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Law & Legislation
The Subtle Art of Mediation
Several years ago, before relocating to Westchester County, I served as board president at my 112-unit co-op building in Manhattan. Like most co-ops, we had a history of occasional disputes between tenants and among board members. But, by using the subtle art of mediation, we were able to resolve these invariable disagreements to the satisfaction of all involved. Read More
Tenancy by the Entirety
Most co-op owners have never given much thought to the manner in which they took title of their apartments. But by overlooking this important aspect of such a significant purchase, some shareholders may have put themselves at considerable financial risk. The method by which a married couple takes title to their real estate holdings can have major reper-cussions in the event of the death, bankruptcy or default of a spouse, or in the case of a divorce. Read More
Big Trouble at Big Six
Trust. It's a word often heard when board members and shareholders of Big Six, a 982-unit co-op complex in Woodside, Queens, talk about their former managing agent, Richard Stone, and what they think went wrong. Essentially, they say, we trusted the wrong man. Why did individual shareholders, mostly retirees, invest up to $80,000 each in a shopping center expansion that ballooned in cost and has yet to be finished? Why did board members allow themselves to be convinced that the expansion was in the co-op's best interests? Read More
Cover Story: Real Estate Indictments: 1999
After Manhattan District Attorney Robert M. Morgenthau handed down indictments against dozens of New York property managers in 1994 for taking kickbacks from contractors, New Yorkers, including the D.A.'s office, thought there would be at least a brief reprieve from local real estate corruption. Even so, the D.A.'s office continued to monitor the real estate industry. "This is Round One," predicted Dan Castleman, chief of the D.A.'s Investigative Division. This past June, Round Two was unveiled. Read More
UCC Article 9 Revisions
A couple years ago, I became genuinely surprised to learn of conflicting opinions throughout the legal community and in court decisions (including rulings from New York State Supreme Court’s Appellate Division) which centered on how to classify cooperative apartment stock and how to deal with liens on co-op stock. The issue became so contentious that there are even several court decisions challenging whether a co-op corporation’s built-in lien on its own stock (as described by the proprietary lease and bylaws) is a perfected security agreement. Read More
The Men Who Would Be Mayor
With all the recent grief and confusion in our city, it’s almost easy to forget that there was a mayoral primary scheduled for September 11th. Voting had barely started when terror descended on New York. As images of destruction and chaos dominated the media and our everyday lives, the idea of voting in a new mayor seemed the furthest thing from our collective mind. Read More
Was it Something I Said?
Historically, co-op boards in New York City
haven’t been required to provide much of an explanation to applicants
about why applications for co-ops are rejected.
Read More
Defending Against Discrimination Claims
In what may prove to be a significant victory for cooperative and condominium boards sued for housing discrimination, an appellate court recently applied the protection of the business judgment rule to a discrimination claim for disability accommodation. Read More
Taxing Questions
Perhaps Benjamin Franklin said it best: “In this
world, nothing can be said to be certain except death and taxes.”
Read More
Breaking the Mold
Molds are naturally occurring organisms that are present almost everywhere. While molds need both moisture and nutrients to grow, moisture is the primary factor that promotes indoor mold growth. Therefore, whenever there is a water leak in a home or residential building, there is the potential for a mold-related legal claim. Read More
Need Answers?
