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Law & Legislation
The Accommodation Situation
Getting around in New York City can be difficult, even at the best of times; traffic, crowds, construction, and inclement weather can all conspire against even the most able-bodied city-dweller. The situation can be more troublesome still for elderly New Yorkers, and those of us living and working with disabilities. For someone using a wheelchair, every curb poses a challenge; for those navigating without the benefit of sight, the sidewalk can be an obstacle course. For anyone recuperating after surgery or serious injury, getting into and out of their own home can pose problems"¦particularly if their building isn't in step with two very important pieces of legislation: the Fair Housing Amendments Act (FHAA) and the Americans with Disabilities Act (ADA). Read More
Overseer or Overlord?
In a case that may well have far-reaching implications both in New York City and beyond, the state Appellate Court, 2nd Department, is currently crafting a judgment that may give the state Attorney General increased oversight in how co-op and condominium boards operate. Read More
Without Rhyme or Reason
The age-old battle between applicants and co-op and condominium boards can sometimes seem like a cunning chess match in which the prospective buyers are pawns awaiting to be knighted with the stamp of approval before they are allowed to move into their brand new castle. Under current state law, co-op and condo boards are protected under a veneer of legal precedents that allows them to reject buyers without having to provide a written reason for their decision. Read More
How Legal is That Doggy in the Window
Ever wonder how that frisky pug got the penthouse window seat in a "pet-free"¯ building? Or how that tabby from 4C manages to saunter down the hall like he owns the place? Thanks to New York City's "pet law,"¯ many co-op and condo owners have found a way to keep a pet or two despite their building's otherwise anti-pet policy. Read More
UCC Changes Could Mean Challenges for Boards
The Uniform Commercial Code (UCC) is essentially an assemblage of various statutes enacted to regulate commercial transactions which - to encourage national commerce - are adopted in the same form by virtually every state. Currently, the new and updated Article 9, which governs secured transactions (usually bank loans secured by pledges of personal property), is in use in more than 40 states. Since the late 1980s, there have been technical variations in the New York version of the pre-existing Article 9 with respect to co-ops' filing requirements, duration of those filings, etc. for a variety of reasons - including encouraging banks to make subordinate loans against cooperatives. Read More
The Jennifer Realty Case
On June 11, 2002, in one of the most significant court decisions affecting co-op and condo owners in recent years, the New York State Court of Appeals issued a ruling in the well-publicized case of 511 West 232 Street Owners Corp. v. Jennifer Realty Corp.. The court held that offering plans are in fact a kind of contract - and legally oblige buildng sponsors to act in good faith and timely sell "at the very least"¯ enough shares to create a "fully viable cooperative."¯ The Court ruled that by keeping a majority of shares in a cooperative, a sponsor defeats the purpose of the contract. Read More
Reversals, Reinstatements, and Rhetoric
In a widely publicized 2000 case, the New York Supreme Court (First Department) issued a judgment annulling New York City's then-newly enacted lead-based paint law, commonly referred to as Local Law 38. The case was immediately appealed, and throughout 2001, confusion prevailed as to which lead paint regulations were actually in effect. Read More
Lead Paint, Taxes, Sidewalk Liability
Although most political watchdogs and legal experts cite the city and state budget woes as a reason for the slow legislative year, a number of important initiatives of interest to co-ops and condos are currently under review. Read More
Stand Up and Speak
Since the attacks and subsequent collapse of the World Trade Centers in Lower Manhattan last fall, area residents, business owners, real estate professionals, developers, and concerned citizens' groups have been doing their best to navigate the welter of legal, social, and civil issues brought up in the tragedy's wake. Even before the full extent of the damage done on September 11th was known, downtown residents feared for their lives, their health, the safety of their children, and the fate of their homes. Business owners and those who worked in Lower Manhattan wondered if they'd be shut down, either by new attacks, government orders, or sheer lack of business. Read More
Broker Uses Inside Info to Defraud Clients
In the course of representing and negotiating for the interests of their clients, real estate brokers are often privy to sensitive or confidential information. Whether buying or selling, residential or commercial, super-luxe or no-frills space, it’s absolutely crucial that brokers put the interests of their clients first–not only for purely ethical reasons, but to avoid career-killing legal imbroglios like the one that recently ended with a Staten Island broker being stripped of her license. Read More
Brace Yourselves
In April 2001, the Committee of Condominiums and Cooperatives of the Real Property Section of the New York State Bar Association, the Association of the Bar of the City of New York, and the New York County Lawyers Association approved a new form of contract of sale for co-op apartments. The new contract contains many improvements and significant modifications to its predecessor, which was approved in August 1999 and is starting to be used more and more in New York. Read More
Controversy and Confusion
In October 2000 Judge Louis York (New York Supreme Court, First Judicial Department) issued a decision that annulled the City of New York’s lead-poisoning prevention statute, commonly called Local Law 38. In the many news articles and attorney bulletins announcing this decision, it was widely assumed that the City would appeal, and that there would be a legal battle over whether filing an appeal would cause an automatic stay of Judge York’s ruling. Building owners, managing agents, and co-op and condo boards were generally advised to continue abiding by the requirements imposed by Local Law 38, despite them not being mandatory while the case was under appeal. Read More
