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Cooperative Properly Placed Lien on Shares, Court Holds

A cooperative board’s imposition of a lien on a tenant-shareholder’s shares was upheld because the board followed the procedures required by the By-Laws in doing so.  Matter of Ger v. Saxony Towers Realty Corp., 2022 N.Y. App. Div. 6157, 2022 N.Y. Slip Op. 06243 (2d Dep’t Nov. 9, 2022).

The cooperative sent notices of default to certain tenant-shareholders by both certified mail and regular mail, addressed to their addresses at the building, advising that they were in default of their proprietary leases based on their failure to pay maintenance and other charges.  The cooperative subsequently sent the tenant-shareholders notices of termination and notices of sale, also by certified and regular mail.

The tenant-shareholders sued the cooperative seeking, among other things, to invalidate the liens.  A lower court canceled the liens because the notices served on the shareholders did not contain an itemized statement of the cooperative’s claim.  The cooperative appealed, and the appeals court held that while the notices should have included this information, its omission did not provide a basis for canceling the liens.  The appeals court also held that the notices were properly served on the tenant-shareholders in the manner required by the proprietary lease.  Thus, the tenant-shareholders had shown no basis for invalidating the liens.