Condominium Properly Increased Common Charges To Cover Board Members’ Legal Expenses
A condominium unit owner brought a derivative action against the members of the board of managers. The Condominium paid for the board members’ legal representation and increased the unit owners’ common charges to raise money to fund these legal expenses. The unit owner that had brought the suit refused to pay the increased common charges. The court ordered it to do so and the appeals court affirmed that order. Board of Managers of Lenox Grand Condominium v. DSC Lenox LLC, 111 A.D.3d 467, 974 N.Y.S.2d 452 (1st Dep’t 2013).
In holding that the legal expenses reflected in the increased common charges were proper, the court noted that procedural requirements for advancement of legal fees by a corporation under the Business Corporation Law do not necessarily apply to condominiums, which are governed by a different statute, Real Property Law Article 9-B. The court also relied on a provision of the Condominium’s By-laws stating that the Condominium’s “common expenses may . . . include such amounts as the Board of Managers may deem necessary for customary or extraordinary legal expenses with respect to the Condominium Property.”