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How the Kasowitz Decision Puts Attorney Fee Provisions in Proprietary Leases on Shaky Ground

By Robert J. Braverman
April 30, 2025

A bedrock of living in a New York City co-op has been the notion that a tenant/shareholder who breaches their proprietary lease or drags their building into expensive and protracted litigation will be responsible for reimbursing the co-op corporation for the expenses incurred as a result of the breach, including the corporation’s reasonable attorneys’ fees. Indeed, over the years, recalcitrant shareholders have been required to reimburse their co-ops hundreds of thousands of dollars in legal fees due to their failure to abide by their contractual obligations and, in some instances, acting as “litigation terrorists.”

The obligation to reimburse the “Lessor’s expenses” is contained in all proprietary leases and trumps the general concept in American jurisprudence that the parties to a dispute each bear the burden of paying their own legal fees. However, a recent decision from the Appellate Division, First Department (which has jurisdiction over Manhattan and the Bronx), has thrown this well-established concept into flux.

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