Monthly Archives: January 2018

Copyright by, and republished with permission of, Habitat Magazine.

The rise of online shopping and the accompanying decline of brick-and-mortar retail stores is a trend that’s threatening a lot of people. Among them are co-op and condo boards who have commercial space in their buildings.

Boards have responded to rising vacancies in commercial spaces in a variety of ways – by signing 99-year leases with investor groups, by lowering rents, by welcoming once-shunned tenants such as restaurants, gyms or bars. Regardless of how they deal with the changing retail climate, though, boards need to realize that big money is at stake when a commercial lease runs out.

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Copyright by, and republished with permission of, Habitat Magazine.

Many members of co-op and condo boards sleep well at night because of the Business Judgment Rule. It shields boards from second-guessing and legal challenges – provided they act in good faith and in the lawful and legitimate furtherance of a corporate purpose. But boards need to remember that the protections of the Business Judgment Rule have limits. This shield can be turned into a sword.

Two recent decisions by a New York appellate court illustrate the yin-and-yang nature of the Business Judgment Rule. In the first case, Gail Koff demolished an interior wall without authorization while combining two apartments in the Washington Irving Condominium in Harlem. When the condo board found out about the renovation, it required Koff to hire a civil engineer to assess the impact of removing the wall, and it assessed a fine of $1,500. But it did not require Koff to reinstall the wall. Rebecca Barber and Craig Hartbought Koff’s apartment in 2004. Continue reading →