A Westchester County cooperative apartment corporation decided to prohibit washing machines in apartments by creating a new House Rule.
The basis for the new rule was a finding by the Board that the plumbing system in the building was “not sufficiently robust” to handle washing machines. The co-op’s Board of Directors, however, took no steps to demand that shareholders remove any existing washing machines from their units. Implicitly, the Board appeared to have granted these shareholders some form of “grandfather” status.
Several years after the new rule was enacted, a longtime shareholder (we’ll call her “Ms. M”) replaced her original washing machine with a new one. The new machine turned out to be defective, causing a flood in her apartment. She then replaced the defective machine with another new one. The cooperative’s Board of Directors, now on notice that Ms. M had installed a new washing machine in her unit, sued Ms. M for, among other things, her violation of the “no washing machine” rule.[i]
One question that arose in the ensuing court proceedings was whether “grandfather” status had been awarded to Ms. M or to Ms. M’s washing machine.
According to the Board and as evidenced by its initial inaction, Ms. M’s original washing machine was “grandfathered.” Once it was removed from the unit, it could not be replaced. According to Ms. M, she had been “grandfathered” – that is, she had been given the right to have a washing machine in her apartment in perpetuity, including a new machine to replace the old one.
The House Rule did not mention “grandfather” status. However, the Court upheld the Board’s right, pursuant to the Business Judgment Rule, to enforce the washing machine ban when the original machine was discarded.
While the Board ultimately prevailed, it required months of litigation, several motions, a trial, and two court decisions. The lesson to be learned is clear: Boards need to be careful in drafting new House Rules to make sure they are clear, concise, and not subject to differing interpretations. If “grandfathering” is an issue, its extent and limitations should be explicitly defined in the rule. Any ambiguity may be interpreted against the Board, or it may serve to foster animosity and prolong a dispute unnecessarily.
[i]280-290 Collins Owners Corp. v. McCaskill
