2001 Jun
2001 Jun Vol. 21, No. 6
Focus on...Law and Legislation
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
That Ugly "F" Word
"Foreclosure" is a word no co-op or condo owner wants to hear, but when residents fall behind on maintenance fees or common charges - when their financial burden becomes too large to shoulder - sometimes foreclosure can be the only answer. Read More
Residential Ghost Town No More
Under the sweeping shade of the World Trade Center, something miraculous is happening—a neighborhood is coming to life. Once the enclave of intense financiers worried more about the bottom line than where they would hang their hats, Manhattan’s Financial District has become home to thousands of new residents. While the focus in recent years has been toward rental properties, condos and co-op development is beginning to take place. With this renaissance, the birthplace of New York City may soon enjoy a deserved second look as not only a place to work, but a place to live and play as well. Read More
Co-op and Condo Renovations
One of the unique features of performing construction work in a cooperative or condominium apartment is that it must usually be performed pursuant to an alteration agreement that addresses what, where, when and how construction work is to be performed. An alteration agreement is typically entered into between the shareholder of a co-op or unit owner of a condo (collectively referred to as “owner”) and the co-op or condo board or its managing agent. It may also be enacted when the co-op or condo board performs renovations in the common spaces of its building. Most of the provisions contained in an alteration agreement are geared toward protecting the condo or co-op and its residents (the “building”) from claims arising from the owner’s construction. As such, the owner takes on an added layer of liability which is not usually involved in undertaking construction of one’s property. It is, therefore, all the more important to ensure that proper protections are incorporated into the owner’s design and construction agreements. Two of the primary ways that the owner can protect itself and the building from liability arising from renovations are (1) professional liability insurance requirements in owner-design professional agreements, and (2) requirements for removal of liens in both owner-design professional and owner-contractor agreements. This article focuses on how these two areas of law pose liability to owners and discusses practical steps that can be taken in order to protect themselves and their building from unnecessary liability exposure. Read More
The Battle for Access
Perhaps you’ve seen the commercials on television; a mob of people shouting “The Internet is slow as heck, and we’re not going to take it anymore!” Or the one where a succession of comedians tell jokes beginning with “My internet service is sooo slow….” and many of us can fill in the blank. While the Internet has begun to revolutionize the way we do business, recreation, and everything in between, technology for residential use has very often proved sluggish and frustrating. High-speed access, in the forms of cable modems and Digital Subscriber Lines (DSL) is available, but with varying degrees of success. Telecommunications companies, real estate associations, and legislators are all trying to come up with a solution to the problems of providing unilateral high-speed Internet access. Unfortunately, they can’t agree on what that solution might be. Read More
Passing the 80/20 Test
The Internal Revenue Code’s Section 216 authorizes cooperative apartment owners to receive a pass-through tax deduction for their proportionate share of the mortgage interest and real estate taxes paid by a qualifying co-op corporation. One of the qualifying tests is the requirement that 80 percent or more of the gross income of the cooperative in each taxable year is derived from the tenant-shareholders. Real estate commercial rents in recent years have caused many co-ops to be in jeopardy of failing to qualify under Section 216, because commercial rents received by cooperatives that are situated in commercially zoned areas are increasing to such an extent that many buildings are or will soon be receiving too much income (more than 20 percent) from these non-qualifying sources, and because it is very difficult for a cooperative to divest itself of these income sources without creating additional tax problems and other problems both financial and non-financial. Read More
East vs. West
Beyond the obvious differences—taxicabs versus cacti, towering high-rises versus wide-open spaces, big business versus big-sky country—there’s more separating the New York real estate scene from the rest of the country than just geography and climate. Approaches to home sales in New York and the urban East differ markedly from sales in the West for a score of reasons. Because of land scarcity, New York and other eastern urban areas have built upward into high-rise apartment buildings, while the West has historically spread outward into private homes, taking advantage of cheap and plentiful land. This fundamental difference underlies the other significant dissimilarities between the regions in the closing process. Read More
Licensing Property Managers
Over the past decade, numerous pieces of legislation have been introduced at the state and city levels calling for the licensing of property managers in New York State. None have been passed, but a new bill, S279 sponsored by New York State Senator Carl Kruger, (D-Brooklyn) is now in the judiciary committee. Kruger spoke at a meeting of the New York Association of Realty Managers (NYARM) early this year, asserting that 2001 was the year this legislation could finally prevail and “put the indicia of professionalism on this industry.” The bill stipulates that residential property managers bring to the job a standardized level of education and knowledge, as well as practical, applied experience. Donna Klein, the executive director of NYARM, describes how the bill would raise the level of respect for property management, as well as the quality of service: “The people that populate this industry are professionals. They deal with licensed people on a daily basis—electricians, plumbers, elevator contractors, waterproofers, people that are in their professions are licensed by the state of New York. Not only does this prove their competence to the public, but because they are licensed, they are held to a higher standard than those that would populate an industry with lesser quality. We want the same respect that all these other professionals get within this industry. We know you can’t legislate morality, but when you’re held to a certain standard, and your license is involved if you break that standard or break the law, it sometimes makes someone stop and think.” Read More
