What's a Biennial Statement
(And Why is it Important to Co-ops>)
A fact that is often overlooked is that the corporate operations of most co-ops are governed by the Business Corporation Law (BCL).
The Business Corporation Law is the main New York State law which governs how co-op corporations must operate. The decisions made by courts in cases involving BCL provisions are the case law which interprets the statute.
Section 408 of the BCL requires all corporations, including co-ops, to file a “Biennial Statement” every two years with the New York State Department of State (“DOS”). The Biennial Statement must be on a form that is provided by the DOS and sets forth: (1) the name and business address of the co-op’s chief executive officer; (2) the street address of its principal executive office, and (3) the address to which the DOS is to forward any service of process on the co-op. The two-year filing period begins in the calendar month in which the co-op’s original Certificate of Incorporation was filed with the DOS. The filing fee is only $9, every two years.
Failure to File
A co-op that fails to file its Biennial Statement will show as “past due” in the DOS’s records. If the co-op needs a certificate of good standing to transact any business, this certificate will show that the Biennial Statement is past due, and the co-op may be delayed or prevented from conducting or completing its transaction, including, most often, refinancing its underlying mortgage. (While the DOS has the statutory right to charge a $250 penalty for non-filing, the DOS has not been doing so in recent years.)
Filing and updating the Biennial Statement is important, since it is an easy and inexpensive way to ensure that the DOS has an up-to-date address for the co-op, so that any litigation papers that are served on the co-op at the DOS are mailed to the correct place. Litigations against co-ops are often initiated by service of process on the DOS as agent for the co-op. Once served with legal papers, the DOS is then required to send copies of these papers to the co-op at the address on file with the DOS as provided in the Biennial Statement.
Change of Address?
If the co-op has changed mailing addresses (most often, as the result of a change in managing agent) but has not updated the address on file with the DOS, the litigation papers will be mailed to an incorrect address, and/or may get lost in the mail. In either such event, the co-op will not know of the litigation, and a default judgment could easily be entered against the co-op for the full amount sought in the lawsuit.
Getting the Proper Forms
Obtaining the Biennial Statement form is simple. The DOS automatically mails the form to the coop’s listed executive office, or, if one is not listed, to the stated address for service. The forms are usually mailed one month prior to their due date. A co-op that has not received a Biennial Statement may contact the Statement Unit of the Department of State’s Division of Corporations, One Commerce Plaza, 99 Washington Avenue, Albany, NY 12231-0002, or by fax, (518) 486-4680, or by email, email@example.com.
Denise C. DeNicola joined Belkin Burden Wenig & Goldman, LLP in 2005, and she specializes in transactional real estate from contract through closing, including sales, purchases and mortgage refinances (residential and commercial apartments and buildings). Directory of New York’s Real Estate Brokers