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Ortiz v. Terrace Towers, Inc.

A-4388-07T2 (N.J. Super. App. Div. 2009) (Unpublished)

COOPERATIVES — If provided for in a housing cooperative’s certificate of incorporation, bylaws, and proprietary leases that not all apartment units are entitled to use of a parking space, then a shareholder-proprietary tenant without a parking space is not entitled to one.

A cooperative apartment complex had thirty residential units and two professional suites, but only twenty-two parking spaces. These spaces were specifically allocated to twenty-two of the residential units. Two shareholders contended that the allocation was unfair and sued the coop. They also alleged that they should not have been required to contribute to the cost of the parking lot, including for taxes, insurance, and maintenance expenses when they were forbidden to use the lot.

The Chancery Division granted summary judgment in favor of the coop. The shareholders appealed, contending that a hearing should have been held on the matter.

The Appellate Division affirmed, ruling that the lower court had sufficient proof to support a finding that the allocation of the parking spaces was permissible. It found that the relationship between the coop corporation and its shareholders was governed by the certificate of incorporation, the by-laws, and the proprietary leases. The Court noted that all of these documents had to be read together. It found that the certificates of incorporation and by-laws made no mention of parking. It also found that the by-laws mentioned that the transfer of stock was controlled by an Occupancy Agreement entered into by the stockholders. It noted that the Occupancy Agreement referred to the dwelling units and that the agreement provided that parking spaces were allocated to only twenty-two of those units. The Court stated that a sampling of contracts to sell units revealed that the parking spaces were specifically included as part of each sale. In addition, the shareholders had overwhelmingly confirmed the allocation of parking spaces to specific units at the coop’s annual meeting. Thus, the Court ruled that the current allocation of parking spaces was in accordance with the governing documents and consistent with the practices of the coop. It further ruled that whether the opposing shareholders were entitled to an adjustment in the carrying charges was not before the Court because it did not know the current allocation method or if adjustments were made for the parking situation. This was because the lower court did not address the economic ramifications of the parking allocation, and therefore, the Court declined to do so. Thus, the questions as to whether the parking area was a limited common element as opposed to a general common element and a determination as to whether this distinction was addressed in the governing documents, were not addressed by the Court.

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