cooperative Archives

Sep 19, 2024

Unpacking the Corporate Transparency Act: What Cooperatives and Condominiums Need to Know

SGR’s Cooperative and Condominium Practice Group has received many questions concerning compliance with the federal Corporate Transparency Act (“CTA”) by cooperatives and condominiums. This bulletin is intended to provide guidance and clarification. The CTA was enacted by Congress in 2021 to assist in prosecuting money laundering and other illicit activities by establishing a national registry, maintained by the United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN), that includes information regarding individuals who control certain entities identified as “reporting companies”. Below are key components you should be familiar with: 1. The CTA in its current form applies to all New York cooperatives, with… Read more

Aug 9, 2019

Statutory Changes Affecting Cooperatives and Condominium Unit Owners

The sweeping changes in New York’s rent laws that were passed by the Legislature and signed into law on June 14, 2019, have been widely reported. While these changes will have a substantial, if not drastic, effect on conventional rental housing, they are largely irrelevant as far as the operations of cooperatives and condominiums are concerned. The legislation that made changes to the rent laws also made a number of changes to other laws that do affect cooperatives and condominium unit owners. Among these changes are the following: Under a change in the NY General Obligations Law, security deposits and rent… Read more

Feb 11, 2019

Co-op Boards Are Not Quality-Control Watchdogs

Copyright by, and republished with permission of, Habitat Magazine. Wade and Vanessa Johnson thought they were getting a “triple mint” luxury unit when they bought a gut-renovated apartment from the sponsor of a cooperative conversion at 1150 Fifth Avenue. But after the closing, the Johnsons learned that there were numerous conditions in the apartment that were not up to code – or actually dangerous – most of which had been concealed. The Johnsons alleged that the renovations were defective and noncompliant with requirements of the building code and co-op policies. For instance, the bathrooms were not properly waterproofed. Two bathrooms… Read more

Aug 23, 2017

Collecting Arrears – When Owners Fail to Pay

Mortgage Payment on Calendar: Collecting Arrears

Most cooperative and condominium apartment owners pay their monthly fees and assessments in full and on time. However, some of our clients have recently reported an uptick in arrearages. There are both similarities and differences that address collecting arrears for cooperatives and condominiums. First, the similarities. Allowing habitual or significant arrearages to accrue poses at least three potential problems for all buildings. Arrearages impose cash-flow difficulties that, if not addressed promptly, place a financial burden on both regularly paying owners, who must shoulder the deficit, and on building managers who must juggle it. They can create a downward spiral, acrimony… Read more

Aug 25, 2009

Authority to Impose Fines

We have been asked from time to time by cooperative (“coop”) and condominium boards about their ability to impose fines to ensure compliance with house rules. While the fines that boards seek to impose are generally small, boards occasionally seek to charge considerable sums for repeated or continuing infractions. You should be aware, however, that regardless of the amount, the legality of fines or penalty fees may be subject to question. Courts have determined that the New York Condominium Act authorizes a condominium board to impose fines. See Sweetman v. Board of Managers of Plymouth Village Condominium, 1998 WL 112655… Read more

Aug 23, 2006

Interest on Unpaid Maintenance and Common Charges

Most cooperative proprietary leases and condominium by-laws permit the board to charge interest on unpaid maintenance or common charges and set forth a fixed percentage or amount for the interest. Some leases and by-laws, including the forms recommended by our firm to its clients, provide authority to the board to set and change the interest rate or late fees from time-to-time. However, where the by-laws or lease set a fixed interest rate or formula, it is important that the interest actually charged by the board and managing agent complies with the terms of the lease and by-laws. The amount of… Read more

Apr 28, 2006

Board Elections and Shareholder Status

As we enter the season when many cooperatives and condominiums hold their annual meetings, it is important to make certain that the election of board members is conducted properly. Sometimes this can be difficult, especially in buildings that have contradictory or ambiguous by-law provisions. These uncertainties lead to acrimony and, occasionally, to litigation. As an example of ambiguity, one provision may simply require that to become a board member the candidate must be a resident of the building (or sometimes just a resident of the state) and over 18 years of age, but not require that the candidate be a… Read more

Nov 1, 2004

Revisions to NYS Tax Law on Gain Realized Upon Sale of Co-ops by Nonresidents

New York State has made recent changes to personal income taxation of transfers of cooperative apartments of which you should be aware. The legislature amended the state tax law (§§ 631, 633) to include as taxable income the gain realized from the transfer of co-op apartment shares by an individual, trust, or estate that is not a resident of New York State. Such gain will also be treated as taxable income of the nonresident if the shares are held in a partnership. These changes are retroactive to January 1, 2004. In addition, to assist in the collection of tax on… Read more

May 21, 2003

“Objectionable” Shareholders

This memorandum was initially issued by the cooperative/condominium practice group of Balber Pickard Maldonado & Van Der Tuin, PC which joined Smith, Gambrell & Russell, LLP on February 1, 2017 and now practices as part of SGR’s cooperative/condominium practice group. We are pleased to report that the New York Court of Appeals in 40 West 67th Street Corp. v. Pullman unanimously affirmed the decision our firm obtained last May from an intermediate appellate court. As you may recall, in that decision, a divided court upheld a cooperative’s right to terminate a shareholder’s proprietary lease on account of “objectionable” conduct. This… Read more