Tenants/shareholders who breach their proprietary lease, or drag their co-op building into expensive and protracted litigation, are usually responsible for reimbursing the co-op for the expenses incurred as a result of the breach, including the co-op’s reasonable attorneys’ fees. A recent decision from the Appellate Division, First Department has thrown this well-established concept into flux.
In Kasowitz, Benson, Torres & Friedman, LLP v. JPMorgan Chase Bank, N.A., a unanimous panel of four judges invalidated the attorney fee provision in The Dakota’s proprietary lease because it permitted the co-op to recover its attorneys’ fees in connection with a shareholder dispute regardless of whether the shareholder was in default or whether the co-op’s claim was meritorious.
In an article for the New York Real Estate Law Reporter, managing partner Rob Braverman provides an overview of the matter, analyzes the Appellate Division, First Department decision, and discusses the key takeaways for co-op boards.
Read the full article here.