Recovering Legal Fees Can the Board Recoup Losses?

Earlier this year, a survey of co-ops and condos indicated a surge of litigation between boards and building

residents. Such lawsuits can be very costly for both the resident and the building. One important deterrant to frivolous or unnecessary lawsuits is the ability of the prevailing party to recover at least part of their legal fees from the losing party.

In one well-known case, a co-op shareholder refused to pay the cost of installing window guards in his apartment, an expense that was his responsibility under the proprietary lease. Apparently concerned with the precedent that would be set if its right of collection was not enforced, the board sued and won summary judgment. Two appeals and several court hearings later, the co-op was awarded $30,000 in legal fees in addition to the original $919 owed for the installation cost.

Most proprietary leases and condominium by-laws do authorize the board's recoupment of attorney's fees in the event it prevails in litigation with shareholders or unit owners. However, the circumstances under which recovery is permitted are often limited. Under New York State law, a successful litigant may not recoup his attorney's fees from a losing party unless such a recovery is specifically permitted by contract or statute.

Only in Default Cases

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2 Comments

  • the co op board withdrew the complaint against shearholder after 3 years of littigation can shearholder recoup his attorney fee?
  • A sample of a default case would be the co-op board denying a shareholder's right to an inspection of the books of account under the proprietary lease. The shareholder takes the co-op board to court for the default and wins. Under RPL section 234 the co-op board would have to pay the shareholder's legal fees.