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COOPERATIVE BARRED FROM ENFORCING $3,500 JUDGMENT BY EXECUTING ON SHAREHOLDER-TENANTS APARTMENT A Ganfer & Shore, LLP Client Advisory March 2008

A court, addressing a novel issue, has prohibited a Cooperative from enforcing a money judgment for attorneys fees against a shareholder-tenant by executing against the Cooperative shares corresponding to the shareholders apartment.Travis v. 29-33 Convent Avenue HDFC, N.Y.L.J. Feb. 27, 2008, p. 26, col. 1 (Sup. Ct. N.Y. Co. Jan. 31, 2008).

The Cooperative held an unpaid $3,500 money judgment against the shareholder-tenant for attorneys fees in a nonpayment proceeding.The judgment did not characterize the $3,500 as additional rent as permitted by many leases, meaning that the lease provisions providing for remedies in the event of a shareholder-tenants non-payment of rent were unavailable.The judgment also did not provide for an award of possession if the judgment was not paid.

The Cooperative served a notice of a non-judicial foreclosure and sale of the cooperative shares.The court granted an injunction against the sale, because the shares were protected from foreclosure by New Yorks property exemption statute, which exempts up to $50,000 in the value of a debtors residence, including cooperative shares, from execution.The Cooperative had failed to show that the debtors equity in her unit exceeded $50,000.

The court noted that the Cooperative retained its judgment and a lien against the apartment, implying that the Cooperative could still collect its judgment when the apartment was eventually sold, or could seek to execute against the shareholder tenants other, non-exempt assets.The court also opined that the Cooperative should have filed a petition in court before seeking to proceed with a non-judicial sale of the shares, even if the value of the unit had exceeded $50,000.

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