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Co-ops get a bad rap as being the nanny state of the NYC building world, with boards telling you what you can and can’t do--not to mention the initial
inquisition interview just to get in the door. No surprise that a lot of buyers prefer condos, even if they do cost more. The flip side is that there are things a co-op board can do that a condo board can't touch—including evict a resident who's making life a living hell.
Only co-ops have this last-resort power of eviction. That’s because instead of getting deeds to their apartments, co-op buyers sign a proprietary lease—creating, in the eyes of the law, a landlord-tenant relationship between the co-op and residents. And unlike a traditional lease on a rental apartment, the kind you sign when you buy a co-op says that you (or your neighbor) can be tossed out for “objectionable” behavior by a vote of the board and/or your fellow co-op owners.
This power to cancel the lease of a noxious neighbor comes from a headline-grabbing 2002 case, 40 West 67th Street v. Pullman. Stemming from a board’s battle to boot a resident, David Pullman, who waged war against a couple who lived above him, it unleashed a wave of attempts to “Pullmanize” nasty neighbors—not all of which were successful. Indeed, in the years following Pullman, courts have made it clear that there’s a right way and a wrong way to remove an abusive neighbor—and that they won’t just rubber stamp an eviction.
Instead, courts scrutinize Pullman actions with "heightened vigilance" to make sure boards are scrupulously following procedural requirements for terminating a lease and that the person being Pullmanized has plenty of opportunities to be heard.
At the same time, however, the Pullman case has only gained strength as a precedent for co-ops having the right to boot bad neighbors. "It has become one of the go-to cases for boards to cite, and its authority is very strong," says Steven Wagner, a co-op and condo attorney with Wagner Berkow LLP and a longtime board member of his own 420-unit Manhattan co-op. "So much so that other states even on occasion quote the Pullman case—it's been cited as far away as Iowa."
To bolster your building's chances of restoring peace and harmony, here's the 8-step process your board needs to follow, drawn from the numerous successful Pullman cases Wagner has handled in his own work as a real estate attorney.
1. Make sure your proprietary lease has a "Pullman" clause
Most proprietary leases have a Pullman clause in the section on termination of the lease, but before you start an eviction proceeding, double check. In the standard-form proprietary lease used widely in the city, you’ll find the Pullman clause in paragraph 31(f):
If at any time the Lessor shall determine, upon the affirmative vote of two-thirds of its then Board of Directors, at a meeting duly called for that purpose, that because of objectionable conduct on the part of the Lessee, or of a person dwelling or visiting in the apartment, repeated after written notice from Lessor, the tenancy of the Lessee is undesirable (it being understood, without limiting the generality of the foregoing, that repeatedly to violate or disregard the House Rules hereto attached or thereafter established in accordance with the provisions of this lease, or to permit or tolerate a person of dissolute, loose or immoral character to enter or remain in the building or the apartment, shall be deemed to be objectionable conduct).
2. Check whether all shareholders need to vote
Pullman clauses come in several flavors. Some require a vote of the shareholders, others a vote of the board and some even require the vote of both. Confirm what your lease requires, as well as the percentage of the board or shareholders who must vote to terminate.
3. Give your neighbor a chance to reform
In most cases, you can only evict a shareholder if they continue their misconduct after you’ve given them written notice (though check the wording in your lease). So it goes without saying that you’ll first have to let them know in writing that they’re breaking the rules.
That said, after a recent case bought by a shareholder objecting to the fact that the co-op hadn't notified them of their right to counsel, the courts have made it clear that your board is obligated to notify the shareholder of the problem, but not to read them a version of Miranda rights. "The court rejected that—it's a civil matter, not a criminal case," says Wagner. "It's not considered the obligation of the co-op to notify a tenant-shareholder who has received notification under Pullman that they have the right to have counsel present."
4. Review the evidence and organize your facts
Put together a timeline listing the incidents, the notices sent to the shareholder and the witnesses. If you have police reports, photographs, arrest records, videos or other solid proof of their misdeeds, putting it together in advance will make everyone's job easier. In the Pullman case, the court noted that Pullman's nastiness was well documented and referenced in the notices to terminate his proprietary lease. This helped the court decide that the board wasn’t motivated by a vendetta but instead had the best interests of the building at heart.
5. Call a meeting the right way
One of the surest ways to doom a Pullman action is by ignoring the technicalities of The Meeting. Meetings of the board and of the shareholders are governed by the co-op's by-laws. Your board must:
• Give enough notice: Your co-op's by-laws specify how meetings of shareholders and of the board must be called. Shareholder meetings usually can’t be held unless the notice is sent at least 10 and no more than 40 days before the meeting. Board meetings usually can be called in a shorter period of time. Make sure that the notice is mailed or delivered in the manner required by the by-laws, too.
• Call the correct type of meeting: There are two types of meetings—regular and special. If the Pullman clause in the proprietary lease says that the vote to terminate must be held "at a meeting called for that purpose,” make sure that the meeting notice says it is a special meeting.
