Business Judgment Rule New York Co Op

Degenshein is a special counsel for that firm.

Business judgment rule new york co op. May a co op s managing agent reject a potential buyer of unsold shares solely on the basis of the co op s financing rule. That was the issue addressed in the recent case elias v orsid realty corp. The state of the business judgment rule appellate court rulings appellate court rulings by adam leitman bailey 2016 february law legislation the greatest changes in cooperative and condominium law this past year did not come from the legislature or from the courts but from the new york attorney general s office nyag.

It shields boards from second guessing and legal challenges provided they act in good faith and in the lawful and legitimate furtherance of a corporate purpose. Boards have a nuclear option when it comes to obnoxious owners. Since then the business judgment rule has been applied to virtually every sphere of a board s operations from renovations to assessments and much much more.

The business judgment rule won t protect an unconscionable board. Baseless and unsubstantiated allegations by unit owners will not trump good faith business decisions. The court held that the board s actions respecting those charges were protected from judicial review pursuant to the business judgment rule.

The business judgment rule prevents judges from questioning actions of corporate directors taken in good faith and in the exercise of honest judgment in the lawful and legitimate furtherance of corporate purposes. After orsid seemingly reasonably adopted that board s own policy. Nevertheless the court also found that the board did not demonstrate its prima facie entitlement to judgment as a matter of law for all the charges fees or fines levied against homeowners.

The business judgment rule has been applied to condominium associations especially in new york. The business judgment rule a court created rule that pre dates cooperative corporations themselves is a common law doctrine by which courts exercise restraint and defer to good faith decisions made by boards of directors in business settings. Richard siegler is a partner in the new york city law firm of stroock stroock lavan.

In 2010 when two apartments were being sold orsid asked elias and senbahar to see that their purchasers met the terms of the. Or make 70 year old walk a mile to get home. New york real estate biggest co op and condo lawsuits.