This summer, the New York State Legislature passed a sweeping 75-page piece of legislation called the Housing Stability and Tenant Protection Act that inspired rejoicing by many renters and outrage among many landlords. Lost in the uproar is the little-noticed fact that the law has major implications for co-op boards, co-op shareholders, and unit-owners in condominiums.
“Co-ops are unintentional roadkill in this blunderbuss legislation,” says Bruce Cholst, a shareholder at the law firm Anderson Kill. “I don’t think the legislature’s purpose was to hurt co-ops; it was to expand tenants’ rights. But co-ops got caught up in the dragnet because co-op boards are considered landlords.”
Cholst adds: “Obviously, this limitation does not facilitate timely payment of maintenance. However, boards should continue to assess late fees as permitted by law, and we recommend that, pending legislative or judicial clarification to the contrary, the late fees should be assessed monthly. Boards should also more carefully scrutinize purchasers’ financials at the time of admission, push banks to pick up shareholders’ arrears more aggressively, and move faster to commence nonpayment proceedings in Housing Court, which is now the mandatory forum for seeking payment of rent arrears.”
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