Q&A: Shareholder vs. Shareholder

Q In the event that a shareholder has a “dispute” with another shareholder—and claims that many other residents of the building have complained regarding  the same issue—but refuses to provide the names of other complainants—how should this be handled? In a co-op aren’t you legally entitled to discuss complaints with other shareholders in order to  mediate any problems?  

     —Shareholder in Manhattan

A “Quality of life matters, such as noise or other nuisance, often pose thorny  issues for boards of directors. It is possible that one shareholder may be  overly sensitive,” says Eric M. Goidel, a partner with the law firm of Borah Goldstein Altschuler  Nahins & Goidel, P.C.  

 “On the other hand, it is quite possible that the shareholder’s complaints are legitimate. Regardless of the legitimacy of a complaint,  housing courts are reluctant to take any drastic action against one resident  merely upon the complaints of another resident. Accordingly, corroboration is  the key to either a successful mediation of a dispute, or a successful summary  eviction proceeding. Where an allegation is presented that one shareholder is  offending a number of other shareholders, we recommend that the managing agent  make an independent investigation to question other neighbors to see whether  the complaints can be corroborated. The shareholder who claims that there are  many other shareholders who have similar complaints may be telling the truth  and may merely be honoring a request by his neighbors for anonymity, or may  merely be exaggerating the claim.  

 “Shareholders should be advised of the existence of a qualified privilege in  community associations (cooperatives included) whereby, absent actual malice,  shareholders are relatively free to discuss issues about other shareholders. If  there is corroboration and it is determined that the complaint is an objective  violation of the proprietary lease (i.e. violation of pet policy, alteration  policy, sublet policy, etc.), then an appropriate warning letter, or the  service of a Notice to Cure should be issued. Where one deals with more  subjective issues, such as noise or other nuisance, it is recommended as a  first step that the violating shareholder and the aggrieved shareholder(s) meet  with either representatives of the board, the managing agent and/or the  corporation’s attorney with the goal toward arriving at a resolution.  

 “Since litigation may ultimately prove to be necessary, it is imperative that  there be ‘immunity’ in what is said at the meeting, such that anything discussed at the mediation,  cannot be used in a litigation. If it is likely that litigation is the path,  which will be followed, it is suggested that any mediation be moderated by an  outside party. This will eliminate the possibility of an accusation that a  party has during the mediation improved its position in any subsequent  litigation.”  


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