cooperative apartment Archives

Mar 27, 2009

Unit Owner Monetary Defaults

The current state of the national and local economy will likely lead to increased nonpayment of monthly charges by owners of cooperative and condominium apartments. The loss of income can affect the financial stability of a cooperative or condominium and, at least in the short run, the costs of unpaid maintenance or common charges must be borne by other owners. Therefore, it is important that boards have and enforce a clear policy as to payment arrears. The procedures and effectiveness of legal remedies for nonpayment differ substantially as between cooperatives and condominiums. Cooperative apartment owners are tenants for collection purposes,… Read more

Dec 2, 2008

Insurance: Prompt Notice of Claims

We have frequently reminded clients of the importance of promptly notifying their insurers of any actual, threatened or possible claims against them. This has been especially important in New York because the New York Court of Appeals has held that an insurer may deny coverage due to late notification, regardless of whether the delay actually prejudiced the insurer. During its 231st session, the New York State Legislature attempted to overrule this case law through legislation. Under an amendment to Section 3420 of the New York Insurance Law, an insurer may now no longer deny a claim for untimely notice unless… Read more

Apr 7, 2008

Authorization of Board Action

On March 31, 2008, the Supreme Court for New York County rendered a decision illustrating the importance for cooperatives and condominiums of documenting board and owner action properly. As cooperatives and condominiums age, the proper keeping of records has become an issue for many of them. It is an issue that should not be overlooked. In Pello v. 425 E. 50 Owners Corp. et al., 2008 N.Y. Slip Op. 30939(U) (Sup.Ct., N.Y. Co., Walter Tolub, J., March 31, 2008), a cooperative claimed to have enacted and subsequently modified a flip tax by board amendments to its by-laws. However, the coop… Read more

Dec 26, 2007

Amendment to the 80/20 Rule

On December 20, 2007, President Bush signed into law legislation dramatically liberalizing the so-called “80/20 Rule” restricting the amount of non-shareholder income cooperatives may receive.[1] As a practical matter, the legislation will eliminate commercial income restrictions for most cooperatives. Under the former rule, in order for a cooperative shareholder to receive the tax benefits normally afforded a homeowner, the cooperative could receive no more than 20% of its income from non-shareholder sources. As a result of this rule, cooperatives controlling substantial commercial space have often capped the rents payable by their commercial tenants below market rents in order to keep… Read more

Feb 15, 2007

Transfer on Death Designation

A provision was recently added to New York’s Estates, Powers and Trusts Law which may affect the ownership of cooperative apartments. Under the revised statute, transfer on death (“TOD”) designations may now be used for securities in New York State. These permit the owner of stock to designate a beneficiary on the stock registration so, that upon the death of the stockholder, the stock automatically transfers to the designated beneficiary without the expense and delay of a probate proceeding. The same result could be obtained previously by designating an individual as a “joint tenant”, but a joint tenant is a… Read more

Oct 5, 2006

Mold

The New York County Supreme Court issued a decision on September 27, 2006, finding that current scientific evidence does not support a conclusion that mold or damp indoor environments cause illness. The lengthy decision was issued after an extensive hearing. This is a very important decision for all landlords, including cooperative and condominium boards, and indicates a growing trend among courts across the country to view evidence of mold-caused illnesses with increasing skepticism. In Fraser v. 301-52 Township Corp., the plaintiffs (husband, wife, and child) sued their cooperative for personal injuries allegedly caused by mold in their water-damaged apartment. The… 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