Tuesday, January 10, 2012

Cooperatives Apartments Be Careful

2 recent decisions speak to the duties Boards have in Cooperative apartments.

Fair Housing Act: Not only can a Cooperative violate the Fair Housing Act regardless of the Business Judgment Rule, but specifically you can't keep the single guys out so says the Federal District Court in Lax v. 29 Woodmere Blvd. Owners, Inc. While the Court did not yet decide for the Plaintiff, the Court did say that the allegations if proven can constitute a cause of action.

Price Floors: While there appears to be a trend that Cooperatives can set floors that apartments cannot be sold under based upon the Business Judgment Rule, be careful that the floor is reasonable (whatever that means) and that the Board has authority to set such a floor in the Cooperatives governing documents.

To be clear, the Business Judgment Rule says that Corporate Officers are not liable for their decisions and actions when they are made under authority and in a good faith furtherance of Corporate purposes.

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