Q. My family have stored our bikes in our co-op basement for years at no charge. Now the board and management have decided to impose a large fee for each bike, including for existing owners. We asked the board to tell us on what citation/regulation the decision was based. Here is how they responded:
“If a board votes to implement fees whether for bikes, storage, fines, etc., they can choose to do so. However, current residents or owners would not be exempt from paying. When fees are implemented, they are done so across the board to all, no one is grandfathered in when it comes to pay fees that produces additional income for the building. The board can implement fees even on those who did not pay for bike storage before.”
The governing docs do not have to be changed for this purpose.
As per Proprietary Lease item 3 states: “The covenants by the Lessor herein contained are subject, however, to the discretionary power of the Directors to determine from time to time what services and what attendants shall be proper and and the manner of maintaining and operating the building, and also what existing services shall be increased, reduced, changed, modified or terminated.”
Is this legal? What should we do?
A. According to attorney Aaron Shmulewitz of the New York firm Belkin Burden Wenig & Goldman, LLP: “The authority of a board to act is governed by the provisions of its proprietary lease and house rules, which should be reviewed carefully in each particular case. Typically, a proprietary lease does afford a board the authority to offer, and regulate the use of, storage space in the building, including for bicycles. The authority to regulate such use includes the authority to change hours and means of access, and to impose and increase storage fees—and even to terminate the availability of such storage—to the extent that the board deems such decisions to be in the best interests of the cooperative and its shareholders.
“To that extent, any such decision would be protected by the Business Judgment Rule, and would be immune from successful judicial challenge by a disgruntled shareholder. Shareholders would be bound by any such decision, including the imposition of storage fees for the first time. If a shareholder does not wish to pay such fees, they can either terminate the storage arrangement, or the board will do so for non-payment. Thus, if this co-op’s proprietary lease is typical, it would appear that this board acted appropriately, and the shareholder would be bound by the board’s decision.”