Q&A: Move-in Fees

Q Our board is thinking of instituting move-in fees. What is a fair move-in fee? How could we implement this policy without a shareholder vote? What could we do with the money we collect? Could it go into the reserve fund or would it have to be returned if they moved out, similar to a deposit?

—Fair-minded Board Member

A “So long as it is reasonable in amount, a board of directors of a cooperative generally has the inherent power to adopt move in/move out fees or deposits without shareholder vote,” says Eric M. Goidel of the law firm of Borah Goldstein Altschuler Nahins & Goidel, P.C. in Manhattan.

“The purpose of such fees should be to compensate the corporation for actual expenses associated with a move, as well as any damages to common areas related to a move. It should not be a significant revenue generator.

“While there is no set policy, typically a corporation would require a sizeable moving deposit (often in excess of $1,000). Provided that there is no damage to common areas and provided that the building’s moving procedures were followed, a portion of the deposit is returned. The balance of the deposit is retained by the corporation to defray administrative or employee expenses, where either building personnel or a security guard are stationed to assist/oversee a move. A portion of the deposit may be retained to defray the expenses of normal wear and tear, which while necessarily occurring to common areas and elevators during any move, never rises to the level of actual damage for which direct reimbursement from the shareholder would be required.

“While again there is no rule, the portion of the money allocated to supervision or immediately required common area repairs should be credited to the operating account. The balance should be placed into the reserve fund to defray the cost of future repairs/replacement. While there are any number of boards which charge significant move in/move out deposits that do not bear a reasonable relationship to the costs associated with a move, it is possible for an outgoing shareholder to the claim that a nonrefundable deposit is in essence a flip tax for the outgoing shareholder, or for the incoming shareholder, an entrance fee. Unless expressly sanctioned by either the proprietary lease or by laws an exorbitant fee might be subject to attack.”

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