As we are currently living in the age of technology, is it possible for individuals to rely on an email to be a legally binding real estate contract? Email is one of the most effective and common communication tools in business. It allows people to instantly send new ideas, terms for an agreement, or offers quickly in writing. New York Statute of Frauds General Obligations Law § 5-701 sets forth that all agreements must be in writing and signed by all parties, and § 5-703 goes further to require all conveyances and contracts concerning real property to be in writing (also see Scheck v Francis, 26 NY2d 466, 469—70 , parties to an agreement “are not bound and may not be held liable until it has been written out and signed”). But can a chain of emails make up a legally binding agreement if there is an agreement, contractual intention and consideration?
In 2013, Justice Sgroi of the New York Appellate Division shed light on this issue in Forcelli et al. v. Gelco Corporation et al. 2013 NY Slip Op 05437. The court was asked “whether an email message can satisfy the criteria of CPLR 2014 so as to constitute a binding enforceable stipulation of settlement.” The Court affirmed the previous decision that when:
“an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement.”
If parties do not wish for an email chain to accidentally be held as enforceable, it is important to provide a disclaimer stating the lack of intention to enter into an agreement. More recently in Stonehill Capital Management v. Bank of the West, 28 NY3d 439 (2016), New York’s Court of Appeals held that, in an online auction for syndicated loans, the acceptance of a bid via email “that communicated the terms of the purchase and the date and instructions for the closing … indicated the sale was moving ahead and included references to documents necessary for closing the transaction” was sufficient in demonstrating the parties’ intent to enter a binding agreement.
So can the same decision be applied to real estate contracts? It is already established in Crabtree v. Elizabeth Arden, 305 NY 48 (1953), that for a real estate agreement the memorandum signed can consist of multiple documents “connected with one another either expressly or by the internal evidence of subject matter and occasion” if at least one of the documents of the same transaction, “the one establishing a contractual relationship between the parties”, provides the “signature of the party to be charged”. The same principles apply to real estate agreements over email. If the email satisfies the requirements of the New York Statute of Frauds (see Naldi v. Grunberg, 80 AD3d 1, 908 NYS2d 639 (1st Dept. 2010), all the terms of the contract have been agreed upon, and none of the provisions are open for future negotiations (see Saul v. Vidolke, 2017 NY Slip Op 04485), then it can be binding.
An issue that commonly arises is whether the signature of an email constitutes as a signature of the agreement. In Williamson v. Delsener, 59 AD3d 291, 874 NYS2d 41 (1st Dept. 2009), the First Department held that the attorney’s printed name at the end of the email was sufficient, but in Naldi v. Grunberg, 80 AD3d 1, 908 NYS2d 639 (1st Dept. 2010), the Court failed to elaborate whether an attorney’s automatic “signature block” at the bottom of the email satisfied the subscription requirement for the purposes of the Statute of Frauds. However, in Jimenez v. Yanne, 2017 NY Slip Op. 05677, the First Department clarified that typing the name at the end of the email did satisfy CPLR 2104’s subscription requirement. To avoid confusion, parties should add electronic signatures to agreements to distinguish it from the signature block at the end of an email.
 General Obligations Law § 5-701 and 5-703. Available at: https://law.justia.com/codes/new-york/2010/gob/article-5/title-7. Accessed on Nov. 3, 2017.
 Forcelli et al. v. Gelco Corporation et al. 2013 NY Slip Op 05437 [109 AD3d 244]. Available at: http://www.nycourts.gov/reporter/3dseries/2013/2013_05437.htm. Accessed on Nov. 3, 2017.
 Ib. at 245.
 Ib. at 252.
 Stonehill Capital Management v. Bank of the West, 28 NY3d 439 (2016). Available at: https://law.justia.com/cases/new-york/court-of-appeals/2016/191.html. Accessed on Nov. 3, 2017.
 Crabtree v. Elizabeth Arden, 305 NY 48 (1953) at 55.
 Ib. at 55 -56.
European competition law and policy is regulated by the European Commission. EU competition law is enforced to provide a free, fair and efficient integrated market, enhance consumer welfare, and to provide market structure.
Article 102 of the Treaty on the Functioning of the European Union (TFEU) prohibits undertakings (entities engaged in an economic activity) from exploiting a dominant position in the market. The EU Commission notes that these dominant undertakings must “ensure that its conduct does not distort competition.” However, in recent years, big tech companies such as Intel and Google, which dominant their industries, have pushed the limits of existing competition law. Many such laws, were written prior to the age of modern technology.
