Proprietary Lease Provision Was Unenforceable

December 26, 2018

LVT Number: #29827

Cooperative shareholder tenant sued landlord co-op for failing to transfer shares to her for another apartment in the building owned by her husband. In response, landlord counterclaimed for attorney's fees. The court ruled against landlord, who appealed and lost. An attorney's fee provision in tenant's proprietary lease was unconscionable and unenforceable as a penalty since it provided that tenant must pay attorney's fees if she commenced an action against landlord based on landlord's default.

Cooperative shareholder tenant sued landlord co-op for failing to transfer shares to her for another apartment in the building owned by her husband. In response, landlord counterclaimed for attorney's fees. The court ruled against landlord, who appealed and lost. An attorney's fee provision in tenant's proprietary lease was unconscionable and unenforceable as a penalty since it provided that tenant must pay attorney's fees if she commenced an action against landlord based on landlord's default. To enforce this lease provision would discourage aggrieved tenants from pursuing litigation and making meaningful decisions about how to enforce their rights in legitimate instances of landlord default.

Krodel v. Amalgamated Dwellings Inc.: 166 A.D.3d 412, 2018 NY Slip Op 07531 (App. Div. 1 Dept.; 11/8/18; Richter, JP, Manzanet-Daniels, Kapnick, Kern, Moulton, JJ)

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