Q&A: Blocking Our Skylight

Q We are shareholders in our co-op. We bought our apartment because of its skylight. It's leaking though and the board refuses to repair the skylight. The board has ruled that if we insist on a repair, the co-op will cover the skylight with wood because it would reduce the expense for the building. That would reduce the value of our co-op. Does the board have the right to cover our skylight with wood?

—Not Seeing the Light

A “As a starting point,” says Chicago attorney Steven D. Welhouse of The Sterling Law Office, “you should consult the language of your co-op apartment lease or occupancy agreement (the “lease”), rules and any other governing documents to determine who is responsible to maintain and repair your skylight. There may also be language contained in these governing documents setting forth how the skylight is maintained and repaired. For example, some historic buildings have strict guidelines as to which types of windows can be used for replacement. It is possible that the skylight is specifically defined in these governing documents as being the shareholder's responsibility to maintain and repair.

“If the board of directors is responsible to maintain and repair the skylight, they must do so or the board's members run the risk of breaching their fiduciary duties to you and the other shareholders. Simply boarding over the skylight is not an appropriate repair of the skylight; just as boarding up apartment windows is not an appropriate repair when they begin to leak. The board has a fiduciary duty to maintain and repair the co-op building, within the parameters of its obligations set forth in the co-op corporation's governing documents, particularly where a certain building feature that is included in the board's responsibility to maintain and repair is allowing water leaks into the building. The board should have been monitoring the condition of the building to determine necessary maintenance and repairs and adjusted the budget accordingly. Not properly repairing the skylight may also open the board up to a claim that it breached its fiduciary duty by self-dealing.

“Courts reviewing whether a board has met its fiduciary duty measure the board's action by the Business Judgment Rule. This is the same rule that the actions of a business corporation's board of directors is measured by. A board must have a rational basis for its decision. If the board's action is fraudulent, self-dealing or unconscionable, the rule is violated and the board has breached its fiduciary duty to the co-op corporation's shareholders. A court will also determine whether the board's action was permissible under the co-op's governing documents, and the board will have breached its fiduciary duty where its action is not permissible.”

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