James Cutting, a member of BBG’s Co-Op and Condo practice, was published in Habitat Magazine’s Co-op/Condo Case Watch. Co-op/Condo Case Watch is a newsletter on real world legal lessons written by a member of a leading law firm in the Co-Op/Condo space.
A summary of James’ article, including key takeaways for boards, is below:
Case Summary: In the case of Board of Managers of Graceline Court Condominium v. Malcolm Shabazz Development Corporation, the Graceline Court Condominium in Harlem discovered unusually high water charges in 2023. Upon investigation, the condo board found that the commercial unit owned by Malcolm Shabazz Development Corp. had a defective water pump causing extreme water waste and lacked a separate water sub-meter. The condo’s bylaws required the commercial unit owner to pay for its own water based on sub-metered usage. The board sued the commercial unit owner for six years of unpaid water charges and costs related to installing the sub-meter, alleging breach of contract and unjust enrichment.
Court Decision: The commercial unit owner attempted to dismiss the case, arguing they weren’t responsible for installing the sub-meter and citing a 2013 release. The Court rejected this, stating the condo rules clearly required the owner to pay for water usage and the release did not apply to water billing issues. The Judge noted the release only covered claims before April 2013, while the current case involves charges after that period. The Court allowed the unjust enrichment claim to proceed due to uncertainty about water charges before the sub-meter installation. The commercial unit owner has since appealed the decision.
Takeaway: Boards should ensure strict compliance with bylaw provisions on sub-metering and billing practices, especially for commercial units. Regular checks on sub-meters and careful review of general releases are essential to avoid future billing disputes and unintended liabilities.
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