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25 Mar 2016
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To Convert or Not to Convert

Is your co-op considering the transition to a condo?  These days the allure of living in a co-op just isn’t quite what it used to be.  It can be difficult to sell your apartment, buy an apartment, sublet the apartment, or pretty much anything else, as co-op life necessitates board approval for just about everything. Plus, where the average sales price of a condo unit jumped 21 percent from 2013 to 2014, the average sales price of the shares referable to a co-op unit only increased about 1.7 percent. With all of that in mind, why not just convert?  Converting from a co-op to condo isn’t as easy as one may think.  Below are a few, yet major hurdles to overcome if you want to successfully “shed the shackles” of co-op life.

 Get shareholder approval

Most proprietary leases require a “super-majority” of shareholders, as many as 80 percent, to make this sort of change, and persuading that many residents to vote in favor is the first hurdle.  For co-ops with shareholders who prefer an absence of renters in their building, it may be difficult to garner support.

Paying off the underlying mortgage

The co-op will have to pay off its underlying mortgage, and shareholders who carried personal mortgages would have to refinance, swapping their loans for more traditional mortgages.  Depending on your co-op’s mortgage underwriting, there may be huge repayment penalties.

Drafting new governing documents

A new declaration of the condominium and new bylaws would have to be written to replace the old proprietary lease and bylaws.

Pay your taxes

The conversion triggers a personal “tax event.”  That’s because it’s not actually a conversion, but a dissolution of the corporation, with the full capital gains taxes payable for that year as if a sale occurred.  For individual shareholders that have been in the co-op for years there may also be huge capital gains taxes when they trade their shares in for a deed to a condo unit if a unit’s value has increased at the time of conversion.

If the shareholders in your building are unwilling to deal with all of this, there are a couple of things that the building can do to make life in a co-op less restrictive.  For co-ops with high down payment requirements, the building can lower the down payment bar.  Co-op boards can also agree to loosen some of their policies, including the application process or the building’s policy regarding owner sublets.

18 Mar 2016
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Co-Ops and Greener Living

On August 16, 2010, former Mayor Michael R. Bloomberg signed Local Law 43, “NYC Clean Heat,” which requires that all buildings in New York City transition away from No. 6 heating oil in favor of cleaner grades of heating oil or cleaner fuel.  The law was put in place to address the public health hazard presented by oils that, when burned, emit sulfur dioxide and fine particulate matter, which contribute to local air pollution and harmful greenhouse gas emissions.

The program has been a resounding success.  As of June 30, 2015, the city of New York achieved 99.8% percent compliance with Local Law 43, significantly reducing the city’s carbon footprint.  Between 2012 and June, 2015, nearly 6,000 heating oil conversions were completed from No. 6 or No. 4 heating oil to a cleaner fuel.  In fact, more than 75% of these projects converted the building’s heating system to one of the cleanest fuels, including ultra-low sulfur No. 2 oil, natural gas, biodiesel, and steam.

Though New Yorkers are now enjoying the cleanest air in 50 years, Local Law 43 is but one part of a larger initiative designed to reduce greenhouse gases in New York City by 40 percent in 2030 and 80 percent by 2050.  Patrick Love, the New York City Carbon Challenge coordinator in the Mayor’s Office of Sustainability under Mayor Bill de Blasio, noted that one of the main contributors to pollution happens to be buildings.  In fact, nearly 70 percent of greenhouse gas emissions come from buildings’ electricity, cooling and heating systems.

While immense progress has been made, there is still quite a bit to do, but New York City is not asking buildings to do it alone.  Part of Mayor de Blasio’s initiative is the NYC Retrofit Accelerator, a team of building experts who provide independent, customized technical assistance and advisory services.  This team is continuing to assist buildings burning No. 4 heating oil to meet the deadline and convert to a cleaner fuel by 2030.  The program is not only good for the environment – the NYC Retrofit Accelerator can also help buildings reduce their operating costs and increase the value of the building by upgrading outdated systems.

