Q&A: Can a board charge arbitrary fees?

Q. I’m concerned about my board charging for arbitrary fees. My co-op recently charged a shareholder for a letter written to her by the co-op’s attorney.  Other shareholders have received similar letters but haven’t been charged for them.  Is it permissible for the board to charge such a fee and if so, may the board apply the fee randomly?”

                         —Unfair in Greenport

A. “It is impossible to determine the validity of the fee without knowing the content of the letter and the terms of the co-op’s proprietary lease,”   said attorney Michael T. Manzi of the New York law firm of Balber Pickard Maldonado & Van Der Tuin, PC. “Many proprietary leases include a provision that permits the co-op to charge a tenant/shareholder for the co-op’s legal fees if the tenant/shareholder is in default and the co-op brings an action or proceeding for the default.   If the co-op’s proprietary lease includes such provision and no other provision pertaining to attorneys’ or other fees, then the co-op may not charge a fee for the letter unless the letter constitutes a notice of a default under the proprietary lease and the co-op brings an action or proceeding against the tenant/shareholder.  Some proprietary leases include broader provisions, however, that would permit the board to charge such a fee.

“Even if the fee is valid, it is poor practice to impose the fee on some shareholders but not others and in some cases such practice would remove the board’s action from the purview of the business judgment rule. However, there may be something different in this situation that caused the board to impose the fee.  Regardless, the tenant/shareholder should write to the managing agent and request a justification under the terms of the proprietary lease for charging the fee and inquiring as to why the board imposed the fee against her but not others.” 

Related Articles

Q&A: What to Do About a Smoking Neighbor?

Q&A: What to Do About a Smoking Neighbor?

Q&A: Question About the Value of Shares After a Cooperator Dies

Q&A: Question About the Value of Shares After a Cooperator Dies

Q&A: Improper Power Grab Threatens Co-op

Q&A: Improper Power Grab Threatens Co-op

 

Comments

  • I recently had a issue with my neighbor above we have been at it for months. I ended up getting arrested and the Co-Op (we're both Share Holders) has billed me $850.00 (which are closing fees from my understanding) . There was no closing and no is moving at this time. Is it Legal for a Co-op to charge a Share Holder $850.00 (closing fees) and call it Legal Fees.