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Board’s Discretion To Refect Occupancy Of Cooperative By Trust’s Designee Upheld A Ganfer & Shore Client Advisory for August 2008 Ganfer & Shore, LLP (New York, NY)

Another recent case reaffirming a cooperative boards right to disapprove occupancy by an individual designated to reside in an apartment under a trust is Gleckel v. 49 West 12 Tenants Corp., 52 A.D.3d 469, 859 N.Y.S.2d 712 (2d Dept June 3, 2008).Here, the deceased owner of a cooperative apartment bequeathed it to a trust for the benefit of several relatives.The proprietary lease provided that the Cooperative could not unreasonably withhold consent to an assignment of the lease to a financially responsible member of [the owners] family.The beneficiaries agreed among themselves that the owners nephew would purchase and occupy the apartment.However, the board concluded that the nephew was not financially responsible and withheld its consent.
A lower court held that issues of fact existed regarding the reasonableness of the boards conclusion that the nephew was not financially responsible.This was consistent with cases holding that where a board agrees to act reasonably in making a particular decision, the level of deference accorded the boards decision may be reduced.(Please see the August 2006 issue of this Client Advisory).However, on appeal, the appellate court held that the board had sufficiently established that the nephew failed to show that he was financially responsible.The court concluded that [a]ccordingly, the boards withholding of consent had a legitimate relationship to the welfare of the cooperative, and therefore was reasonable.

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