A cooperative shareholder, who owned shares in two cooperative apartments at the 111 Tenants Corp., had subleased both apartments since they were acquired in 1972. In 2003, the cooperative board passed a resolution restricting the subleasing of apartments and, in passing this resolution, targeted the shareholder. The shareholder claimed that the board resolution should not apply to her because, at the time she acquired the units, she was told by the Sponsor that she would have “full, unconditional and perpetual sublet rights”.
The cooperative shareholder challenged the board resolution and sought to have it set aside as being unenforceable against her. However, the Court ruled that pursuant to the shareholder’s proprietary leases, the right to sublet that she acquired when she purchased the shares to her apartments always required board consent, and there was no protection against consent being unreasonably withheld.
Moreover, the Court ruled that even if the shareholder had been granted preferential unfettered sublet rights, Business Corporations Law §501(c), which provides that “each share [issued by a corporation] shall be equal to every other share of the same class,” precludes any special subletting rights.
The action is entitled Bregman v. 111 Tenants Corp., and was decided in the Appellate Division, First Department, of New York.
Any questions regarding this decision, or issues regarding any similar matter, can be directed to Peter Moulinos at firstname.lastname@example.org.