Co-op & Condo Case Watch: Who Pays the Piper?
BD. OF MGRS. OF 207-209 E. 120TH ST. CONDO. V. DOUGAN
BACKSTORY Almost two and a half years ago the board of an eleven-unit condominium in East Harlem discovered that Kwame Leslie Dougan, the owner of a ground-floor apartment, was renting his unit on Airbnb. The board saw his marketing on the Airbnb site, and also found a lockbox containing keys to the building’s front door located on the exterior window outside Dougan’s apartment. The board instructed its attorney to notify Dougan that he was breaching the bylaws, and over the years numerous motions were filed to compel him to stop this behavior.
THE COST OF LITIGATING The board had spent $37,741.85 on attorney fees over this period trying to get Dougan to stop the short-term rentals. He clearly violated the condo’s bylaws, and the court had ordered a cease and desist order to him. This case sought to compel Dougan to reimburse the condominium for the legal fees it had spent.
IN THE COURT After reviewing the relevant bylaw provisions of the condominium, the court denied the motion, finding that the provisions did not provide for recovery of legal fees for violations that did not involve the recovery of common charges. The condominium claimed it was entitled to recover the legal fees under the common bylaw provision that allows the condominium to abate and remove a violation of the bylaws “at the expense of the defaulting [u]nit [o]wner[.]” The court wrote that “while this section can be read to require the unit owner to pay the expenses incurred by the Condominium in remedying the condition resulting from the unit owner's breach, such as the cost of removing a structure or eliminating a condition, it evinces no intent to impose liability on the unit owner for attorney's fees and expenses incurred in litigation.” Other sections relied upon by the condominium also did not provide the right to recover legal fees, so the condominium absorbed the entire cost of bringing the action.
COUNSEL For Defendant Dougan JOHN P. DeMAIO / For Plaintiff Condominium JOANNA C. PECK, ADAM LEITMAN BAILEY
TAKEAWAY This case is a stark reminder to condominiums that many of their bylaws do not provide the right for the condominium to recover attorney’s fees when a unit owner defaults on a non-monetary obligation. Boards should look to amend these provisions to allow for legal fee recovery since there are many common situations where a condominium board is forced to bring action to enjoin a non-monetary default (unauthorized alterations, illegal use, unreasonable noise, and short-term rentals are just a few).
Case Summary and Takeaway by Stewart E. Wurtzel, Principal, Tane Waterman & Wurtzel
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