Court Determines if Board of Managers Properly Conditioned Approval
Andy Y. Wong sought to enclose the section of hallway between apartments 12G and 12H without paying the fees required by a “hallway takeover” rule adopted by the Board the Board of Managers of the 45 W. 67th St. Condominium. The Board conditioned approval on the payment of $90,00 up front and an annual fee based upon the square footage of the contemplated enclosure. Litigation ensued. Wong moved for summary judgment. Upon searching the record, Supreme Court denied the motion and ruled in favor of the Board. Wong appealed.
The bylaws permitted unit owners to enclose the hallway between their units “with the consent of the Residential Condominium Committee (which consent shall not be unreasonably withheld or delayed).” And authorized unit owners to raze or incorporate certain spaces “which service or enclose only [the unit owner’s] Residential Unit and do not affect access to any other Unit.”
The declaration and bylaws also empowered the Board to administer the condominium’s affairs, to operate and maintain the “common elements” (including hallways), to adopt and amend rules, to oversee and decide whether to approve unit alterations, to adopt the rules necessary to carry out the purposes of the condominium, and to manage the condominium’s finances.
Condominium boards are responsible for running the day-to-day affairs of the condominium and, to that end, often have broad powers in areas that range from financial decision making to promulgating regulations. Where a board’s disputed decision was based on a governing document which provides that consent shall not be unreasonably withheld, the heightened standard of reasonableness is to be applied in lieu of the usual business judgment rule. This standard of reasonableness hinges on whether the board’s decision is legitimately related to the welfare of the condominium.
Here, it was within the Board’s broad authority to adopt the hallway takeover rule and to impose fees as a precondition to permitting a unit owner to effectuate a hallway takeover. And specifically permitted the Board to withhold consent so long as the Board did so reasonably, i.e., in a manner legitimately related to the welfare of the condominium. And a condominium board placing reasonable conditions on consent was not unreasonably withholding consent.
The rule was not applicable to hallways that service and affect access to more than one unit. It was therefore within the Board’s authority to adopt the hallway takeover rule requiring reasonable consideration from unit owners in exchange for granting exclusive use of the hallway area in perpetuity. It was also within the Board’s authority to decline consent to a hallway takeover when a unit failed to comply with this rule. Supreme Court properly denied Wong’s motion for summary judgment.
But the Court improperly searched the record to grant summary judgment to the Board insofar as it found the amount of the fees was reasonable. While the Court properly found that the Board had the authority to condition its consent on the payment of fees, there remained factual issues surrounding the amount of those fees and the appropriate methodology to be employed in calculating those fees, which was a fact-intensive issue.