Co-op Boards Must Follow Legal Steps to Address Objectionable Conduct

SERIOUS NUISANCE. Getting along with your neighbors is key when living in a co-op community, but sometimes things go off the rails. When there are complaints about a shareholder’s behavior, there are concrete steps boards must take to address the situation. The first is to document the problem by assembling a paper trail of complaints, cell phone videos or audio, and witnesses, including building staff. Most objectionable conduct cases involve a resident or shareholder causing a problem in their hallway or adjacent apartments, so you want to reach out only to people who are directly affected. In situations where the behavior spills into common areas like the lobby or pool, you want to contact everybody in the building to assemble evidence. 

ISSUING A WARNING. Once a complaint is documented, the board has to decide whether the behavior in question truly constitutes objectionable conduct and action needs to be taken. Assuming the evidence is compelling, boards should turn the matter over to their attorney, who will send a formal notice to the offending shareholder saying the conduct must cease; otherwise, steps will be taken to terminate their proprietary lease. If the conduct continues after the written notice, a board hearing is scheduled where both sides present their case and witnesses may testify. While some co-ops require a majority shareholder vote on whether the conduct is indeed objectionable, that can usually be decided by a majority of the board. Either way, if a majority favors termination, the next step is filing for eviction.

LEGAL TIMETABLE. Proceedings in landlord-tenant court typically take several  months. But with objectionable conduct, co-ops can file for an immediate motion for summary judgment, because case law  — specifically, the Pullman decision — states that as long as boards have followed all the legal steps in their proprietary lease, including serving notices, conducting hearings, and making an unbiased decision, courts will not second-guess those good-faith decisions under the business judgment rule. The court will issue an eviction warrant. If the person doesn’t get out, they are forcibly removed from the property. 

THE TAKEAWAY. It’s important for co-op boards to understand that, while it’s challenging to deal with a problematic shareholder, there are clear and legal processes to handle these situations. The most common mistake is to not follow all the requisite notice requirements in the proprietary lease. Proper notices have to be sent, either by certified or registered mail or both. A property hearing must be held with someone recording the proceeding so there are no questions about what actually took place. If boards follow all the protocols according to their governing documents and make a good-faith that a shareholder’s lease should be terminated, the courts will uphold the motion for summary judgment and give boards the relief they're seeking. It should be a slam-dunk case.