—Right to Rent
“A cooperative with organizing documents (offering plan, bylaws or proprietary lease) that gives some shareholders different sublease rights than others, based upon their being original purchasers or based upon the length of time they have owned their shares, is likely to have such provisions declared illegal because it violates BCL 501(c). To remedy this problem, a board has two choices. It can either grant to all shareholders the same privileges enjoyed by the most favored shareholders, so that all are treated the same, or it can attempt to amend the corporate documents to create uniform rules for subleasing that apply to all shareholders.
“When the board attempts to change subleasing rules by merely passing a board resolution, it may be acting beyond its authority and the resolution may not be effective. The corporate documents should be examined to determine what procedures need to be followed to amend the proprietary lease or bylaws to effect the changes desired by the board. If the board attempts to take away rights enjoyed by some shareholders, rather than extend such favorable rights to all shareholders, those adversely affected by the resolution may well challenge such action as being beyond the board’s authority and not protected by the business judgment rule.”