In June, the European Commission fined Google $2.7 billion for abusing its dominant position under Article 102. The EU Commission found that Google holds a super-dominant position in the internet search market in the EEA (except for the Czech Republic), which exceeds 90 percent. The undertaking abused its dominant position and directly breached Article 102 by placing its own shopping service above its competitors. The Commissioner for competition, Margrethe Vestager explained:
What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.
The general counsel for Google, Kent Walker, noted that this exemplifies the Commission’s willingness to fine large American tech firms companies. This wasproven to be true, yet again, as on Wednesday September 6, 2017, Intel was fined $1.3 billion for abusing its dominant position in the microchip market by giving preferential treatment (such as rebates) to computer developers who used Intel’s product. Although there is criticism that the EU Commission is unfairly targeting large tech companies, the real issue is that they are abusing their dominant positions in the market.
EU competition laws are stricter than antitrust laws in the U.S., however, it is not illegal to hold a dominant position under EU law. The breach of the TFEU arises once these companies use their position to unfairly gain an advantage in the market. Article 102 prohibits the following types of abuse:
Therefore, the EU Commission is unlikely to change its behavior towards these large tech companies that commit one or more of these abuses. Perhaps in the future the Commission will adjust how it deals with the tech industry, which is increasingly expanding, but for now these companies need to abide by the competition regulations set in place in each jurisdiction.
On June 27, 2017, a global ransomware attack affected computers in the U.S., Europe, India, Russia, and the Ukraine, similar to a computer virus known as Petya or Petrwrap, but more intense than the May cyberattack that impacted 150 nations with the ransomware WannaCry. Bill Wright, senior policy counsel for the cybersecurity firm Symantec, explains that “[o]nce you unleash something that propagates in this manner it is impossible to control.” And companies could not control the attack as DLA Piper lawyers showed up to work early Tuesday only to see a sign stating: “All network services are down, do not turn on your computers! No exceptions.”
The hackers used methods stolen from the National Security Agency and targeted major companies, law firms, financial institutions, and hospitals. Including: the pharmaceutical firm Merck & Co., Russia’s leading oil producer Rosneft, Britain’s WPP (the largest advertising agency), Deutsche Post’s Ukraine division, law firm DLA Piper, the Russian central bank, multiple Ukrainian banks, and hospital chain Heritage Valley Health System. The hackers encrypted some of the world’s most sensitive information and demanded a payment of $300 in Bitcoin (roughly $777,700 USD) as consideration for the decryption code. According to the American Lawyer and blockchain records, 27 organizations have paid the ransom. Perhaps if these companies kept their information secure using blockchain technology, they would not have run into this problem in the first place since there is no centralized source with blockchain, making it virtually impossible to hack.
Between this week’s global malware outbreak, the attacks on Weil Gotshal & Manges and Cravath, Swaine & Moore last March, and the leak of the “Panama Papers” from Mossack Fonesca, law firms more than ever have an incentive to adapt their measures, technology and policies to safeguard client information. How can firms protect themselves for a major breach of security? Establish and maintain an enterprise security system to protect all electronic documents and conduct and document regular risk assessments. Installing and implementing thorough and precise cybersecurity measures, technology, and policies is essential. These practices will mitigate malware risks, provide procedures on how to locate and eliminate the virus, and attract future clients. These policies however need to be monitored not just by IT, but by the attorneys and support staff. In case of a cybersecurity attack, it is helpful to have an off-site back-up server that is frequently maintained to re-install any lost information. Firms should have cybersecurity insurance to cover the ransom, forensic investigator contracts, and legal expenses related to the malware attack.
Furthermore, law firms should also have in place malpractice insurance policies that protect against cybersecurity liability in case privileged or otherwise confidential client information is released due to the malware. Attorneys can be held liable under professional negligence such as in the case Millard v. Doran No. 153262/2016, where a real-estate attorney who used AOL email for her legal practice was liable for professional negligence for not implementing any cybersecurity protection measures and for using a server that was “notoriously vulnerable” to hackers.
Law firms with clients in the financial or health sector are subjected to further cybersecurity regulations. Pursuant to 23 NY CRR 500.03 and 500.01(n), (d), (g) and 500.11(b), the New York Department of Financial Services requires financial institutions to comply with cybersecurity regulations, which includes assessing their law firms’ (who fall within the ambit of Third Party Service Providers) cybersecurity measures and ensure law firms do not misuse nonpublic information. FINRA regulates broker-dealer firms in regards to cybersecurity as well. However, these regulations transfer to broker-dealer’s law firms if the firm is negligent in monitoring the client’s security practices. In regards to any client matters relating to health, data protection is covered in the HIPAA Data Security Regulations and the HIPAA Privacy Regulations. Law firms here fall within the ambit of “business associates” and are directly liable under HIPAA for any data breaches.
