Real Estate Weekly
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Court finds Loft Law doesn’t protect co-op shareholder from eviction 

Rosenberg & Estis, P.C. has defeated an appeal by a cooperative shareholder arguing that he should be considered a tenant of a Brooklyn loft building and, therefore, exempt from paying maintenance fees or being evicted.

Rosenberg & Estis members Jason R. Davidson and Alexander Lycoyannis represented the cooperative board before the Appellate Division, Second Department. The firm has long specialized in New York’s unique Loft Law, which was enacted in 1982 and created a new class of buildings known as interim multiple dwellings or “lofts.”  The Loft Law was designed to protect tenants and to create a pathway for property owners to legally upgrade and convert former commercial and industrial spaces to legal residential occupancy.

In this case, the appellant was seeking, among other things, a preliminary injunction barring the cooperative board from recovering assessments and maintenance fees, and terminating his proprietary lease.  The appellant claimed that he was a tenant entitled to protections under the Loft Law and, therefore, that the cooperative board could not seek to collect unpaid maintenance and assessments pursuant to New York’s Multiple Dwelling Law — which precludes a landlord from recovering rent where a building lacks a residential certificate of occupancy.

However, the court, agreeing with and adopting Rosenberg & Estis’s arguments, held that such law was not meant for an individual like the appellant, who, as a shareholder, is an “owner-occupant” of the cooperative housing corporation and not a tenant entitled to legal protections against the actions of the owner — since, in fact, the appellant is himself an owner.

“This is a case of ‘you can’t have your cake and eat it, too,’” said Lycoyannis. “As an original shareholder who formed the co-op decades ago, the appellant knew it would take significant expense to upgrade the property to the extent necessary to secure a residential certificate of occupancy. Yet when the board attempted to recover those costs, he complained as if he was a third-party tenant in the property. We are gratified that the court saw through this charade and that we successfully protected the cooperative’s rights.”

The decision paves the way for the cooperative to recover its costs to bring the building up to code and to terminate the appellant’s proprietary lease for noncompliance with his obligations thereunder.

“New York’s Loft Law is complex, and cases such as this highlight the need for experienced representation,” said Davidson. “Rosenberg & Estis has been successfully helping clients navigate the Loft Law for decades, and we continue to stay abreast of legislative changes and case law that help us to continue to secure important court victories such as this one.”

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