The bylaws limited the uses to which the common elements could be put, stating: "The common elements shall be used only for the furnishing of the services and facilities for which they are reasonably suited and which are incident to the use and occupancy of the units." The pertinent issue now was whether the use was incidental to the use and occupancy of the units.
The court explained that the word "incident" was defined as "something contingent upon or related to something else" and "incidental" as "of a minor, causal or subordinate nature." Metro argued that it meant "something dependent on or subordinate to something else of greater or principal importance." Metro and the board argued that the cell towers would be incidental to residential use because 17 percent of the property owners no longer used landlines, and the revenues generated by the lease would be used to reduce the amount the unit-owners had to pay toward future maintenance of the common elements.
Revenue Generation Not Automatically an Incidental Use
The court found these arguments without merit. As to the first contention, the only support submitted was an article from The New York Times which itself relied on a Nielsen survey. Further, the 17 percent figure was for American households, not households in White Plains nor households at the Biltmore. More importantly, there was no evidence Biltmore residents were presently unable to use cell phones from their units.
Regarding the second contention, the fact that the lease would generate revenues that would offset future maintenance expenses did not warrant a conclusion that the cell towers were incident to residential use. If that were the case, then any revenue-producing activity anywhere in or on the building would be incident to residential use.
The board's augments based on historical examples fared no better. It was customary for multi-unit dwellings to have a laundry room, the court found, and the board's permission to allow Verizon FIOS to install equipment in the common areas was an incidental, residential use. The installation of a satellite radio receiver on the roof so as to permit residents and those within the receiving parameters of the building to have satellite radio reception was also incidental to residential use. Unlike the existing equipment on the roof, which needed to be within a close vicinity in order for the unit-owners to enjoy the services — and, therefore, incident to residential use — the cell towers did not have to be on the building in order to provide or improve service to the unit-owners.
Ultimately, the court found that Metro's placement of cell towers on the roof, for the purpose of becoming a provider of wireless communications to a vast area of White Plains could not be said to be "incident to" the residential use of the units.
Further, the substantial rental payments that Metro was willing to make to the board in return for its placement of the cell towers combined with the revenues Metro would receive supported the conclusion that the lease was commercial and not incidental to the residential use of the units. Thus, the court concluded that the board did not have the authority to enter into the lease. Notably, the court did not find that the board committed a breach of fiduciary duty, and that the board's acts were not illegal or fraudulent.
Courts look to the precise language of bylaws to establish the rights and responsibilities of the condominium and its unit-owners. Here, the bylaws did not permit the board to enter into a cell-tower lease because the court found that the tower was not "incidental" to the residential use and occupancy of the building, as the bylaws required.
Richard Siegler is a partner in the New York City law firm of Stroock & Stroock & Lavan. Dale J. Degenshein is a special counsel for that firm.
Adapted from Habitat March 2009. For the complete article and more, join our Archive >>
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