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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: July 26, 2018

No Waiver Clause Precludes Claim of Waiver Based on Prior Course of Conduct

On July 12, 2018, Justice Ostrager of the New York County Commercial Division issued a decision in MacArthur Properties I, LLC v. Galbraith, 2018 NY Slip Op. 31612(U), holding that a no waiver clause precludes a claim of waiver based on prior course of conduct, explaining:

Wholly without merit is plaintiff’s claim that the Condominium waived its right beginning in 2017 and going forward to calculate Common Charges based on Common Interest due to its course of conduct over the years which calculated the Charges based on usage. That argument is barred by Article IX of the By-Laws, which expressly protects the Condominium against waiver, stating in Section 5 that:

No restriction, condition, obligation, or provision contained in these By-laws shall be deemed to have been abrogated or waived by reason of any failure to enforce the same, irrespective of the number of violations or breaches thereof which may occur.

What is more, the First Department has rejected a claim of waiver based on a prior course of conduct where, as here, the relevant document contained an explicit no-waiver clause.

Plaintiff’s reliance on the Second Department’s decision in Dice is misplaced. The clause quoted by plaintiff was included in the court’s general discussion of the law on waiver and was not the holding. The holding was limited to the court’s denial of summary judgment based on issues of fact as to whether the Condominium could rely on a no-waiver provision in the By-Laws to enforce the no-pet provision in the Building’s Rules and Regulations. Dice is readily distinguishable from the instant case where the Condominium is relying on a no-waiver clause in the By-Laws to assert rights that are secured not only by the Condominium By-Laws and Declaration but also the Real Property Law.

Considering all the facts and circumstances presented here, including the language in RPL ยง 339-m and the various Condominium Documents, not the least of which is the language in the publicly recorded Second Amendment that expressly allows the Condominium to charge the Commercial Units 22% based on their Common Interest, the Court finds in favor of the movant Condominium in part. Specifically, the Court finds that the Condominium has the right if not the obligation, to charge the Commercial Unit Owners for Common Elements based on Common Interest beginning with the 2017/2018 budget and going forward so that the Residential Unit Owners pay no more than the Real Property Law and Condominium Documents require.

(Internal quotations and citations omitted).

A no-waiver clause protects a party’s right to have a contract interpreted according to its text, and without regard to accomodations it may have made in performing the contract. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure how to enforce rights you believe you have under a contract.

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