May condominium unit-owners stop their board from permitting a cell tower to be installed on the roof of their building? The answer was yes in a recent decision in White Plains, N.Y., where the court found that a condo's bylaws did not permit the board to enter into a cell tower lease because the tower was not "incidental" to the residential use and occupancy of the building, as required by the bylaws. It's an instructive study in how the concept of "incidental use" helps balance issues between unit-owners and the board.
In Kaung v. Board of Managers of Biltmore Towers Condominium Association, Rose Kaung and other residents sought a court order to prevent the construction of cell towers on the roof of the building. They sued the condominium, individual board members, and MetroPCS New York, which had entered into a 25-year lease with the condominium allowing Metro to erect and maintain eight cell towers there.
The residents contended that, based on provisions found in the governing documents, the board was without authority to enter into the lease without the approval of a majority of the unit-owners. They argued that the lease involved a commercial use of the roof and thus violated the governing documents, which required the board to maintain the residential character of the condominium. Indeed, the documents provided that "the common elements shall be used only for the furnishing of services and facilities for which they are reasonably intended and which are incident to the use and occupancy of units."
Conversely, Metro asserted that, in connection with its federal license to provide advanced wireless services to the public in the greater New York area, it had invested millions of dollars and had plans to construct 10 rooftop wireless sites within White Plains. Metro contended that the site was essential to providing the services Metro is obligated to provide. The company submitted the minutes from the December 6, 2007, board meeting where the board resolved to allow the cell towers to be installed.
According to Metro, the only issue now was whether wireless services were "incident to" residential uses of units, under the bylaws. Metro claimed that the cell tower was as incidental as were landlines and cable services, which were already in the building.
The board, for its part, asserted that it was within its rights to enter into the lease since the board had previously entered into leases, involving the common elements, that generated revenue — for washers and dryers, rooftop XM Satellite Radio antennas and an agreement with Verizon FiOS for that Internet/phone/TV service's equipment to be installed in common areas.
The board argued that its decision was also protected by the Business Judgment Rule, and that it was within the board's province to determine, under the bylaws, whether the placement of the cellular towers was "reasonably suited and ... incident to the use and occupancy of units." According to the board, the antennas were reasonably suited for placement on the roof since the roof already housed similar items (e.g., air conditioner towers, roof antenna, elevator equipment room, roof fans); the roof had not been used for residential purposes; and residents were not permitted on the roof.
The board insisted that the condominium's house rule seven specifically addressed the authority of the board to approve the placement of the cellular tower on the roof, since it provided that "No ... radio or television aerial shall be attached or hung from the exterior of the Building ... except as shall have been approved in writing by the Board of Managers or the managing agent or the manager, which approval shall not be unreasonably withheld...." To support its decision that the lease would be incident to the residential use of the buildings, the board argued it would generate more than $270,000 in revenues.
An Irrelevant House Rule
The court explained that the bylaws were a contract between the unit-owners and the board. Thus, the provisions of the bylaws controlled whether the board had the authority to enter into the lease. The court did not agree with the board's claim that the board was empowered to enter into the lease by house rule seven. That rule regulated the behavior of unit-owners by preventing the marring of the exterior appearance of the building by a plethora of aerials protruding from the residents' windows. That was unrelated to whether the board could allow installation of a cell tower.
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