ALBANY – In a ruling that potentially shifts the balance of power in a significant sector of the New York City housing market, the Court of Appeals yesterday held that cooperatives, condominiums and their shareholders can sue sponsors who fail to sell apartments within a reasonable period following conversion. The decision recognizes a cause of action for breach of contract, and could spark a spate of lawsuits by tenant-owners and co-op boards when sponsors are hoarding unsold apartments.
Plaintiffs’ counsel Beatrice Lesser, of Gallet Dreyer & Berkey LLP in Manhattan, said the ruling should end what has become a common sponsor practice of retaining rather than selling apartments. She said the ruling largely vests control in the owners rather than the sponsors who, even lacking a majority of votes on the board, were able to dictate building management practices. Until yesterday, it was unclear whether owners and co-op boards had any recourse.
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