Frank Lovece in Legal/Financial on May 31, 2016
A shareholder in a co-op was contacted by a location scout who wanted to rent out his apartment for a film shoot. But the board president told the scout that almost all filming in the building was done in a first-floor apartment – and he gave the scout that apartment owner’s contact info. Was this equitable?
If the proprietary lease, bylaws, and applicable law don’t forbid filming in apartments or require board consent for it, then the board president – or for that matter, the entire board – cannot block the shareholder from renting out his apartment for a film, says attorney Scott Greenspun, a principal at Braverman Greenspun. In fact, Greenspun adds, even if board consent were required, a rule that permitted only certain designated apartments to be used for film locations might violate the New York State Business Corporation Law, which requires that all shares in a co-op be treated equally.
Greenspun cautions there is little case law in the context of having film/TV shoots in co-op apartments. But attorney Marc Landis, a managing partner at Phillips Nizer, notes: “I don’t see any basis for saying one apartment is allowed and another isn’t. If the president, on behalf of the board, is going to make those kinds of determinations, [he or she] would need a rationale within the confines of the Business Judgment Rule, or it’s subject to legal challenge. There’s no reason for an upstairs apartment shareholder to be deprived of the same opportunity the downstairs shareholder might have.”
Short of a legal challenge, what’s a shareholder’s recourse? Both attorneys suggest taking the question to the other board members first. “Since it shouldn’t be at the board president’s sole discretion, it would make sense for the shareholder to approach other board members, asking if this is a board policy,” says Landis. “If the board member says yes, then the shareholder can take it up with whole board. If no, then it’s a different issue; the president is acting without authority.”
“If there are board members other than the president who are more approachable, [the shareholder] could approach [them],” Greenspun adds. “The shareholder could also try contacting the managing agent for information. While not necessarily less confrontational, the shareholder could make a demand on the managing agent for review of all documents relating to the rules and policies concerning film shoots in apartments.”
This controversy could have been avoided. One thing boards should do, says Landis, is write up and adopt a formal agreement, similar to an alteration agreement, that covers the renting of space in the building for TV, film and commercial shoots. Only then will the building be ready for its closeup.
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