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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  today for a free consultation or call 212-260-8060  Top Property  Management in NY  Three Best Rated  Best Property  Management Company  in Manhattan  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:  Q&A

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