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Perspectives

Condo By-Law Amendments Requiring Arbitration Do Not Apply Retroactively

The By-Laws of a Condominium, as originally issued, required that certain types of disputes be resolved in arbitration rather than in court.  A unit owners’ meeting was called on a proposal to amend the By-Laws to require arbitration of all claims and disputes.  Four days before that meeting was held, the plaintiff unit owner sued the Board of Managers and its members on claims for alleged water damage to plaintiff’s unit, lack of proper maintenance, and breach of fiduciary duty by the Board.  At the unit owners’ meeting, the By-Law amendment was adopted over plaintiff’s opposition.

Defendants moved to dismiss the lawsuit and to compel arbitration.  The court denied the motion and directed that the litigation would proceed in court.  The dispute was not arbitrable under the original By-Laws because it was not within the subject-matters for which those By-Laws required arbitration.  The dispute was not arbitrable under the amended By-Laws because the lawsuit was filed before those By-Laws were adopted and took effect.  Menkes v. Board of Managers of 561 5th Street Condominium, 2022 N.Y. Misc. LEXIS 605, 2022 N.Y. Slip Op. 30393(U) (Sup. Ct. Kings Co. Feb. 2, 2022).