Co-op boards are often faced with difficult judgment calls; on the one hand, it’s the duty of board members to safeguard their fellow shareholders’ investments and overall quality of life. On the other hand, they must carry out that duty on the right side of the law, or risk serious legal penalties for themselves and their cooperative corporation at large. The issues of disability, disclosure versus privacy, and reasonable accommodation are tightly interwoven in the context of a co-op building’s admissions process. Navigating these issues requires great care on the part of admissions committees to insure that the building’s board makes sound decisions without infringing on the rights of a prospective buyer.
The line between upholding fiduciary duty and making potentially expensive legal blunders is sometimes less than clear to volunteer board members with limited knowledge of the law. This fact that was brought home vividly this past June, when the New York County Supreme Court ruled in favor of a prospective co-op buyer whose purchase was stalled for four whole years by a board’s ignorance of the law and disagreement over their obligation to accommodate his disability.
Back in 2005, on the very day he was scheduled to close on an apartment in the 20166 Tenants Corporation co-op in Manhattan, buyer Constantine Hassapoyannes asked the co-op’s managing agent a delicate question. Some of the units in his new building had washing machines, but current house rules prohibited the installation of new washer/dryer equipment. Because of extensive cancer surgery, Hassapoyannes required laundry facilities within his apartment to clean linens and garments. Would the board have a problem with him installing a washer/dryer in his new apartment to accommodate this need?
As it turns out, the answer was yes, that was a problem. So much so that the board of 20166 Tenants Corporation delayed the closing on the apartment and ultimately withdrew its approval of Hassapoyannes’s purchase entirely. As one might imagine, legal entanglements ensued immediately, with Hassapoyannes (represented by Manhattan-based law firm Vernon & Ginsburg) suing the board to overturn their rejection of his application and get the closing back on-track.
For their part, according to court documents, the co-op board (represented by the Manhattan-based law firm of Cantor Epstein & Degenshein) felt that Hassapoyannes had deliberately withheld important information during his interview, and were concerned that he might have misrepresented other significant facts and information about himself during the interview/disclosure process. The board argued that in light of Hassapoyannes’s formal acknowledgement and acceptance of the co-op’s rules (which included the washer/dryer restriction), the omission of his own intention to install a washer/dryer was not only deceitful, but legally actionable. According to sources close to the case, certain board members felt so strongly that Hassapoyannes was in the wrong that they took the suit all the way to the Appellate Court before admitting defeat.