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18 Dec 2014
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CONDO AND COOP RULES OF THUMB: COMMERCIAL UNIT DISPUTES

As a unit owner in a condominium or shareholder in a cooperative building, your focus is usually not on the commercial space on the ground floor.  You might not typically think of the commercial space as a part of your building, but no matter how you view it, the commercial owner can cause quite a bit of grief for residential owners in the same building.  Below, we discuss common issues that result in disputes between residential owners and the commercial owner.

It bears emphasizing that the building sponsor, who typically drafts the offering plan, is the initial owner of all of the units or shares in the building, which includes the commercial space.   Many building sponsors retain ownership of the commercial space, intending to lease it out themselves, and may draft the offering plan to include some beneficial terms for the commercial space.  The sponsor may give, to itself or an affiliate, a sweetheart lease for the commercial space, for a long term at below market rent.

Additionally, the sponsor may write into the offering plan that the commercial space can be used for “any lawful purpose.”  At first glance, this may not seem like a problem, until you stop to consider that “any lawful purpose” may include adult entertainment or a nightclub that unit owners may find distasteful, or a food service establishment that could attract unwanted pests and smells.  An establishment with an otherwise “lawful purpose” may also result in noise and vibration complaints against the commercial owner.  Regardless of whether the noise level is normal for a particular category of business, if the residential owners are exposed to it constantly, they will deem it unacceptable.

Another frequent point of dispute relates to unclear language in governing documents on whether certain parts of buildings are intended for commercial or residential use, like the basement or garage space.  Relatedly, a sponsor that tries, belatedly, to incorporate part of the building’s common space into the commercial space will likely face backlash.

In the face of all of this, a building’s board that is newly-controlled by the owners or shareholders may try to take steps to eradicate what may be perceived as unfair bias toward the commercial owner in the governing documents.  Such action is almost always a case of board beware:  the board still owes a fiduciary duty to the commercial owner, and always acting against the commercial owner may cause the commercial owner to initiate litigation against the board for breach of that duty.

While conflict between residential and commercial owners in a building is inescapable, litigation always gets expensive.  Therefore, open lines of communication and compromise should always be the first response with litigation as an option of last resort.

18 Dec 2014
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CONDO AND COOP RULES OF THUMB: THE HOLIDAY TIPPING POINT

It’s that time of year again.  As we entire the final stretch of the year, in addition to holiday gifts for loved ones and friends, apartment dwellers also have to consider holiday tips for their building staff.  Are you required to tip?  Usually not, but it’s an overwhelmingly observed custom and if you do not, in most buildings you will be in the minority.

How much do you tip?  As the idea is to reward service, holiday tipping does not correspond with the size of your apartment or the amount of your rent.  Quite a few buildings will let you know suggested tip amounts and some buildings pool tips together.   If you do not live in one of those buildings, there’s a fairly wide range of “common” tips depending on the type of building that you live in and the number of staff.  Tips for building superintendents typically are around $75 and up and can go as high as $500.  The range for a doorman/concierge is from $25-150 and can go as high as $1000.  For building porters and handymen, the range is from $20-$30 but can go as high as $75.  Finally, garage attendants range from $25-$75 but can go as high as $100. In most instances, the more staff your building has, the lower the average tip per staff member.

When do you tip?  The best time is between Thanksgiving and Christmas, but building staff receive tips from December through January.  When in doubt, ask your neighbors or the members of the building’s board.

10 Dec 2014
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SPECIAL PROCEEDINGS AGAINST CORPORATIONS: ARTICLE 78

Before the adoption of CPLR Article 78, parties were afforded the option of commencing one of three actions against a body or an officer:  a writ of mandamus, seeking an order to act, a writ of prohibition, seeking an order to prohibit an act, or a writ of certiorari, for judicial review.  These three actions are now subsumed within Article 78, which, since it was enacted in 1937, establishes the procedure for bringing certain actions against governmental and quasi-governmental bodies, including agencies, public bodies and officers.

In spite of the fact that Article 78 is broad and can be utilized against every “body or officer,” it has become synonymous with proceedings brought to challenge administrative agency decisions.  Attorneys and clients alike often misunderstand Article 78, forgetting that it can be used against private companies as well, who attain quasi-governmental status through their corporate charters and state filings.  Private entities can be compelled to fulfill obligations imposed by statute and also by their internal rules.  For example, an Article 78 proceeding can be brought against a private educational institution for wrongful termination of a faculty member, to compel a corporation to comply with its bylaws regarding governance, to compel a corporation to respect a shareholder’s right to inspect the corporate books and records, or to compel an incorporated social club to reinstate a member who was arbitrarily expelled, just to name a few.

Article 78 proceedings are commenced in New York State Supreme Court in any county within the judicial district where the body or officer acted in the complained-of manner by making a determination, refusing to perform a duty specifically enjoined upon him, taking an acting which the petitioner is seeking to restrain, or where the principal office of the body or officer is located.  There are two ways to commence an Article 78 proceeding:  via notice of petition or via order to show cause.  If you have concerns that the body or officer against whom you are seeking relief may act expediently to your client’s detriment, commence your petition via order to show cause and request a stay in the order so you can prevent anyone from taking action while your proceeding is pending.  If you commence your action via notice of petition, you cannot schedule the court date less than 20 days from the day you file the initial papers.  When deciding to commence an action via Article 78, be sure to pay special attention to the statute of limitations.  You only have four months to challenge a determination made by an administrative agency, body or officer.

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Guzov sends quarterly emails that highlight industry trends and updates to our News & Press.
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