Co-op Improperly Rejected Daughter’s Request for Transfer of Apartment Shares

(Decision submitted by David Hershey-Webb of the Manhattan law firm of Himmelstein, McConnell, Gribben, Donoghue & Joseph LLP, attorneys for the tenant.)

Landlord sued to evict co-op shareholder tenant’s daughter after tenant died and landlord rejected the daughter’s request to transfer the proprietary lease to her. The daughter claimed that landlord unreasonably withheld consent to transfer the shares. The court agreed and ruled for the daughter after trial. The proprietary lease provided that landlord could terminate the lease on five days’ notice if the lease passed by operation of law to anyone other than a shareholder. But tenant had requested the transfer of shares, and the proprietary lease also stated that consent couldn’t be withheld for transfer of shares to a financially responsible family member. Landlord argued that it couldn’t verify the daughter’s income because she didn’t file income tax returns. But there were other means to verify income, including Social Security award letter records offered by the daughter. And given low incomes, affordable housing tenants may not be required to file income tax returns. The business judgment rule didn’t protect the co-op’s rejection of a transfer of shares when the proprietary lease barred unreasonable withholding of consent to do so. 

601 West 136 Street HDFC v. Tsiropoulos: Index No. 56552/2016 (Civ. Ct. NY; 3/13/17; Stoller, J) [11-pg. doc.]