For firms that are located in both the U.S. and EU, it is imperative to understand the different regulations in each jurisdiction. The European Union has implemented the Data Protection Regulation for all Member States, which will be in effect on May 25, 2018. This Regulation requires law firms to notify clients in the event of a data breach.
Click here for a regulation implementation timeline.
In 1881, Philip Hubert (architect and entrepreneur), Jared Flagg (clergyman and painter), and James W. Prisson (designer) brought the co-op concept to New York’s Rembrandt building, “so named because it was aimed in part at artists, who were presumed to be more accepting of the unconventional.” The concept was to allow tenants to cooperatively make decisions for the building and expenses on their own. The developers however, sought to “control” who moved into the building, permitting only “people of means and good social standing.” However, the Rembrandt co-op did not survive for long as in 1903, Andrew Carnegie purchased the building. Perhaps its failure was due to a lack of modern by-laws.
Co-ops are directed by two main governing documents: the proprietary lease and the by-laws. The by-laws are a set of governing rules created by the corporation that shareholders are bound to. The by-laws establish what you can and cannot do as a shareholder or board director, how you vote, appoint new board members, pay maintenance fees and flip taxes, assign your lease and most importantly, how to amend your by-laws to keep up with modern times. However, many New York co-ops’ by-laws were written in the 1980s and are not always consistent with modern legal practices and technology – nor are they in layman’s terms. Commentators argue that the by-laws “were never intended to be permanent” – they should be regularly updated to meet the demands of the shareholder-tenants.
Every building’s by-laws differ in regards to the procedure of amending the provisions. Some cooperatives require either a shareholder or board of directors to vote in the affirmative of two-thirds, seventy-five percent, or a super-majority to amend, alter, repeal or create new by-laws, and some co-ops may permit both to vote depending on the provision. For a shareholder vote, generally the shareholders who own a majority of the corporation’s shares must hold and attend the meeting to form a quorum, and depending on the by-laws, vote either in person or by proxy. If a quorum is not present at the meeting, the holders of a majority of the shares can adjourn the meeting to another date at which time the shareholders present at the original meeting are entitled to vote regardless of a quorum.
Generally the by-laws require all board members to attend the meetings in order to adopt a resolution. However, this cumbersome and sometimes inconvenient rule has been offset by New York’s Business Corporation Law §708, which permits board members to either all give written consent to adopt a resolution without the need of attendance or participate via telephone conference or another device allowing everyone to hear each other at the same time, such as Skype (unless restricted by the by-laws or certificate of incorporation). Amending the by-laws to make the procedure of voting more efficient and adaptable will carry many benefits.
The indemnification provisions are one of the most important to be updated since board directors or officers can be held liable for certain acts or omissions when acting within their capacity. In 1988 New York’s Business Corporation Law §722 – 726 was amended to permit corporations to indemnify directors if the by-laws reflected the provisions of the new law. It is imperative to amend your by-laws to mirror the language of the Business Corporation Law.
Another common issue that arises is whether shareholders are permitted to sublet their apartment. Some co-ops will impose sublet fees to cover any expenses. Regardless of whether the provisions provide for a fix fee or reasonable fee, the courts will not require a payment that is too excessive. If a co-op does impose these fees, it is imperative that they are reflected in the by-laws and the proprietary lease in clear and concise language. In Zimiles v. Hotel des Artistes, Inc. 216 A.D.2d 45, the New York Supreme Court held that because the proprietary lease or the by-laws lacked specific provisions regarding the sublet surcharge, it was void. The co-op was ordered to return over $300,000 in sublet fees and the shareholders were granted attorney’s fees.
Children in New York City generally do not have large backyards to run around and play in. Instead, in addition to available parks and outdoor spaces, their apartment and building’s common areas become indoor playgrounds. Regardless of the space, children inevitably injure themselves when they play, whether that is from a mere scrape on their knee to slipping down the stairs and breaking a bone. Who is liable for the child’s injury if it occurs in the common area of the co-op?
In a co-op, a board is elected on behalf of the corporation to manage the building. The board owes the shareholders a duty of care to maintain a safe environment, particularly in a co-op’s common areas. If there is a danger that the board knows of or ought to know of, it has a duty to make the danger obviously known to the shareholders and tenants (including children). This includes putting up signs and notifying the residents. If the board is negligent in making this danger known, the corporation could be held liable for the child’s injury.
