Page 6 - NY Cooperator April 2020

6 THE COOPERATOR — APRIL 2020 COOPERATOR.COM Cooperator.com From Chaos, disruption, everything closing around us...not the best conditions for buy- ing or selling a co-op or condo. Yet for many, the search for a home—or the urgency to sell the one you’ve got—may supersede the crisis around you. The question arises as to how the real estate brokerage community is coping with the COVID-19 crisis. As the pandemic—and federal, state, and local government responses to it—evolves, how are brokers keeping their business afloat? Precautions & Options Apart from the obvious hand washing, hand sanitizing, and hand wringing that have become a fact of daily life in the past weeks, brokers and brokerage companies say they are doing their best to handle this crisis of social intimacy as fairly and creatively as possible. Bruce Robertson, a broker with Compass in upper Manhattan, provided The Cooperator with the basic precautions his company is taking. In a memo to its sales staff, Compass management recommends that “it is up to you and your sellers whether or not you should proceed, but in light of the current situation in Westchester and NYC, you might be better off only allowing showings” rather than holding open hous- es that are less manageable. They also offer some best practices going forward to pro- tect both agents and clients: • Offer to do video tours for buyers and/or agents by appointment • Take an open house live on Facebook. You may need a gambrel to steady your phone and will need a good internet connection. • Replace an open house with a social media ad and market it more extensively on Facebook or Instagram. • Continue to market to brokers via email or social media. When it comes to conducting open houses, the following rules are suggested: • Disinfect the home when you arrive —and know if your clients have traveled or are ill • No entry to anyone who has traveled internationally in the last 14 days • People must disinfect their hands at the front door with hand sanitizer or wipes upon entering the home—or wash their hands using soap and water and disposable towels • Ask them not to touch anything in the home—lights should be on and doors open • Limit the number of people in the home at one time to just one or two parties • Ask people to maintain safe distances if waiting • Sign people in yourself, one at a time • Disinfect the home before leaving Additionally, Compass recommends the following rules to protect their brokers and salespeople: • Confirm that buyers have not traveled internationally in the last 14 days • Ask buyers and agents to disinfect their hands with sanitizer or wipes at the front door Sales in the Age of Coronavirus Lockdowns, Quarantines, and Uncertainty BY A.J. SIDRANSKY How to Recover Fees from a Delinquent Shareholder in the Age of HSTPA Legislation Prevents Collecting ‘Additional Rent’ in Court BY DARCEY GERSTEIN COOPERATOR.COM continued on page 7 As previously covered in this publica- tion and elsewhere, sweeping legislative likelihood that in addition to mainte- reforms under the 2019 Housing Stability nance, the shareholder owes other monies at law firm Schneider Buchel in Garden legal fees being sought (which most pro- and Tenant Protection Act (HSTPA) that to the co-op for late fees, assessments, re- were intended to protect rental tenants pair fees, and attorney fees that accrue in because of co-op shareholders owning to place a lien on the shareholder’s shares perhaps inadvertently—and, many argue, the course of the proceedings or any other shares rather than real property (as is the for the indebtedness and obligations.” He deleteriously—included cooperatives in legal action that has been taken against case in ownership of a condo or single- their regulations. Among those regula- tions is the prohibition of collecting “ad- ditional rent” charges—such as late fees, paid and unrecovered charges from a ten- attorney fees, sublet fees, and the like— in summary nonpayment proceedings in the remaining shareholders are on the protracted timeline associated with them. Housing Court. Because the structure of cooperative cumbent upon boards to avoid shoulder- ownership relies on a proprietary lease ing their neighbors with undue financial is to file a lawsuit, which would of course for the right to occupy a unit within the burdens in ways that are legally permis- building, legislation that covers residen- tial leasehold agreements is inclusive of co-ops and their shareholders. In cases where a shareholder is being legally pur- sued for nonpayment of “rent”—or, in co- op parlance, the monthly charges referred collection is commencing what is known to as “maintenance”—there’s a strong Article 9 nonjudicial foreclosure. Accord- them. Unlike rental apartments where un- ant would fall to the landlord, in a co-op courts and therefore the legal fees and hook for any bad debts. It is therefore in- sible. The Case for Nonjudicial Foreclosure One possibility suggested for recover- ing fees from a shareholder in arrears now shareholder to make the co-op whole or that HSTPA prevents “additional rent” to strike a deal that suits both parties. as a Uniform Commercial Code (UCC) ing to Marc Schneider, managing partner have language entitling the co-op to the City, New York, this option is available prietary leases do), and entitling the co-op family home). A sale of shares via a nonjudicial fore- closure has the benefit of avoiding the Once such a foreclosure is initiated, says Schneider, the shareholder’s only recourse require additional time and money on the part of the shareholder. Schneider asserts that the threat of losing the shares in the foreclosure sale is enough to force the Schneider points out that “In order to do this, the governing documents must adds that this method is best reserved for arrears collection only—not for eviction of the shareholder from the co-op unit. The Case Against Nonjudicial Foreclosure But not everyone agrees with the util- ity—or legality—of this method. Andrew J. Wagner, shareholder in the New York office of Anderson Kill P.C., who spe- cializes in co-op and condo law, recently wrote an article published in the New York Law Journal in which he advocates against the use of nonjudicial foreclosures by co-op boards looking to sidestep re- strictions imposed by HSTPA. He argues that even if a proprietary continued on page 7