Q&A: Rental Issues in a Co-op

Q I am a rent-stabilized tenant in a co-op building. I was a tenant in the building before it became a co-op, and have had numerous problems with the owners.

Currently at the top of my list is a discrepancy over my security deposit – in that the owners have continually failed to inform me of where it is kept. They have not responded to any mail, certified or otherwise.

Is there a way of establishing a liason between the co-op board and the residents of the building who stayed on as renters?

-Irritated in Forest Hills

A According to Phyllis H. Weisberg of the New York-based law firm Kurzman, Karelsen & Frank, LLP, “It is unclear whether the letter writer’s references to ‘owners’ refer to the apartment corporation or the landlord. If the references are to the apartment corporation, as discussed below, there is no relationship between a cooperative’s board of directors and a rental tenant. Therefore there is no obligation with respect to the security deposit. Consequently the tenant’s remedies are with his or her landlord and not with the board of directors.

“Thus, upon the conversion of a rental building into cooperative ownership, the ownership of the property is transferred to a cooperative apartment corporation. The apartment corporation is operated by a board of directors elected by the shareholders of that corporation. The relationships between the board of directors and the shareholders, who are also lessees, are set forth in both the bylaws and the proprietary lease.

“The rights and obligations of a rental tenant and his or her landlord are basically undisturbed by the conversion. In effect, the rental tenant becomes a subtenant since his or her landlord becomes the lessee under a proprietary lease with the apartment corporation. The rights and obligations between the rental tenant and his or her landlord are still set forth in the same rent stabilized lease as before the conversion. The landlord is still responsible for complying with the lease and with all applicable laws affecting the apartment, including any rent regulation laws. Since the tenant has a direct contractual relationship with the landlord, rather than with the board of directors, and since the landlord is responsible for complying with the lease and all applicable laws affecting the apartment, the tenant’s remedies are against the landlord.

“Under New York law, the landlord must keep a security deposit in an interest-bearing account in a New York State bank and inform the tenant of the name and address of the bank and credit that tenant the entire annual interest, less one percent (1%) of the security deposit per year for the landlord’s administrative costs. If the landlord fails to provide the required information, or otherwise fails to respond to the letter writer’s letters and/or requests, the letter writer may contact the Consumer Frauds and Protection Bureau of the New York State Attorney General’s Office.

“The letter writer should be aware that the board of directors consists of volunteers who, in addition to their full time jobs and other obligations, run the apartment corporation for the benefit of all shareholders. Unfortunately, the board members usually have little time to spend on anything but the concerns of the apartment corporation. Since the board of directors has no obligation to the renters, it would be unusual for there to be much, if any, interaction, in the form of a liaison or otherwise.” n

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