• Clearly state the purpose of the meeting: The notice of special meeting should also state that the purpose of the meeting is to consider and vote upon a resolution (i) to terminate the proprietary lease of the tenant-shareholder, (ii) to authorize the commencement of an action or proceeding to recover possession of the apartment and (iii) to cancel the share certificate. It is good practice to list each of the incidents that form the basis for the objectionable conduct claim.
6. Bring a stenographer
It’s critical that your neighbor has an opportunity to be heard. To document that he or she has not been deprived of due process rights, it is important to have a stenographer present at the meeting to accurately record what is said and done.
The specific charges in the notice should be reviewed and discussed and the tenant shareholder or his/her attorney should be given a complete opportunity to speak, and comment on or rebut the charges. It is best to have your attorney there to "neutralize" the tenant's attorney.
It’s helpful to have any witnesses of the objectionable behavior present so that the charges may be substantiated, if necessary. Note that the tenant-shareholder and his or her attorney don’t have the right to stick around during the board’s deliberations.
7. Serve a termination notice
The termination notice, which is a notice sent to the tenant to terminate his lease, must follow the rules for giving notice to the "lessee" under the terms of the proprietary lease. The notice should state that the board or the shareholders voted to terminate in accordance with the lease and it should be specific as to the dates, times, location and nature of the incidents constituting the objectionable conduct. Include a copy of the resolution adopted by the board or the shareholders with the notice. It must be delivered in the exact manner called for in your building’s proprietary lease and should give no less than the minimum number of days stated on the proprietary lease before the termination is effective.
8. Head to court
Next it’s time to head to court for the “heightened vigilance" review required by the Pullman decision—after which, if you have done everything right, the court will defer to the vote of the shareholders and/or the board and allow you to kick out your nasty neighbor. Many of these cases are decided by the courts on motions for summary judgment, which means that you can win the case without a trial!
Your co-op can bring two types of lawsuits, depending on the facts of the case. Consult your building’s attorney for which is best.
One is the type of lawsuit that was brought in the Pullman case—an action in the state trial court for possession and ejectment, declaratory judgment cancelling the shareholder’s stock and lease, and a money judgment for the tenant's use of the apartment after the proprietary lease is terminated, attorneys' fees and costs.
The second type is called a holdover proceeding and is brought in housing court. The holdover proceeding would not include the declaratory judgment cancelling the stock and lease. However, most co-op by-laws allow the board to cancel the shares following a holdover proceeding. Additionally, when a warrant of eviction is issued in housing court, the lease and the landlord-tenant relationship are legally terminated.
What can go wrong
While there have been hundreds of successful Pullman actions in the last decade, courts have dismissed many too—often on a technicality, which is why it is so important to follow the steps set out above.
Here are some reasons courts have dismissed Pullman cases in recent years:
• The tenant shareholder and his attorney were not given the opportunity to speak and were told to "shut up!"
• There was no transcript of the meeting and the specific charges of objectionable conduct that were cited by the board as the grounds for terminating the lease were not identified.
• The board was not properly elected and the tenant shareholder showed that the board was trying to evict him so that he would stop complaining and fighting them.
• The alleged objectionable conduct occurred years before and there had been no communication with the tenant shareholder for more than three years. The court found that this delay did not provide appropriate notice or an opportunity to be heard.
Some conduct that lead to successful Pullman actions:
• Multiple and repetitive lawsuits being brought by the tenant against the board, the co-op and other shareholders based on false allegations, coupled with dozens of letters to the board and to the shareholders containing defamatory materials.
• Multiple and vexatious lawsuits against the building, refusal to pay maintenance for extended periods of time and threats to sue everyone in the building who voted in favor of Pullmanizing the tenant.
• Multiple instances of loud music at all hours of the night, "guests" sleeping in the hallways in front of the shareholder's apartment, pot smoke billowing from the apartment and two alleged sexual assaults.
• Repeated complaints of hoarding, fires in the apartment and ignoring protocols for both bedbug extermination and to avoid introducing bedbugs into other areas of the building such as the halls, the elevator and the laundry room.
• Multiple instances of threats, altercations and assaults against board members, other shareholders and the building staff.
• A sponsor's failure to sell apartments or offer them for sale.
Pullmanizing is a lot of work, uses a lot of the board's time and is fraught with technical booby traps. If your board is careful and handles the case properly, the board's efforts to remove an objectionable resident from the building can often result in a negotiated settlement and avoid lengthy court proceedings. Even if a settlement is not reached, doing things the right way will set you up to win the case on a motion for summary judgment, thereby avoiding a costly and expensive trial. It is well worth the effort in saved time, money and peace of mind if you do it right.
New York City real estate attorney Steven Wagner is a founding partner of Wagner | Berkow with more than 30 years of experience representing numerous co-ops, condos, and individual owners and shareholders. To submit a question for this column, click here. To ask about a legal consultation, send an email or call 646-791-2083.