Page 5 - CooperatorNews May 2021

COOPERATORNEWS.COM COOPERATORNEWS — MAY 2021 5 QUESTIONS & ANSWERS Legal Q A& Our division devoted exclusively to co-op management and condo management is dedicated and proactive. Our fees are flat with no hidden charges. We've got you covered. Visit remny.com today for a free consultation or call 212-260-8060 Top Property Management in NY Three Best Rated Best Property Management Company in Manhattan PropertyMangement.com 2019 NYBMA Property Management Company of the Year NYBMA U.S Directory of Real Estate Excellence Award 2020 U.S Directory of Real Estate Best Property Management in New York Yelp Best Property Management Company in NY PMfinder Top 25 Property Management Company in NY iPropertyManagement Top Commercial Property Management Companies in New York Clutch Top Property Management Companies on Social Media Medium 2020 Top Property Management Company in NY Expertise Best Co-op and Condo Management Company in NY The Water Scrooge Top Condo Management companies in New York Condo Control Best Property Management in New York Improve Rentals Top Property Management Company in NY BirdEye 2016 Property Management Company Of the Year NYARM 2017 Sitecompli Pioneer Award Sitecompli N E W Y O R K ' S T O P R A T E D C O N D O A N D C O - O P M A N A G E M E N T Assessments Collection Q In addition to our monthly $942 common charges, the board of our condominium complex has been collecting an additional $257 assessment each month since August 2018 in anticipa- tion of future repair work, and to replenish our underfunded reserves. We have some major capital work scheduled to commence soon, and instead of using the reserves we’ve been funding for the last three years, start- ing in August 2021, the board has decided to impose a new special assessment of $1,542 on each unit for four months, to cover the entire cost of the work — about $150,000. Th e board is not spending a penny from the reserve. Moreover, in the notice letter of this new $1,542 assessment, the board also states that the previous ongoing $257 monthly as- sessment will be incorporated into our base monthly common charges commencing Au- gust 2021. Is it legitimate for the board to do all of this? —Owner Who Th inks Th is Is Unfair A “Th e short answer to these questions is yes,” says at- torney Stewart Wurtzel of the Manhattan fi rm of Tane Waterman & Wurtzel, P.C. “It is perfectly legitimate for the board to determine how to raise money for repairs and to replenish reserves through assessments. “Th ese decisions will be protected by the Business Judgement Rule. A properly replenished reserve fund is an important component of a fi nancially healthy building. As the original assessment was to be used for future repairs and to replenish the reserve fund, use of all or a substantial portion of the reserve fund to pay for current repairs will have defeated the purpose of the initial as- sessment. “In addition, if the monies were drawn from the reserve fund to make the repairs, it would most likely be necessary to have ex- tended the assessment to replace what was spent. It is also unknown as to how many repairs are forecast over the next number of years. Th e board may have been concerned about repairs that will be upcoming and wanted to make sure there was a fi nancial cushion to help pay for those repairs. “Because of restrictions in many condo- minium bylaws, a condominium’s ability to borrow to fund repairs is oft en more limited and certainly more cumbersome than the tools available to a cooperative. For example, unit owner approval is usually needed before a condominium can seek to take a loan. “Finally, having set aside money in the common charge budget to help fund the reserve is also a legitimate exercise of busi- ness judgement. Many lenders are requiring condominiums to have set aside for reserve in determining whether they will provide end loans in the building. Building an ex- cess in the budget for reserve purposes will hopefully obviate or minimize the need for a future assessment. On its face, this sounds like the board is doing exactly what it should be doing to preserve the fi nancial integrity of the building.” n Disclaimer: Th e answers provided in this Q&A column are of a general nature and cannot substitute for professional advice regarding your specifi c circumstances. Always seek the advice of competent legal counsel or other qualifi ed profes- sionals with any questions you may have regard- ing technical or legal issues. Write to CooperatorNews and we’ll publish your question, along with a response from one of our attorney advi- sors. Questions may be edited for taste, length and clarity. Send your questions to: darcey@cooperatornews.com. Q&A