Housing cooperatives, commonly referred to as co-ops, can be an ideal living situation for individuals who value community, financial stability and want something slightly cheaper than a condo or townhouse. However, as is the case in any living situation, problems can arise from anywhere, at any time. 

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In some cases, disputes may arise between you and the rest of the co-op members or the governing body, which often is comprised of a board of directors depending on how your co-op is structured. If this dispute is based on the co-op breaking the law, breaching its contract with you or even failing to uphold its duties to all co-op members, then you may have legal grounds to discuss filing a lawsuit with a lawyer.

The Basics of Co-ops

A co-op is structured differently than a condominium. The co-op is an essentially a business that owns the real estate. The co-op is not the real estate itself so when you buy into a co-op, you are purchasing shares of a corporation or business. As a shareholder, you own a portion of the business and are one of the many owners of the real. Additionally, as a shareholder, you are given exclusive rights to and use of one of the housing units on the property.

All co-ops run differently, depending on their structure, size and rules. Smaller co-ops tend to be highly cooperative living arrangements in which every resident has a seat at the table and actively maintains the real estate. On the flip side, larger co-ops tend to have a sizeable board of directors, containing a small percentage of residents that make significant decisions for the property. As part owner of a business, you may have disputes with the business. More often than not, you are likely to have a dispute with the governing body of the business rather than the business itself.

The Most Common Co-op Disputes

A wide range of disputes can arise between one co-op member and the board. Some of the most common legal disputes include:

• Denials of a shareholder’s attempt to sell their shares

• Denials of a shareholder’s attempt to sublet

• Proposed use on Airbnb or other short-term rental sites

• Denials of a shareholder’s proposed renovations

• Renovations requested by the board

• Pet restrictions

• Accusations of discrimination

• Accusations of a board member’s self-dealing or conflict of interest

• Fraud or embezzlement

• Cockroaches, bedbugs, and other pest extermination

• Improperly handled votes

• Improperly levied fines

Implications of Suing Your Co-op

When filing a lawsuit against your co-op, remember that in addition to suing the presiding board, you’re suing your community where you live day in and day out. Due to the social issues that could arise, it’s advised by legal counsel to not jump immediately to pursuing a lawsuit. In most situations, it is important to go through your internal processes as thoroughly as possible before taking legal action.

Discuss Your Rights and Legal Options With a Lawyer

If you and the co-op can’t come to some type of resolution, and you believe your rights are being violated, the best option is to call an attorney to discuss your situation. By talking with a residential real estate attorney, you will gain the insight of a highly experienced and knowledgeable legal professional regarding your rights and the laws that are currently in place.

One of the reasons to think carefully about suing your co-op is the overall cost. With any lawsuit, it is going to be a significant investment of both time and money. Additionally, your agreement with your co-op may specify that if you sue and lose the settlement, you may be subject to pay the co-ops attorneys’ fees as well as court costs.

An attorney might recommend utilizing an alternative dispute resolution method, such as mediation or arbitration, with the co-op to resolve the issue outside of court. Mediation or arbitration can also take time and accumulate costs, but they are known for being less costly than a lengthy and contentious lawsuit.