Your roof terrace leaked and the neighbor below you sued for damages. Do you have any recourse? The heating system in your apartment failed to work and the managing agent sent you the bill for its repair. Do you have to pay? Read More
Same Planet, Different Worlds
While there are many similarities between co-ops and condos, are the two very different when it comes to things like insurance and liability? Read More
It's All About Trust
Once an estate planning operative for only the rich and famous, trusts are commonly used today to facilitate estate planning for everyone. While empty-nesters downsize and seek out residences that are more maintenance free—such as co-ops or condos—they are also seeking to create an estate plan that insures a distribution of their assets with minimum tax consequences. Accordingly, co-op boards are increasingly faced with requests to approve transfer of ownership of co-op apartments to trusts. What are the ramifications of such transfers, and what should a board do when faced with such a request? Read More
Finding Good Help
It is a fairly common situation: The managing agent of a 30-unit condo calls the building’s legal counsel and asks whether the building is required to hire or retain a resident superintendent. Sometimes the building wants to rent or sell the superintendent’s apartment to offset expenses—or perhaps the board believes that there is not enough work to justify hiring and paying a full-time, live-in superintendent. Read More
Rule Change
Spring is here, and with it comes a lot of renovation—especially of homes, weekend homes and co-ops. With all that work comes inevitable disputes between homeowners and their architects, interior designers and contractors. For many years, arbitration has been the main method chosen by interior designers and architects to resolve their disputes with clients. Read More
Mayor Presents $52.7 Billion Budget
Flush into his second term as the city’s chief executive, Mayor Michael R. Bloomberg proposes a $52.7 billion budget plan for 2007 and updated his four-year financial plan for New York City in an attempt to keep the city’s finances on solid ground. Read More
Make It Safe
Imagine this scenario... you are in charge of a residential property, as either a board member or a managing agent. One of your residents has just advised you that the lock on the front door of the building has been known to malfunction “from time to time.” Read More
The Laws of the Land
Each year, our representatives in the New York State Legislature propose, debate, and ultimately pass or reject scores of laws and pieces of legislation. Read More
Home Sweet Home?
While most residential buildings in the city are either purely rental or purely co-op/condo, there are many co-op and condo buildings that are home to rental tenants. This usually is the result of the building converting from rental to co-op or condo, or of shareholders or unit owners renting their units for a period of time or as a source of income. Read More
A Place of One's Own
When it comes to something as valuable as the place we call home, almost any dispute has the potential to turn into a legal crisis—and that goes double for New Yorkers. For tenants and landlords, these issues usually arise over problems with late rent, rule breaking, or destruction of property. Co-op and condo owners face many of the same issues as rental tenants and their landlords—but they aren’t the same. Read More
Playing the Percentages
It may sound like an oxymoron, but in the world of co-ops there is such a thing as “bad income.” The federal tax code requires that cooperative buildings receive at least 80 percent of their income from their shareholders—usually in the form of monthly maintenance charges and periodic special assessments. Failure to meet this requirement (commonly known as the 80/20 rule) results in a building’s shareholders being unable to declare certain tax benefits, such as declaring the interest on mortgages and an exemption on taxable income when selling a home. Read More
Changing the Guard
This is a transitional time for the New York City Council. This year, there is a new City Council Speaker in the person of Christine Quinn, a Democrat from District 3 on Manhattan’s Lower West Side who, since becoming speaker, has announced a series of reforms aimed at making the council more democratic. Read More
The Mighty Quinn
Considering that she’s still a few months away from turning 40, Christine Quinn, Speaker of the New York City Council, has achieved a great deal in politics and is thought of as the second most powerful figure in city government, after the mayor himself. Read More
Caveat, Co-ops!
Question: When reviewing applications from prospective
purchasers, can a co-op board treat a married couple differently from an
unmarried one without running afoul of New York’s discrimination
laws? Answer: Possibly.
Read More
From the Court to the Board
Several interesting court decisions regarding co-ops
and condos were made during the latter part of 2005. The decisions received
some commentary, but perhaps not the attention that they deserve. In a
condo case, the Appellate Court that oversees the trial courts in Manhattan
and the Bronx made a decision that clarifies when a condo unit owner may be
subject to liability in connection with the condo’s common elements.
And New York’s highest court issued a decision changing how one
determines whether a co-op shareholder is a holder of unsold shares (i.e.,
a shareholder who typically has special privileges, such as being able to
transfer and sublease without board approval). Some other notable decisions
provide valuable lessons.
Read More
Doing it By the Book
Unlike co-ops, which are governed by the business
corporation law and the common law with respect to cooperative housing
corporations, condominiums are really a creature of statute. The statute
that gives authority to create condominiums is article 9-B of the Real
Property Law, which is commonly known as the Condominium Act.