Your Legal Counsel
When your board hires a professional, you’re looking for someone they can trust to do good work on behalf of your building. This goal is doubly important when it comes to hiring and interacting with a lawyer for your co-op or condo building. The long-term relationship between a board and legal counsel provides continuity and guidance as the years pass and boards change. In order for that relationship to work, however, both the board and the attorney must be willing to work together to ensure that things run smoothly and in the building’s best interest. Relying on the good judgment of your legal counsel and being aware of his or her responsibilities to you and your building will benefit everyone involved and make the day-to-day operations of your building as smooth and trouble-free as possible. 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
Your Rights and Obligations
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? You bought a dog for your child, and six months later the board has demanded that it be removed from the building. Do you have to comply? Read More
Regulated Renters' Rights
Think you don’t need the services of that 24-hour doorman in your co-op anymore? Better check with the rent stabilized tenants with whom you share the building. Chances are their leases provide protection against the elimination of building services. Read More
Terminating Sponsor Leases
Many New York City co-ops have garages leased to the sponsor dating back to the co-op’s conversion. Though these garages, described by one judge as "a veritable gold-mine," throw off riches mostly to the sponsor, a little-known federal statute gives co-ops the right to reclaim the benefit of garage ownership–namely, the high rents the garages generate–and an important recent decision of a federal appeals court has just made it easier to do. Read More
Unlawful Stock Transfers and Termination
Co-ops have to be vigilant and address defaults due to nonpayment, objectionable conduct, illegal sublets, bank foreclosures and below market resales, and shareholders declaring bankruptcy. Some proprietary leases and bylaws appear to give co-op boards incredible authority. By a mere majority vote, boards can declare a shareholder, investor or even a sponsor in default due to their own actions, or the actions of the subtenants and renters. Boards may mistakenly believe that by a mere vote and then notification, they can terminate the shareholders’ stock and lease. Boards who read their proprietary lease and bylaws in a narrow and literal way may begin to think they can solve their resident problem cases by eliminating the shareholders’ or investors’ rights and interest in the stock and lease, without a judicial procedure. The court cases cited above show that even with a court action, the co-op may not be able to terminate the stock and lease! Boards often believe that after stock is terminated, the apartment and stock automatically revert back to the co-op, as the co-op’s property without a private, public or foreclosure sale. Read More
Laying Down the Law
New York, my old home state, presently litigates all co-op and condo disputes. Litigation, however, continually proves to be an expensive and time-consuming endeavor. Perhaps it’s time for New York to consider compulsory mediation-arbitration before initiating court proceedings. Mediation is negotiated peacemaking and arbitration is a decision favoring one side over the other. The main benefit to both is that they take place outside of a courtroom setting, saving precious money and time. From beginning to end, the process runs about five months. Parties don’t have to lose endless hours from work while they wait around in stuffy, crowded, run-down courtrooms waiting for their cases to be called. Parties and witnesses appear once at the scheduled hearing date and that’s it. Court cases–even here–can take a couple of years to conclude. That shopworn phrase of "Justice delayed is justice denied" doesn’t apply to arbitration cases. Read More
Board Members Beware
As we enter the 21st Century, issues of equality continue to be a problem in the United States. As such, government has created a complex set of laws to protect people from discrimination, but the problem has still not gone away. The responsibility to treat prospective unit owners equally goes above the societal implications for board members and managing agents. If they are not careful to avoid acting in a way that might be viewed as discriminatory in a court of law, they risk lawsuits and severe legal penalties. It has been held that board members can be found personally liable under city, state and federal laws for discriminatory practices. Read More
Passing on Co-ops
Maintaining authority over sales by estates has become a difficult challenge for co-op boards of Read More
Board Denials on the Rise
As the resale value and demand for cooperative apartments increase and the supply of available Read More
Voting by Proxy
When it comes to decision-making in your building, attending meetings in person Read More
Buying an Apartment With a 'Significant Other'
Sensible people routinely have life insurance, disability insurance, car insurance and homeowners insurance, Read More
Reacting to Sponsor Default
tarting in the mid '70s and continuing through the latter part of the '80s, New York City was engulfed in the co- Read More
Derivative Lawsuits
A cooperative is generally organized as a so-called business corporation, just like, for example, IBM Read More
Charging Legal Sublet Fees
In a recent decision, New York's second highest court ruled that the Hotel Des Artistes coop-erative did not have the authority Read More
Change is Good!
Times change and your building's house rules should change along with them. A decade may have Read More
Rights of Inheritance
Several months ago, I wrote an article for this column detailing the circumstances under which a cooperative Read More
Provide Disabled Access
In a September 1994 decision applicable to many cooperatives and condominiums in New York City, the Appellate Division, Read More
