Governor Kathy Hochul has signed a bill that exempts cooperatives from the restrictions in the 2019 Housing Stability and Tenant Protection Act. The law inadvertently lumped coop boards with commercial landlords because of the tenant-landlord relationship that exists in housing cooperatives.
Coop boards can once again collect more than one month’s maintenance as security deposit. Coops historically required some purchasers with marginal financial profiles to escrow several months of maintenance as a condition for the coop board’s consent to the purchase.
Because the law is no longer applicable to coops, coop boards can charge more than the the $50 cap on late fees and allows coop boards to impose late fees equal to 8% of the monthly maintenance. The $20 cap on application fees has also been removed, allowing coop boards to charge appropriate fees for background, credit and criminal history checks, as well as transfer agent fees. Most importantly perhaps, coop boards can now collect legal fees, late fees and other charges from proprietary shareholders.
Westchester Coop Boards have new law to deal with. The parade of horrible litigation over rejections could result. A minefield of legal complication for boards and management to navigate.
The new local law amendment requires boards to provide a notice of rejection to the Westchester County Human Rights Commission with 15 days of notifying prospective buyers of a denial. It also requires coop boards to disclose their minimum financial requirements to potential buyers.
https://therealdeal.com/tristate/2021/06/30/westchester-compels-co-op-boards-to-justify-rejection-of-buyers/
Hallelujah. When new law passes, the constraints by the Tenant Protection Act like the recovery of legal fees in housing actions will not apply to coops.
Read more.
Mitchell-Lama reform bill (A.7272/S.6412) has passed both the New York State Assembly and Senate and now heads to the Governor’s desk. Once signed, here are some of the changes that Mitchell-Lama Coop Boards and their managers need to know:
- the board must hold at least six public meetings each year.
- proxy voting is eliminated and replaced with an absentee ballot system.
- dissolution will be a lot tougher because the threshold needed to voluntarily dissolve will be 80% of all dwelling units and back-to-back dissolution votes cannot be held, because there will be a five-year moratorium following a failed dissolution vote.
- Finally, any and all formal steps toward privatization can’t take place until the last of the Executive Orders related to the COVID-19 state of emergency expires or is rescinded.
Read more here.
Coop, condo and HOA employers can mandate that most employees be covid vaccinated according to the new pronouncement by the EEOC. However employers can’t violate provisions in the American with Disabilities Act (ADA). They should also adhere to religious exceptions, local and state law, among other considerations. Tread carefully and watch for new Occupational Safety and Health Administration (OSHA) guidelines as to safety measures in the workplace.
https://www.eeoc.gov/wysk/what-you-should-know-about-covid-19-and-ada-rehabilitation-act-and-other-eeo-laws
NY State Human Rights Law Section 296 entitled “Unlawful Discriminatory Practices,” now requires housing providers to “disclose to all tenants and prospective tenants of their right to request reasonable modifications and accommodations if they have a disability. . . . ” (the “Notice”). Housing providers include those who have the “right to rent or lease” apartments. So, cooperatives have to comply and so do condo boards that own and rent units. If a coop tenant subleases or a condo tenant leases their unit, they also have to comply with the law and provide the Notice. The Notice must be delivered to all tenants and prospective tenants on or before April 2, 2021, or within 30 days of the tenancy beginning. This is going to be a headache for coop and condo boards. Stay tuned for more.
Here is a sample notice that the NYS Division of Human Rights crafted.
The Board of Managers of the Oceana Condominium No. Two learned recently that withholding the waiver of the right of first refusal cannot be used to block an unwanted condo sale.
In this particular condo, the President of the Board owns and lives in the unit directly below the unit being sold, and he allegedly did not want children living above him. The prospective purchaser has young children, and the President also allegedly did not want a sale for the low sales price. The contract was subject to short sale approval by the bank holding the first lien on the unit, a short sale which had been approved by the sellers bank. The purchaser claimed that the Board was troubled that it would appear in the public record and lower the value of the units in the development, so the Board interfered with her contract with the selling unit owner, so she was not able to purchase the unit. The condo board did not choose to exercise their right of first refusal, but they would not provide the document which this development ordinarily provides, stating that they were not exercising their right of first refusal. Without this document, the purchaser’s lender refused to close. The sale was lost as a result of the Board’s delay, the holder of the second lien on the unit foreclosed on the unit, preventing the purchaser from closing and the purchaser sued.
