Q At a general meeting of our condominium, a proposal for a flip tax/transfer fee on the sale of a unit failed to get enough votes. Subsequently, the board of managers decided to impose a transfer fee of five months maintenance charges to be split between the buyer and the seller. The bylaws of the condominium have no provision for a flip tax or a transfer fee. Can the board of managers do this without a change in the bylaws?
—Law Abiding CitizenA “Generally, condominium bylaws empower the board of managers to make certain financial decisions without the unit owners’ vote,” says attorney Pierre Debbas of Romer Debbas LLP. “Mainly this authority consists of determining the condominium’s budget, the amount of common charges required to meet the condominium’s budget and also the necessity of any increases in common charges or implementations of assessments. It is probable that your bylaws will permit the board to impose fees on the sale of a unit, but those fees should be limited to administrative, professional, legal or other expenses that the condominium and/or its managing agent incur due to the sale of a unit.
“Since a flip tax is primarily a revenue producing mechanism that pertains to co-ops, most condominium bylaws do not address your question specifically. However, the condominium bylaws should state that any additional fees (not listed above) that are imposed on a sale must be approved by a vote of the unit owners.
“Real Property Law § 339-u, states that a condominium must be governed by the bylaws and no modification of or amendment shall be valid until such amendment is recorded. The board’s unilateral enactment of the “transfer fee” was done in light of the requisite number of unit owners voting against the flip tax; and the board in doing so appears to have exceeded its authority given to it under your by-laws.
“Given that your bylaws have no specific provision permitting for a flip tax/transfer fee combined with the fact that the unit owners voted against this proposal, the board of managers more likely than not has violated RPL § 339-u and the enactment of the “transfer fee” should be repealed.”