What else can the board do? The board can implement house rules against children playing in common areas, however, the board would need to ensure that these rules are clearly understood by all occupants, enforced, and complied with in order to prevent liability. It would be a good idea for the board then to ensure that children have parent or adult supervision when playing. Another issue that arises in tort is who would be liable if a child’s friend is injured? This scenario falls into the category of occupier’s liability, whereby the corporation is the occupier and the visiting child would be an invitee/licensee. In this regard, the board would owe a duty to the visiting child – the invitee/licensee – to warn of any danger that the board knows about or ought to know about, which the visitor would not reasonably observe or be aware of.
The best option for a board is to designate a safe space for children to play in. This designated play space would limit potential liability for the board for a child getting injured while they play in the common areas. To meet New York State safety regulations for children from the ages of birth to fourteen, the corporation must ensure that any play area is made of materials (covering the equipment and underneath playground equipment) that are soft and shock absorbent, such as shredded rubber. Commentators assert that this is especially beneficial for neighbors, since they will not be disturbed by the sounds of children exhausting their energy in neighboring apartments.
New Yorkers frequently question whether they are allowed to sublet their apartment, for reasons ranging from financial hardship to overseas assignments. The answer depends on whether you are a co-op shareholder or condo unit owner. Condo residents have more freedom to sublet, since they own their property outright. However, complications arise for co-ops due to their complex nature. Co-op residents are shareholders, and shareholders do not own their unit – they own shares, which grant them the right to occupy the unit. Co-op boards put each potential resident through an invasive vetting process, so you can imagine they are likely more conservative with their subletting policies. However, co-op boards need to be willing to permit their shareholders to sublet their unit when necessary.
Ultimately, it is the co-op board’s decision whether to approve subletting, and the parameter of the terms. The board can restrict how long a shareholder can sublet, who can be a subtenant, impose fees and surcharges, and even deny subletting completely. However, these policies (especially terms relating to time constraints and surcharges) must be clearly stated in the proprietary lease. The board is barred from imposing additional subletting rules that are not already listed in the lease (see DeSoignies v. Cornasesk House Tenants’ Corp.) and from creating unreasonable restrictions, such as charging excessive fees (see Bailey v. 800 Grand Concourse). However, most of the co-op board’s decisions can be justified using the business judgment rule, which has the power to protect all reasonable decisions in regard to subletting. Therefore, boards have a wide range of flexibility when determining how stringent the terms should be. For instance, every co-op board can calculate surcharges using a formula of their choosing, which is usually a percentage of the maintenance fee. If the board wants to amend the terms of the lease to impose greater limitations on subletting units, the board must hold a shareholder meeting and obtain a supermajority – two-thirds vote – in favor of the change.
Co-op boards look for potential shareholders who will have a long-term interest in the building and are able to pay bills and maintenance fees; hence their reluctance to approve subletting. So what should you expect when subletting your co-op? Your board will probably have a set of policies that need to be strictly adhered to in order to avoid breaching the proprietary lease. A breach could lead to termination of the lease and forfeiture of all shares. Co-op boards sometimes permit shareholders to sublet their space after they have lived in the building for a certain number of years, but every co-op is different and so are the proprietary leases. Your board can also limit how many years each subtenant can lease the apartment. Your board will also likely require your potential tenant to go through an interview process similar to the one you went through. This normally requires a co-op board package, including a history of the individual’s financial history, business and personal references, tax returns etc. These requirements are effective ways for the board to maintain control, but also meet the needs of shareholders.
A common issue that arises is who is responsible for damages from a subtenant, the shareholder or the corporation? The burden of repairs should be stated in the proprietary lease and any other governing documents of the building. Typically, if the damage is to the structural integrity of the apartment or building (ceiling, wall, or floor), negatively impacts the habitability of the apartment, and/or is covered by the co-op’s insurance, it will be the co-op’s responsibility to make the repair. If the corporation makes the repair, but the damage is due to the shareholder’s negligence, the board can file a negligence claim to recoup any damages. If any fittings, fixtures, interiors are damaged, repair costs usually fall on the shareholder.
Trademarks provide greater legal protection for your business or brand by giving you ownership and exclusive rights to your mark, which traditionally have been company names, symbols, designs, slogans and phrases. However, in recent years intellectual property lawyers have even applied for trademarks for shapes, sounds, colors, and scents, but these types of applications are not always successful. For instance, in a challenge made to England and Wales’ Supreme Court, Nestle, the owners of KitKat, were denied the right to receive a trademark for KitKat’s unique shape. This decision creates a higher standard as to what unconventional things can be trademarked in England and Wales, although Nestle has successfully received trademark approval in other countries for KitKat’s shape (Australia, Canada, Germany, France, and South Africa).