Read More
No Control Equals No Liability
Recently, the Appellate Division, First Department—the state’s second highest court located in Manhattan—announced a decision with far-reaching implications for the state’s condominium owners. In the case Pekelnaya v. Allyn, the court ruled that individual condo owners cannot be held liable to third parties for injuries sustained as a result of a defective condition in the “common elements” of the building. Read More
Business Corporation Law
The Business Corporation Law, or BCL, is one of the primary statutes regulating operation of cooperative housing corporations. The BCL was implemented over a century ago, and remained more or less unchanged until it was overhauled in 1998. The BCL provides a template for managing the board election process and protecting shareholders’ rights, and outlines legal methods of corporate governance. The following is a summary of some of the key points in the BCL impacting cooperative apartment corporations—things every board member and managing agent should be aware of, plus some points that should be of interest to shareholders themselves. (It should be noted, however, that these items apply to co-ops’ bylaws and Certificates of Incorporation, not their proprietary leases.) Read More
The Wild West
After what seemed like years, the wrangling over the proposed West Side Stadium in Manhattan and the city’s bid for the 2012 Olympics is over. A new stadium will now be built in Queens, not Manhattan; New York wasn’t chosen for the Olympics in 2012; the Jets, sans Chad Pennington, are still in New Jersey; Chelsea residents like this reporter no longer get “No Stadium!” flyers under our doors, and opponents of Mayor Michael R. Bloomberg must now find new issues to fight over. Read More
More Power to Condo Boards
Historically, co-op buildings have had the market cornered on board-mandated restrictions, strict bylaws, and procedural red tape, while condos have been more black-and-white: co-op shareholders own shares, and condo owners own real estate. Co-op residents wishing to sell their shares faced the greater possibility of board interference in the sale process than condo owners, whose boards typically exert only the right of first refusal when it comes to who buys into the building. If exclusivity and "building character" is a priority for you, a co-op is probably the way to go. If liquidity and minimal board involvement is what you're after, you're likely a condo customer. Read More
The Mayor's Budget & Housing
On May 5, 2005, Mayor Michael R. Bloomberg proposed a $49.7 billion budget plan for Fiscal Year 2006 that closes a once $4 billion budget gap and continues to invest in education, housing, human services, public safety and economic development. While the mayor's budget reaps the benefits of an improved economy, there is still quite a bit earmarked that could impact the co-op and condo market and/or the overall housing market. Read More
Local Law 11
February 21, 2005 signaled the commencement of the sixth cycle of New York City's façade inspection laws: Local Laws 10 (1980) and 11 (1998), now referred to collectively as Local Law 11. Read More
Blue York
In Atlanta, Georgia, it's illegal to tie a giraffe to a telephone pole or street lamp. In Pueblo, Colorado, it is illegal to let a dandelion grow within city limits. In Alabama, it is illegal to wear a fake mustache that causes laughter in church. You may not be arrested and jailed if you're caught pulling any of these stunts, but make no mistake: these rules are on the books, and if you're deemed unruly, publicly intoxicated, or otherwise disagreeable to the authorities while tethering your giraffe, cultivating your dandelions, or wearing your goofy mustache, they may decide to dust off these old laws and arrest you for them, too. Read More
The Local Law Lowdown
The past year has seen a lot of changes in the codes governing New York City's buildings, both inside and out. Rules covering lead paint, carbon monoxide detection, and construction permits have been introduced or revised, and it's up to board members, property managers, and individual shareholder/ owners to take responsibility and educate themselves about the changes. Read More
Changing the Rules
When you're on the board of a co-op or condo building, sometimes it can feel like you need a law degree to understand all of the paperwork that gets thrown at you. Depending on where you live, there are bylaws and proprietary leases and house rules and everything in between. And like any thriving growing community, sometimes rules and laws need to change with the times. But how often can these documents be changed? Who changes them? Do the owners or shareholders have any say in these changes? Read More
