Important New Court Ruling Affirms: It's Legal to Withhold Amenities
The Columbia, Manhattan
Nov. 7, 2014 — If there were ever a doubt about the appropriateness of withholding building amenities from condominium owners in arrears, a recent court decision in New York City lays it to rest — and lays out what a condo board did right in the way it pursued one of the very few pieces of leverage available to compel recalcitrant unit-owners.
It's difficult to say if this is a first, but with no precedent cited other than the Business Judgment Rule, the Oct. 2 decision in The Columbia Condominium v. Ullah may well be a landmark confirming the legality of a common practice.
Farrin Ullah owns the combined apartment 25E/F at The Columbia, the 1983-vintage tower at the northwest corner 275 West 96th Street that helped revitalize the aging and downscale stretch of Broadway around it. The 32-story building's amenities include a gym with a pool, racquetball and squash courts, a roof desk, a garage, a laundry room, a nursery and a community garden.
The board and Ullah agree that she has not paid common charges since 2007. It's complicated, since her divorce settlement from Zahid Ullah, finalized in May 2004, stipulated that the combined units were to be reconfigured back into separate apartments, with Farrin and Zahid each getting title to one. Until that division took place, Farrin got exclusive use and occupancy. Zahid, who initiated the divorce in 2001 after nearly 20 years and three children, would pay both apartments' mortgages, real estate taxes, common charges and homeowner's insurance.
Divorce and Conquer
Zahid, however, doesn't appear to have been very good about making payments, and in 2005 Farrin told a court that if he couldn't cough up what he owed, she was requesting to "be removed as the prime resident immediately. [The husband] is to become the sole responsible parent and I will have to be excused from keeping the children in my home," she said in court papers. Whew. Harsh. And Zahid, lobbing back hard, requested that the court grant him custody of the children and "force the [wife] to get supervised psychiatric treatment."
While all this was happening, no mortgage or common charges were being paid, and the mortgage-holders commenced foreclosure proceedings. Did Zahid have the money to pay? As the court put it in reference to one hearing, he had offered no documentation "as to the disposition of the $1.5 million in liquid assets listed on his net worth statement filed in February 2001. The hearing ended prematurely as a result of the wife's emotional outbursts that culminated in her abrupt departure from the courtroom." It was all still dragging on through at least November 2012.
Lien on Me
Earlier that year, The Columbia's condo board filed a lien of common charges on both apartments. Farrin's response was that it was unclear whether she or her ex-husband owned one of the units, 25F. Judge Cynthia S. Kern of New York County Supreme Court was unimpressed by that argument since, as she wrote in her Oct. 2 judgment for the board, not only do the public records at the Office of the City Register and the Department of Finance show Farrin is the sole owner of 25F, but so does the title-insurance company that performed common-charge-lien foreclosure searches.
Farrin made other claims as well, which is standard procedure, but one them may be novel: that she had a right not to pay common charges because the board withheld building privileges and amenities.
Many condominiums, especially in recent years, have begun using this tactic and forbidding, for instance, access to the pool and to parking. Others direct doormen and concierges not to accept dry cleaning, food deliveries, or messenger or other private delivery services, such as UPS — which, really, is no more a hardship than it is for the million or so New Yorkers who live in non-doorman buildings.
Whoomp! (There It Is)
Did Farrin's defense work? No. As Kern wrote: "Pursuant to a house rule passed by the Board in December 2011, which took effect on January 9, 2012, the Board had the authority to deny Ullah these services based on her failure to pay these common charges. Ullah has failed to establish that the Board did not have the authority to pass this house rule or that the Board acted in bad faith or in a way that did not further the legitimate interests of the Condominium."
And there it is, enshrined now in a court decision: So long as a condo board properly passes a house rule (presumably applying to all homeowners and not just one), it is within its rights to withhold amenities. This almost certainly applies to co-op boards as well, but co-ops have so many other tools to compel a shareholder in arrears. Condominium boards, however, can rejoice — and recode the key-fob to lock the homeowner out of the laundry room.
For more, see our Site Map or join our Archive >>
Photo: PropertyShark.com. Click to enlarge.