New York's Cooperative and Condominium Community

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Co-ops and HOAs Are Democracies. They Run on Laws.

New York City

HOAs, co-op boards, governing documents, business judgment rule.
Dec. 4, 2023

The board at a homeowners' association (HOA) on Long Island has mandated that residents allow an outside inspector onto their properties to determine the condition of building exteriors and windows. If deficiencies are found, owners will be given time to correct them — then fined if they fail to do so. Since the HOA's governing documents already provide a mechanism for dealing with obvious signs of neglect, do owners have to comply with the board's mandate? And is it legal in New York?

The articles of declaration and bylaws for your HOA will state which actions are within the board’s power, replies the Ask Real Estate column in The New York Times.Homeowners’ associations, like housing cooperatives, have elected boards that have a fiduciary duty to members and are charged with putting members’ interests first and acting in good faith. Boards often have wide authority to carry out their duties, depending on what is contained in the community’s governing documents. In many homeowners associations, the bylaws state that exterior maintenance, including window repair and replacement and weatherproofing, is the responsibility of each homeowner.

Under New York law, a board’s decision to conduct a community-wide exterior inspection, and to hire an outside vendor to conduct it, will be protected by the business judgment rule, says Nancy Kourland, a partner at the Lasser Law Group. That means that as long as the decision to inspect was made for legitimate corporate purposes, was authorized by the bylaws, was applied to all homeowners equally and was made in good faith, the courts will not intervene and second-guess the board's action. “Here," Kourland says, "it appears that the board is well within its authority to hire a professional inspection company to assist it in performing community-wide inspections of all exteriors.”

Homeowners who dispute the inspector’s findings could hire their own inspector and use that report as a negotiating tool with the board over the scope of the repairs.Even if you find that the board does not have the authority to mandate these inspections, however, you must decide whether you are willing to fight it, says Andrew Lieb, the managing partner at Lieb at Law, who handles real estate litigation. Complying with the inspections will likely save you thousands of dollars on a potentially expensive and lengthy legal battle.

The bottom line: HOAs and co-ops are democracies, and when you buy into one, you're agreeing to subject yourself to the governing documents — and the occasional intrusions that come with them. It's called the rule of law. "You're signing up for it," Lieb says. 

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