When the culture changes at a co-op, so can its tolerance for bad behavior. Andrew Wagner, shareholder at Anderson Kill, walks Habitat through the process.
When the culture changes at a co-op, so can its tolerance for bad behavior. Have you seen this play out?
Yes, I have. We represent a former Mitchell-Lama co-op that was privatized about three years ago. Many of the co-op’s shareholders were low- to middle-income people who had been living there for decades. The co-op had a resident who was sending abusive and nasty letters to board members and other shareholders. Even more egregious, she was so abusive toward the building’s staff that a couple of employees had quit. Eventually it came to a head, and the board finally decided they had to do something.
Why had they been reluctant?
There’s always a reluctance to evict a shareholder, but that’s especially true in affordable-housing co-ops. But now that the building is private, the board has obligations to all their shareholders, including people who had more recently bought apartments, and they had no choice but to commence eviction proceedings.
So with privatization came a whole different sensibility.
Right. The board has to do their due diligence and take into account the value of the apartments and people who are buying into the building, which are considerations that didn’t exist before. It was a cultural shift that occurred.
What happened when the board took action? I understand the shareholder didn't take it lying down.
She's been difficult, to say the least. We started by sending a letter detailing examples of her objectionable conduct – which really goes back decades – and advised her to stop. She continued with her offensive behavior, so we invited her to a special meeting where the board would give her an opportunity to present a defense, witnesses and even a lawyer before making its determination.
Did the special meeting take place?
Before it did we were contacted by Sen. Alessandra Biaggi, who represents the district. The shareholder had reached out to her and asked if she would be willing to step in and help us come to a resolution. We agreed to adjourn the special meeting and have a private, off-the-record talk with the senator, and then we invited the shareholder in on the discussion. Senator Biaggi was extremely helpful. She didn’t take sides, but hopefully she got the message across to the shareholder that this is a community and that in a co-op everyone has to follow the rules.
Where do things stand now?
We're in the process of negotiating a probationary agreement where the shareholder can stay if she behaves. But there has to be a remedy and some sort of accountability if she doesn't. But we're not looking to race to the courthouse. We’re hoping we'll be able to come to a mutually agreeable settlement.
Given the situation, it seems the board has been patient and diplomatic.
They were very conflicted over this. But it's in everyone's interest that the matter be resolved. Housing Court is a difficult place to be, and even if someone doesn’t follow the rules, no one likes to be involved in an eviction process. We’re optimistic, and we’ll see what happens.