Co-ops Now Exempt from Portions of Tenant Protection Act Advocates, Lawmakers Unite to Correct Problematic Language

Co-op shareholders, board members, and their support professionals are breathing a collective sigh of relief this week as the New York State legislature passed a bill exempting co-ops from certain provisions of the Housing Stability and Tenant Protection Act of 2019 (HSTPA). 

The HSTPA provides protections to rental tenants by limiting the monetary and legal actions landlords can take against them in certain circumstances. Geoffrey Mazel, a co-op and condo attorney with Hankin Mazel in New York and legal advisor to the Presidents Co-op & Condo Council (PCCC), which represents thousands of cooperative units in Queens and elsewhere, explains that co-ops were inadvertently included in the legislation by virtue of the language used in it. 

According to Mazel, like rental buildings, co-ops provide housing under leasehold agreements—but unlike rentals, cooperatives are owned and operated by their tenant-shareholders and do not make a profit. Because of this unique ownership structure, certain provisions of the HSTPA would actually harm the tenants of co-ops rather than protect them. 

Mazel explains: “When HSTPA came out this time two years ago, I sat down and read it, and realized the effects this would have on co-ops. There was a lot of opposition. … Co-ops aren’t owned by an individual to make money; they’re owned, well, cooperatively. [The PCCC and I] took this up with Senator John Liu, and both he and [Assemblymember] Edward Braunstein didn’t realize that co-ops were not carved out. So it became a priority of ours, and even though it took a while with COVID last year and [the backlog it produced this year] I’m happy to say that it was smooth sailing in the Assembly, with unanimous passage. The Senate was a little bit harder, but it passed.”

Among the protections that the new legislation affords co-ops, says Mazel, is the ability to hold money in escrow—to provide housing to a financially marginal prospective shareholder, for example—as well as the prerogative to obtain legal and late fees from shareholders and to adjudicate both in one court. One compromise in the bill, notes Mazel, is the limit on late fees: a co-op can now charge a maximum of 8% of the arrearages. Landlords, per the HSTPA, may only collect $50, or 5% of what is owed - whichever is less. 

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