11 Mar 2016
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Wagging around the law: feigning disability to get around a building’s “no pets” policy

Many people have legitimate disabilities for which they qualify for and rely on service dogs.  But what happens when your residential building has a “no pets” policy?  Pursuant to the Americans with Disabilities Act, service dogs and other assistance animals, trained to assist owners with a diagnosed disability, are classified as separate from pets.  Federal, state and city laws, including the Americans with Disabilities Act, the Fair Housing Act, the New York State Human Rights Law and various local laws, such as the New York City Human Rights Law, prohibit discrimination by housing providers, including owners, real estate agents, managing agents, building superintendents, cooperative and condominium boards.  Discrimination in this context includes refusing to make: (1) reasonable modifications to a dwelling or common use area to accommodate a person’s disability, and (2) reasonable accommodations in policies or services if necessary for the disabled person to use the housing.  Such accommodation can take the form of a waiver of a building’s “no pets” rule for a disabled resident’s service animal.

While this seems fairly straightforward, as people become more informed of how broadly the term “disability” is defined, the number of residents applying for waivers is increasing exponentially.  The proof required for a waiver differs from building to building, but generally, you need to show that you have a disability within the meaning of the law and that your service animal is medically helpful to your disability.  For some buildings, a detailed doctor’s note may suffice, but unfortunately, these notes can be all too easy to obtain, especially if you already have the animal.  The federal government does not keep track of all service animals, and a quick internet search reveals a wealth of online resources dedicated to providing fake certificates, vests, and even doctor’s notes.

While the law limits the types of questions your building can ask regarding the nature of your disability, some buildings are performing more in depth investigations to determine the sincerity of the waiver application.  These investigations may include research regarding the medical professional who drafted your letter, and a search of social media sites to determine whether the applicant has posted any conflicting information regarding a purported disability.  Indeed, disabled individuals with legitimate service animals may face more scrutiny from their residential buildings as a result of fraudulent service animals and falsified waiver applications.  While New York Agriculture and Markets Law Section 118 makes it a violation punishable by a fine to affix to any dog a false identification tag, property owners do not have many options unless the animal constitutes a legal nuisance.

04 Mar 2016
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Is My Airbnb Legal? Chances are, it’s not.

In New York City residential property located in an apartment building must be used for “permanent resident purposes.” According to New York State’s “Multiple Dwelling Law,” (“MDL”), which was passed in 2010, it’s illegal for an apartment to be rented out for fewer than 30 days, unless the apartment “host” is also present and occupying the unit.  This practice of renting out part of an apartment for less than 30 days has been termed “room sharing.”  However, unless you’re a licensed hotel, it remains illegal to have paying guests for less than 30 days in an otherwise unoccupied apartment.  Violations of New York’s MDL can result in steep fines of $1,000 to $5,000 for a first offense, and last fall, the New York City council held a hearing on a hotly contested bill that proposed raising fines against illegal hotel operators.

Now, even sticking to the letter of the law and renting your apartment for more than 30 days does not guarantee that you’re in the clear.  Depending on your building, you may still be in violation of your lease or your building’s rules.  It is not uncommon for a building to bar short-term rentals entirely.  If you happen to live in a condo or co-op, the building’s board may impose additional fines to violators, or even commence an eviction proceeding in more serious cases.  If you’re a renter, make sure to check with your landlord first.  You may not be entirely aware of the building restrictions, and short term rentals may violate your lease.

What does the future have in store for Airbnb in New York?  In November, New York City Mayor Bill de Blasio publicly pledged $10 million to go after violations of short-term rental laws over the next 3 years.  While Airbnb still faces an uphill battle in New York, don’t count them out.  The company is working on a grassroots public relations and lobbying strategy aimed at getting favorable legislation passed in New York on the state level.  At the end of 2015, Airbnb successfully completed a $1.5 billion fundraising campaign.  However, getting legislation passed to overturn the MDL is still a huge hurdle and even if it’s successful there, Airbnb will still have to get past individual building restrictions.

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