Co-op's Rules Didn't Allow Charge Against Shareholder for Illegal Subletting

Landlord cooperative corporation assessed a $3,000 fee on tenant shareholder for illegally subletting her co-op apartment, after other shareholders complained that tenant no longer lived in the apartment and that the subtenant who lived there made excessive noise. Tenant claimed that she did live in the apartment with her sister and that this was permissible. The corporation refused to rescind the fee. Tenant then filed an Article 78 proceeding to challenge landlord's decision. The court and appeals court ruled for tenant and revoked the fee. Contrary to landlord's claim, the co-op board had no authority under its governing documents to assess a fee against tenant for illegal subletting. The proprietary lease, bylaws, and handbook didn't contain an enforceable house rule concerning subletting. The fee assessment therefore wasn't allowed by the business judgment rule. Tenant also was entitled to attorney's fees as the prevailing party in the case. 

Cohan v. Board of Directors of 700 Shore Road Waters Edge, Inc.: 2013 NY Slip Op 05447, 2013 WL 3814235 (App. Div. 2 Dept.; 7/24/13; Angiolillo, JP, Leventhal, Lott, Austin, JJ)