In early spring, the board at a white-glove Upper East Side co-op refurbished the backyard and purchased outdoor furniture. It also laid down rules: children 16 and older are allowed to sit in the garden during appropriate hours and enjoy it in a quiet manner. Children under the age of 16 are prohibited from setting foot in the backyard, even if accompanied by an adult. An alarmed shareholder wrote to the Ask Real Estate column in the New York Times, wondering if co-op boards are allowed to treat residents “differently.”
Lisa Smith, a partner at the law firm Smith, Gambrell & Russell, told the Times the rule legitimately protected the co-op and its shareholders from liability issues.
“I agree with Lisa’s answer,” says Bruce Cholst, a shareholder at the law firm Anderson Kill, “but my personal opinion is that this rule went too far.” Instead, he says, he would have drafted the rule allowing children accompanied by adults to use the back yard, while also reserving the right to restrict anyone who doesn’t abide by a code of conduct. In other words, Cholst worried that the rule, as contrived, could be interpreted as age-discriminatory.
Creating a co-op rule is easy to do. But it must have legal legs to stand on. The regulation known as the Business Judgement Rule gives broad power to boards to make rules as long as they are done in good faith, in a non-discriminatory manner, and in compliance with the law.
Tara Snow, a partner at the law firm Novitt, Sahr & Snow, thinks the backyard rule at the Upper East Side co-op is doomed. “You can’t even have children in there with a parent? How is that safety?” she says, noting that similar rules have been found discriminatory in other states.
Cholst says there’s a way to sidestep the issue of age-discrimination when creating such rules. When one of his clients wanted to prohibit young people from using the gym because of liability concerns, Cholst applied the rule to anyone under 5'-3" tall. He included an addendum that permitted the board to “consider” allowing short adults to use the gym.
“It went fine,” he says. “No one complained.”