Coop and Condo Board's Secret Litigation Weapon

New York Law Journal (NYLJ)

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PUBLISHED ON: June 22, 2020


Lawsuits from cooperative share¬holders and condominium unit owners opposing their boards’ conduct have become commonplace. When confronted with such challenges to their authority, boards, of course, may defend their position on the mer¬its, or they may seek legal vindication under the Business Judgment Rule.

Lawsuits from cooperative share¬holders and condominium unit own¬ers opposing their boards’ conduct have become commonplace. When confronted with such challenges to their authority, boards, of course, may defend their position on the merits, or they may seek legal vindi¬cation under the Business Judgment Rule.

However, pitched legal battles of this nature, which often entail costly and protracted litigation over hotly con¬tested factual issues, tend to plunge a residential community into civil war and impede a board’s overall ability to manage building affairs.

Fortunately, boards in New York have a little known but widely effective alternative for defending their conduct while averting communal fratricide. Most lawsuits challenging the propriety of decisions by cooperative and condominium boards are subject to a four-month statute of limitations in accordance with CPLR Section 217 (1). As a practical matter, by the time an aggrieved owner decides to sue, procures counsel, and prepares and files the summons and complaint, the four-month statute of limitations may well have elapsed. Thus, only the swiftest acting plaintiffs can sidestep a solid statute of limitations defense. By filing a procedural motion to dismiss rather than defending on the merits or asserting a substantive Business Judgment Rule defense, a board may avert a costly public conflagration......