. Is [that] inequitable?”
“What’s a tradition?” attorney Marc Landis, a managing partner at Phillips Nizer, asks in response. “Co-op corporations are governed by laws and governing documents, and a tradition doesn’t fall neatly into either one.” Attorney Scott Greenspun, a principal at Braverman Greenspun, says that if the proprietary lease, bylaws, and applicable law don’t forbid filming in apartments or require board consent for it, then the board president – or for that matter the entire board – could not block the shareholder from renting out his apartment for a film.
In fact, Greenspun adds, even if board consent were required, a rule that permitted only certain designated apartments to be used for film locations might violate the New York State Business Corporation Law, which requires all shares in a co-op be treated equally.
Greenspun cautions there is little case law in the context of having film/TV shoots in co-op apartments. But given the facts presented by the shareholder, Landis notes: “I don’t see any basis for saying one apartment is allowed and another isn’t. If the president, on behalf of the board, is going to make those kinds of determinations, [he or she] would need a rationale within the confines of the Business Judgment Rule, or it’s subject to legal challenge. There’s no reason for an upstairs apartment shareholder to be deprived of the same opportunity the downstairs shareholder might have.”
Short of a legal challenge, what’s a shareholder’s recourse? Both attorneys suggest taking the question to the other board members first. “Since it shouldn’t be at the board president’s sole discretion, it would make sense for the shareholder to approach other board members, asking if this is a board policy,” says Landis. “If the board member says yes, then the shareholder can take it up with whole board. If no, then it’s a different issue; the president is acting without authority.”
“If there are board members other than the president who are more approachable, [the shareholder] could approach [them],” Greenspun notes. “The shareholder could also try contacting the managing agent for information. While not necessarily less confrontational, the shareholder could make a demand on the managing agent for review of all documents relating to the rules and policies concerning film shoots in apartments.” One thing a board should do, says Landis, is have a formal agreement similar to an alteration agreement. But we’ll save that for a sequel.