The Court threw out all of the claims against the Board and individual Board members except for a tortuous interference with contract claim against the Board. So, the litigation continues, with escalated legal fees and costs escalating because of the decision making by the Board or its President. In this particular case it appears that directors and officers insurance responded with a defense but even then the condo is responsible for paying a deductible and claims like this can impact future insurability and/or the cost of insurance. In some cases, we’ve seen individual board members ask for their own counsel because of possible conflicts of interests considering the Board President there seems to be the primary culprit.
With some good legal advice and management guidance, this situation could have been contained and avoided. For the Oceana Condominium No. Two, the saga continues.
Read the decision here.
More tenants’ rights legislation. If passed condo and coop owners would have to show “good cause” to evict.
The bills, if enacted, would change how someone owning real estate could treat an occupant of space regardless of whether the occupant had a legal right to occupy the space. These bills apply to all residential real estate except rent-stabilized and rent-controlled apartments, and owner-occupied houses with less than four units.
https://legislation.nysenate.gov/pdf/bills/2021/A5573
Coops, condos and HOAs are itching to open up amenities that were temporarily closed because of the Covid-19 Pandemic. We are starting to be asked by boards and management for legal advice about opening up pools, gyms, public meeting rooms, roof decks, playrooms, etc. Every association is different but here are some tips that we believe will be helpful.
- To the extent authorized by the association’s governing documents and law, increased maintenance and cleaning expenses should be passed on to individual members using common facilities who fail to comply with applicable rules and regulations.
Most community association boards are generally and specifically authorized by their governing documents to make and adopt rules and regulations governing the use of the common element facilities. If your association has not already done so, the board should consider passing a resolution adopting new rules or amending current rules which impose on owners increased responsibility while using the common element facilities and specifically restrict the use of common facilities by owners and residents who are sick or may have been exposed to Covid-19. Such rules could require those who use the facilities to use appropriate sanitizing and social distancing measures. In which case, the association’s rules and regulations should entitle the association to impose upon the owner the increased costs or expenses associated with the increased cleaning as a result of their behavior. Adopting a disclaimer and waiver form for use of facilities could also cover this so that additional costs to make it safe are passed along to users as opposed to all owners.
- Levy fines for non-compliance and earmark fines collected for COVID-19 prevention related measures.
Once the association has adopted its COVID-19 related rules and regulations, the board should be able to enforce them against violators. The board could consider earmarking non-compliance fines to help pay for the increased costs and expenses related to COVID-19 prevention. Be sure to examine your governing documents to make sure fines are within the board’s power. If not a bylaw amendment may be required.
- Consider including a line item in the association’s operating budget for increased COVID-19 expenses.
The goal to keep your association community safe could be expensive. Rather than trying to figure out how to pay for it later, perhaps include a new line item in the annual budget. The other benefit is that owners will see (if they read the financials) that the board is proactively acting to make the community safe by planning ahead.
- Consider opening only those common facilities and amenities for which the association has developed an enforceable plan of action.
There is no one-size-fits-all COVID-19 plan, and any prevention methods and measures adopted by the board should be tailored to the specific association. There is also no requirement that the association open (or close) all common facilities and amenities at the same time. Boards could open one amenity at a time and see how it goes and then govern accordingly.
- Check with your insurance provider to see if there is coverage.
Before opening any amenity, boards and management should check with their insurance agents to see if their current insurance is adequate. We have learned that insurance companies are relying on exclusions in most policies regarding Covid-19 and not planning to cover certain losses. We will have to wait and see whether this turns out to be the case and whether new insurance coverage for such losses will be available at an additional cost. If there isn’t coverage for claims like people contracting Covid-19 at the pool and suing the association for not taking safety precautions, boards may decide not to open or to open only for persons who sign well crafted disclaimers and waivers. The trouble with those documents is that they may provide a defense to a claim, but the association may still have to pay to defend against it if there isn’t insurance coverage. Whether this is a risk the board wants to take will depend on the board. Boards that don’t want to take the risk themselves, could go to the owners for a vote on the matter and take the burden off of the board’s shoulders.
