Page 9 - CooperatorNews March 2022

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COOPERATORNEWS —
MARCH 2022
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ֶ SELF TEACHING FELLOWSHIP
AS SEEN IN “CACOPHONY”
LORDS F(E)AST
were cumbersome and intrusive. Co-op
boards were prohibited from collecting de-
posits in excess of one month’s ‘rent’—or
more accurately in the case of a cooperative,
one month’s maintenance fees. They were
also prohibited from charging an applica-
tion fee of more than $20.00, and late fees for
arrears were limited to $50.00 or 5% of the
monthly rent. Boards were prohibited from
seeking late fees, charges, or penalties in non-
payment actions, and were required to send
notices by certified mail seeking legal fees in
connection with default judgments. Though
co-op shareholders are clearly very different
from renters, both legally and procedurally,
the 2019 law lumped them all together—and
in so doing took the teeth out of many of the
legal remedies co-op boards rely on when
vetting prospective buyers and navigating
disputes with current shareholders.
What Was Changed?
Perhaps most importantly, co-op boards
can once again condition their approval of a
purchase on the posting of a maintenance es-
crow. Maintenance escrows have been a com-
mon tool for ensuring the financial health
of co-ops for decades. In cases where a new
shareholder is fundamentally qualified but
has some irregularities or other potentially
problematic factors in their financial pro-
file, putting a certain amount in escrow up
front provides the board—and by extension
the community—with a guarantee that the
shareholder’s monthly fees will be covered.
In addition to peace of mind and financial
stability, maintenance escrows also make the
sale of units easier by opening the field to a
broader array of potential buyers, says Philip
Simpson, a partner with Robinson Brog, a
New York-based law firm. “By allowing a
maintenance escrow, the changes should
make co-op apartments more available to
people whose documentable income might
not otherwise meet a board’s requirements.”
The other changes eliminate requirements
and restrictions on late fees and other charges,
re-establish long standing co-op community
management methods, such as board discre-
tion in setting application fees, reasonable late
fees beyond $50.00, the ability to collect fees
and charges in non-payment default cases,
and notifications of delinquency consistent
with the terms of their proprietary lease.
“These changes recognize the fundamen-
tal differences between a co-op and a rental,”
says Simpson. “Co-op shareholders directly
bear the costs of operating their building,
and have the ability to choose the people who
will manage their building. The changes will
bring a greatly needed level of certainty to
purchase of a co-op apartment and approval
of a purchaser.”
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CO-OPS EXCLUDED...
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their service employees prevailing wages? Is on July 1, 2022. Because the affidavit is part quired by law such as NYS COVID-19 Leave,
it the date that the affidavit was executed? Or of the application process for the abatement NYS Vaccination Leave, and in some instanc-
perhaps it is April 1, 2022, when the changes period commencing July 1, 2022, prevailing es, the Paid Sick Leave and Earned Safe and
to § 467-a become effective? Or is it July 1, wages must be paid starting July 1, 2022, and Sick Time Act. Boards of condos and co-ops
2022, when the fiscal year commences?
To answer what could be more than a
million-dollar question for some building
communities, we sought clarification from
the Office of the New York City Comptroller
(ONYCC). The ONYCC advised that the pre-
vailing wage requirement under Real Prop-
erty Tax Law section 467-a is only in effect
during the time that the building is receiving and holiday pay,” which a board may want to
the tax abatement. Buildings that apply and consider to properly meet the prevailing wage
are approved for the abatement starting July calculation. However, these supplements do
1, 2022, must begin paying prevailing wages not include certain fringe benefits that are re-
not before.
What Are the Prevailing Wages?
“Wage” is defined to include the basic 467-a and (2) prepare a customized prevailing
hourly cash rate of pay and supplements. Ac-
cording to the New York Department of La-
bor, “[S]upplements are fringe benefits includ-
ing, [among others], medical or hospital care,
pensions on retirement or death, and vacation
should contact their counsel to (1) evaluate
who qualifies as a service employee under §
wage analysis tailored to the service employ-
ees employed at the building.
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Leni Morrison Cummins, Jennifer D. Mill-
er, & Janice Sued Agresti are attorneys with the
New York offices of law firm Cozen O’Connor.
For more information, visit cozen.com.
TAX ABATEMENT...
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