Co-ops shield shareholders from retaliation

Summary#

S-10727 would amend New York’s Real Property Law by adding a new section on retaliation by cooperative housing corporations. Its stated goal is to protect shareholders and lawful occupants who raise concerns or exercise legal and cooperative-governance rights. The bill was introduced in the Senate and referred to the Rules Committee; it is not law.

  • A cooperative housing corporation could not take an adverse action because a shareholder or someone acting for them, in good faith, took one of the listed protected actions. These include reporting health or safety problems, requesting government enforcement, exercising rights under cooperative documents or law, discussing building matters with other shareholders, organizing, seeking legal advice, or taking part in a proceeding.
  • “Adverse action” includes lawsuits, attempts to end a proprietary lease, objectionable-conduct proceedings, selective enforcement, certain fines or fees, denial of approvals customarily granted in similar circumstances, and other actions that would reasonably deter someone from exercising protected rights.
  • An adverse action within one year after protected activity would be presumed retaliatory. The cooperative would have to prove a non-retaliatory motive by a preponderance of the evidence (meaning more likely than not).
  • In a lease-termination or eviction case based on objectionable conduct, retaliation evidence would be admissible despite the business judgment rule. A court would have to rule for the shareholder if it finds retaliation.
  • A court could award damages, attorney’s fees and costs, and other appropriate relief. Lease, bylaw, rule, policy, or contract terms that waive or limit these rights would be void.
  • The protection would not apply in a case where it is established that the condition behind the complaint or action was caused by the shareholder, someone in their household, or a guest.

What it means for you#

  • Cooperative shareholders and lawful occupants: If you take a listed action in good faith, the cooperative could not retaliate against you for doing so. The bill does not prevent adverse actions for unrelated reasons.
  • Cooperative boards and managing agents: They would have to avoid adverse actions based on protected activity. They could face a civil action and court-ordered remedies for a violation.
  • Courts: In the specified lease-termination or eviction cases, courts would have to consider retaliation evidence even if the business judgment rule would otherwise apply. The bill does not make shareholders tenants, or cooperatives landlords, for purposes beyond this section.
  • Everyone: The bill does not set up an application or complaint office, change ownership of cooperative shares, or directly change taxes, fees, or housing benefits.

Money#

No publicly available information gives an estimated public or private cost.

  • The bill authorizes courts to award damages, attorney’s fees and costs, and other relief; it does not set amounts.
  • It does not specify new government funding, staff, fees, fines, or a funding source.

What is unclear#

  • The supplied material does not include the current Real Property Law, so the bill’s changes cannot be compared here with existing protections or remedies.
  • The bill does not define terms such as “good faith,” “substantially similar manner,” or an action that would “reasonably deter” a shareholder.
  • It does not explain how the one-year presumption would interact with other evidence or claims in a case.
  • The exception for a condition caused by a shareholder, household member, or guest could limit the protection, but the bill does not explain how it applies when a complaint involves more than one condition.
  • The bill does not set a filing deadline or explain how a claim under this section would proceed beyond saying a civil action may be brought.

Case for#

  • A possible argument for the bill is that people may be less willing to report safety problems or use their legal and governance rights if a cooperative can respond with penalties, selective enforcement, or lease proceedings.
  • The one-year presumption could make it easier to challenge retaliation when the adverse action follows soon after protected activity.
  • Allowing courts to consider retaliation in objectionable-conduct eviction cases could help ensure that those cases are not decided without relevant evidence.
  • Voiding waiver terms would prevent cooperative documents from removing the protections the bill creates.

Case against#

  • The list of adverse actions is open-ended, and terms such as “reasonably deter” are undefined. This could make it harder for cooperatives to know which actions may lead to a claim.
  • The one-year presumption shifts the burden to the cooperative to prove a non-retaliatory motive. That may complicate disputes where an adverse action follows protected activity but the cooperative says it acted for another reason.
  • The bill allows damages and attorney’s fees but does not set limits or explain how courts should determine them.
  • It is unclear how the exception for conditions caused by a shareholder, household member, or guest would work in cases involving multiple causes or separate complaints.