Court orders shareholder to produce unpaid charges

Real Estate Weekly, August 25, 1993

A Manhattan Civil Court judge ordered a lawyer to pay $44,000 in unpaid maintenance and special assessment charges on his luxury Park Avenue apartment.

The court found that the co-op shareholder had never complained to the cooperative about most of the alleged conditions he later cited -- excess heat, foul odors, roaches and rodents, and a lack of window guards -- as grounds for withholding the payments.

"The case of 1050 Tenants Corp. vs. Lapidus gives cooperatives a significant advantage over shareholders who refuse to pay maintenance based on a |warranty of habitability' defense," says Luise A. Barrack, litigation partner with Rosenberg & Estis, P.C., the real estate law firm that represented the co-op. "If the shareholder cannot prove he told the co-op about the alleged conditions, he loses."

The court also found that the testimony by the shareholder lacked credibility, largely because he failed to allow access to the co-op to check the conditions on which he based his claims.

The court stated: "It simply was not credible that a partner in a real estate firm who truly believed that his children were in danger from a lack of window guards would not send written notice other than one form, or install the guards himself." The court ruled that it would be inappropriate for the shareholder to receive "financial compensation against himself and his fellow shareholder for these complaints."

"In this case," said Barrack, "the court recognized that even if the purported conditions existed, a tenant shareholder will not be entitled to an abatement unless the tenant establishes that notice was given and that repairs were thereafter not made. The court held, in effect, that shareholders cannot sit on their rights and expect compensation."