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Termination of Tenant-Shareholder’s Proprietary Lease for Objectionable Conduct Must Follow Procedures in the Lease

The right of a Cooperative to terminate a tenant-shareholder’s proprietary lease and eventually eject the tenant-shareholder from occupancy is a powerful one, but it must be exercised in accordance with the procedures set forth in the proprietary lease. In 811 Walton Tenants Corp. v. 811 Walton Rescue LLC, 60 Misc. 3d 133(A), 2018 N.Y. Misc. LEXIS 2608 (App. Term 1st Dep’t July 2, 2018), the proprietary lease provided that a tenant-shareholder’s lease could be terminated upon “obtaining authorization by a vote of two-thirds of the board of directors at a meeting called for that purpose.”  The court found that this procedure required under the proprietary lease had not been followed.  In the absence of the required vote at a duly convened meeting, the board was not empowered to terminate the proprietary lease.

In Marjosh Management Corp. v. Aulicino, NYLJ Apr. 2, 2018 (Civ. Ct. Kings Co.), the cooperative’s proprietary lease provided that the proprietary lease could be terminated “[i]f at any time the Lessor shall determine, upon the affirmative vote of 65 percent of its then Board of Directors, at a meeting duly called for that purpose, that because of objectionable conduct on the part of the Lessee, or of a person dwelling or visiting in the apartment, repeated after written notice from the Lessor, the tenancy of the lessee is undesirable.”  The Board sent the tenant-shareholder letters notifying him of a special board meeting at which termination of his proprietary lease would be considered.  However, the letters did not refer to any prior written notice that the tenant-shareholder was engaged in objectionable conduct, or continuation of the objectionable conduct after such notice.  Because the Board “failed to establish compliance with the contractual notice provisions of the proprietary lease” before it voted to terminate the tenancy and commenced litigation, the proprietary lease termination was invalid.  These cases are a reminder that boards considering terminating a tenant-shareholder’s proprietary lease should consult closely with counsel to ensure that they satisfy all the procedural steps required before doing so.