Page 2 - New York Cooperator July 2020

2 THE COOPERATOR — JULY 2020 COOPERATOR.COM ROSENWACH TANK THE FIRST NAME IN QUALITY CEDAR WOOD TANKS WE ARE CERTIFIED and IT MATTERS! 718.729.4900 43-02 Ditmars Boulevard, 2nd Fl., Astoria, NY 11105 www.rosenwachgroup.com Rosenwach is proud to announce that Rosenwach’s tanks are certified to NSF/ANSI 61 by NSF International, a leading global independent public health and safety organization. NSF/ANSI 61 addresses crucial aspects of drinking water system components such as whether contaminants that leach or migrate from the product/material into the drinking water are below acceptable levels in finished waters. To receive certification, Rosenwach Tank submitted product samples to NSF that underwent rigorous testing to recognized standards, and agreed to manufacturing facility audits and periodic retesting to verify continued conformance to the standards. The NSF mark is our customers’ assurance that our prod- uct has been tested by one of the most respected indepen- dent certification organizations. Only products bearing the NSF mark are certified. one site, we are making phone contact with payments of real estate taxes, and in the case underlying mortgages, just to name a few. owners, and we’re seeing positive results. I of co-ops, underlying mortgage payments. Presently, New York co-ops are prohibited just got off the phone with a physician who Th e second category of income comes from from commencing nonpayment proceedings did not understand the nature and urgency of commercial tenants and other non-owner in Housing Court to collect arrearages from his account delinquency. I think that perhaps sources like laundry room concessions. Not their unit owners and commercial tenants, by waiving some late fees, we will be seeing a all co-ops and condos have these types of ten- large check very soon.” One Hand Feeds the Other Cash fl ow in co-op and condominium communities is a matter of survival, not profi t. Communities pay their way by collecting rev- enue. Th at revenue comes from two general categories. Th e fi rst is monthly payments from owners, known as maintenance in co-ops and cial tenants alike unable to pay their monthly common charges in condominiums. Th ese charges. Th is has placed great fi nancial stress monthly charges cover operations—every- thing from salaries to upkeep of buildings to obligations of their own: payroll, utilities, ants, but those who do may be experiencing a sure actions in Supreme Court. Th ese mora- ‘double-whammy,’ with arrearages from both toria are in place until mid- to late August resident owners and commercial tenants. Andrew Wagner, an attorney with An- derson Kill, a law fi rm based in Manhattan, based on certain language in the governor’s says that “\\\\\\\[t\\\\\\\]he pandemic has rendered many Executive Orders, there is enough ambiguity co-op and condo unit owners and commer- on co-ops and condos, which have fi nancial and condos cannot commence lien foreclo- 2020. As an aside, although an argument can be made that these cases can be commenced in them to dissuade me from recommending COPING... continued from page 1 the commencement of any arrears-related litigation at this time. “Since boards have fi duciary obligations to their cooperative corporations or condo- minium associations,” Wagner continues, “they must take whatever steps are neces- sary to collect arrears, even though doing so in the short term may not be possible. But there are things that can and should be done. For example, default letters should be sent to unit owners and tenants in arrears, hope- fully inviting them to contact management to discuss their situation and enter into a for- bearance agreement.” Th is type of agreement temporarily suspends their obligation to pay monthly charges for some specifi ed period of time—but also contains an acknowledg- ment of the balance owed, and a repayment schedule on a mutually agreed basis. Gener- ally, such an agreement will require that the payor remain current on subsequent charges as they become due, once the repayment pe- riod commences. What happens if residential unit owners do not respond, or decline to enter into an agreement? Wagner explains: “In the case of cooperative shareholders, a rent demand can be served so that a nonpayment proceeding can be commenced promptly aft er the liti- gation moratorium ends. Additionally, a de- fault notice should be sent to the unit owner’s lender pursuant to the recognition agree- ment, which might result in the lender pay- ing the arrears to preserve its interest in the unit. Similarly, a condominium lien can be recorded without violating the moratorium, so a foreclosure action can be commenced when permitted.” For commercial tenants, Wagner says, “A negotiated forbearance agreement is also preferable, but other considerations apply as well. For example, the lease should be care- fully reviewed to determine whether, and un- der what circumstances, the security deposit may be applied towards arrears. Th is is very important, because if the business fi les for bankruptcy protection, it will be more diffi - cult to apply it if the petition is fi led within 90 days of its application by the landlord towards arrears. If the security is in the form of a letter of credit, however, it generally may be applied without consequence. Notably, there is pres- ently a prohibition against commencing ac- tions against lease guarantors of certain types of commercial tenancies, so that must be evaluated as well. Finally, an inquiry should be made as to whether or not the tenant has applied for a Paycheck Protection Program (PPP) loan, since up to 25% of the loan pro- ceeds can be applied towards rent and related expenses.” All Venues Are Not Equal Howard Goldman, a principal in the Needham, Massachusetts-based law fi rm of Goldman and Pease notes the evolving na- ture of law as it applies to this conundrum in Massachusetts. He explains: “In a decision on Wednesday, May 6, 2020, Federal Court Judge Stearns granted a temporary injunc- tion enjoining the Massachusetts Attorney continued on page 8