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Authority to Assess Fines and Fees

Cohen v. Board of Directors of 700 Shore Road

In this 2013 ruling, an appellate court stated that a co-op’s $3,000 fine for an illegal sublet was invalid because the board had no authority under the proprietary lease to assess a fee for illegal sublets.The board was also ordered to pay the shareholder’s legal costs.

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"I get asked by clients all the time about ways to enforce the rules that don’t cost a lot in legal fees. And one of the easiest things that a board can do is to fine somebody if he or she is not following the rules. However, what I find a lot in my practice is that boards don’t fine people correctly. And if the fines were ever to be challenged in court, they would be struck down, which is not helpful to the board from an enforcement standpoint. It’s important that boards that are going to turn to fines and fees as an enforcement tool do it correctly."

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