ANY REMEDY WHEN CONDO BOARD REFUSES TO APPROVE SALE?

Tumayeva v. Ocean Condo. No. Two, NYLJ March 18, 2021, Date filed: 2021-02-05, Court: Supreme Court, Kings, Judge: Justice Debra Silber, Case Number: 515695/2020:

"In this action, commenced by a prospective purchaser of a condominium unit who was not able to purchase, defendants (the condominium association’s board of managers and the individuals who are board members) move, pre-answer, to dismiss the complaint for lack of standing, failing to state a cause of action, and founded on documentary evidence (CPLR 3211 [a] [1], [3], [7]). The four causes of action in the complaint are tortious interference with contract, breach of contract, breach of the By-Laws and/or breach of plaintiff’s third-party beneficiary status under the By-Laws, and breach of fiduciary duty.

....

Here, the court finds that the plaintiff lacks standing to raise the claims in her third cause of action, breach of the condominium’s by-laws, because the by-laws did not apply to her directly or as a third-party beneficiary, as she was solely a prospective unit purchaser. The fourth cause of action, breach of fiduciary duty, fails to state a viable cause of action for the same reason. Plaintiff alleges no facts that would establish a fiduciary relationship between her and any of the defendants.

Plaintiff’s second cause of action, for breach of contract — alleging a “contractual relationship” between herself and the defendants on the basis of a processing fee she paid to the condominium to review her request to purchase the unit — also fails to state a viable cause of action. Looking at it in the light most favorable to plaintiff, there are insufficient facts to demonstrate that she and the condominium board entered any contract. There was no offer, no acceptance, and no privity. The selling unit owner was the party who asked the board to review the application, and instead of paying the fee, asked the buyer to pay it. That does not create a contract between the board of managers and the prospective purchaser.

Thus, the second, third, and fourth causes of action are dismissed.

The only claim that plaintiff does have standing to maintain, in this court’s opinion, is plaintiff’s cause of action for tortious interference with her contract. She claims, perhaps not artfully enough, that the President of the Board of Managers owns and lives in the unit directly below the subject unit, that he did not want children living above him and plaintiff has young children, and he did not want a sale for the price plaintiff had negotiated with the seller. The contract was subject to short sale approval by the bank holding the first lien on the unit, a short sale which had been approved by the seller’s bank. Plaintiff claims the board was troubled that it would appear in the public record and lower the value of the units in the development, so the condominium’s Board interfered with her contract with the selling unit owner, so she was not able to purchase the unit. The condo board did not choose to exercise their right of first refusal, plaintiff alleges, but they would not provide the document which this development ordinarily provides, stating that they were not exercising their right of first refusal. Apparently, without this document, Chase Bank, which had provided a mortgage commitment to plaintiff, refused to close. While this document is not required by the Bylaws of the condominium, it is apparently the custom and practice in this development, which has hundreds of units in different “phases” of the development, each with a different board of managers. As a result of the delay, the holder of the second lien on the unit foreclosed on it, preventing plaintiff from closing. The auction was held about two months after plaintiff was supposed to close, and the unit was sold to an investor subject to the lien of the first mortgage.

Additionally, plaintiff’s claims against the individual defendants must be dismissed. Each of the individual defendants is named a party in their individual capacity, not in their capacity as officers or directors of the Board of Managers. An action against an unincorporated association (which is what a condominium is in New York) must be maintained against its president or treasurer (see NY Gen Assn Law §13; Safe Haven Props. LLC v. Madison Green Condominium, 183 AD3d 460 [1st Dept 2020]; Caines v. Prudential Ins. Co., 8 Misc 2d 789, 168 NYS2d 813 [Sup Ct, NY County 1957]). This error is amendable, however, and is not fatal to the action. Therefore, the entire complaint is dismissed as asserted against the individual defendants."