- Court
- New York Supreme Court, Appellate Division, First Department
- Case
- 71st Street-Lexington Corporation v. Frankel
- Date
- May 28, 2026
- Slip Op. No.
- 2026 NY Slip Op 03358
Background
Plaintiff 71st Street-Lexington Corporation, a cooperative corporation, brought this action against defendant Eric Frankel, a shareholder, seeking a declaratory judgment that the proprietary lease for his apartment had been properly terminated and attorneys’ fees. The cooperative alleged that Frankel had defaulted on his obligation under the proprietary lease and house rules to maintain homeowner’s insurance on his unit. After providing Frankel with a notice of default that identified the basis for the default and the method for curing it, the cooperative moved for summary judgment. The Supreme Court, New York County, granted the motion, declaring the lease terminated and awarding attorneys’ fees. In a subsequent proceeding, the court denied Frankel’s motion to set an undertaking and granted the cooperative’s cross-motion for supplemental attorneys’ fees. Frankel appealed both orders.
Holding
The Appellate Division unanimously affirmed both orders. The Court held that the notice of default adequately apprised Frankel of the basis for his default—failure to maintain the required homeowner’s insurance—and the method for curing it. The Court found that the proprietary lease and house rules clearly required shareholders to maintain homeowner’s insurance, that Frankel’s failure to do so constituted a material default, and that the cooperative properly terminated the lease following the uncured default. The Court also upheld the award of attorneys’ fees, finding that the proprietary lease contained a provision entitling the cooperative to recover reasonable attorneys’ fees incurred in enforcing the lease terms, and that the amount awarded was reasonable.
Takeaways
Cooperative corporations may terminate a proprietary lease for a shareholder’s failure to maintain required homeowner’s insurance, provided the cooperative follows the notice and cure procedures specified in the lease. A notice of default must clearly identify the nature of the default and the steps the shareholder must take to cure it. Once the cure period expires without the shareholder remedying the default, the cooperative may proceed with termination and seek a declaratory judgment confirming the termination. Attorneys’ fees provisions in proprietary leases are enforceable, and the cooperative may recover fees incurred in enforcing the lease terms.
Why It Matters
This decision is significant for cooperative housing practitioners because it confirms that failure to maintain homeowner’s insurance is a material breach of a proprietary lease that can result in lease termination and the loss of the shareholder’s apartment. Cooperatives should ensure that their proprietary leases and house rules contain clear insurance requirements and that they follow proper notice and cure procedures before terminating a lease. Shareholders should understand that insurance requirements are not optional provisions and that failure to comply can have severe consequences, including forfeiture of their proprietary lease and the cooperative’s right to sell the associated shares.