In addition to traditional corporate branding, American politicians have a standing history of applying for trademark protection for their slogans, especially in regards to their campaigns – whether it be President Reagan’s “stay the course” for the 1982 mid-term elections, President Clinton’s “don’t stop thinking about tomorrow” slogan, and President Obama’s “change we believe in” campaign. This is true even on a local level, as Catherine Cloud, who coined the slogan “because this is America” for the New Hanover County Democratic Party in Wilmington, North Carolina, rushed to apply for a trademark. Trademarking slogans has proven to be very effective when appealing to voters. Relatedly, politicians have also taken messages from organizations to turn into policy, such as President George W. Bush’s No Child Left Behind Act, which was taken from the Children’s Defense Fund who coined the phrase “leave no child behind”.
Recently, trademarks for slogans and phrases have become increasingly popular. In 2016, there were just under 400,000 trademark applications filed with the United States Patent and Trademark Office (USPTO). Even celebrities race to trademark their sayings, such as Taylor Swift’s pending trademark on “nice to meet you” from her song Blank Space, and Paris Hilton’s notorious “that’s hot”. Why are people so eager to trademark their sayings? Mostly because it has the potential of generating revenue from bumper stickers to t-shirts, like “Keep Austin Weird”. Or as Catherine Cloud argues, it creates a meaningful message, as “’because this is America’ is a rallying cry that focuses on what we have in common, rather than what divides us.”
The trademark application process can be a lengthy one. It typically takes the USPTO 18 months to approve an application, but in some instances it takes much longer. The New Yorker cartoonist, Robert Mankoff, applied for a trademark for his cartoon of a businessman scheduling a meeting with the caption “How about never – is never good for you?” which the USPTO took 23 years to approve. When filing a trademark it is important to hire an attorney that is familiar with the process so that your application can go as smoothly as possible. As an applicant you will need to identify your mark format, what goods and services the mark applies to, whether anyone already holds the rights to the mark, and your basis for filing. Once the application is submitted it must be monitored until you receive approval or denial. In the event your application is opposed or denied, your attorney can appeal the decision.
In past posts we have talked about how to deal with co-op and condo renovations, so that you or neighbor can enjoy those new bathroom fixtures, but with all construction comes the chaos, the noise and debris. When does the noise from construction become unreasonable?
Construction should not take place outside of weekday working hours (along the lines of 8 a.m. – 5 p.m.). Permissible hours for construction and any restrictions on contractors’ actions should be explicitly stated in the house rules so that neighbors are not unduly burdened. Naturally, noise from construction is to be expected, but this does not mean that your neighbor’s contractor can be as loud as possible. If the noise is unbearable, communicate your concerns to your neighbor. They can instruct the workers to be more mindful of the noise. If your neighbor refuses to acknowledge your complaint, go to your co-op or condo board and show them any written correspondence between you and your neighbor addressing the issue. Prior to initiating litigation, your board should take the necessary steps formally notify and warn the shareholder or unit owner that the noise from their renovation has become a nuisance to neighbors.
This formal notification should be in the form of a written warning explaining that the shareholder’s or unit owner’s conduct is disturbing their neighbors. If something is occurring in violation of the house rules, such as construction work outside of the appropriate times, the board should include that the residents are breaching the building’s governing documents. It is very likely that an alteration agreement between the building and the shareholder/unit owner also addresses this issue, and if so, any breach of the alteration agreement should be noted in writing as well. If the shareholder or unit owner does not respond to these warnings, the board should compile a record of the house rules and provisions of the alteration agreement that have been breached and all written warnings to the resident.
What do you do if your neighbor contests your complaint that the noise is unbearable? You or your board (depending on who is bringing the complaint) could hire a consultant to measure the noise from the construction. If your board was reluctant to intervene in the first place, this evidence would strengthen your argument and most likely persuade the board to take action against the shareholder or unit owner whose unit is undergoing renovation.
To avoid conflicts between neighbors and the board, it is important that the board reviews all construction projects (big or small). The board should remind shareholders and unit owners of the limits of their construction projects, ensure that they do not make unreasonable noise or mess, and only work during the allotted times in the house rules. Secondly, the board should notify all residents in the building of the construction project and its estimated time frame, and work to enforce the restrictions in place. This will help to prevent animosity between neighbors. Litigation is costly and time consuming, and almost certainly not in you or your building’s best interest for a noise complaint.
Renovations in condos and co-ops are common, especially for growing families. Board members inevitably will have to deal with a stream of renovation and alteration requests throughout their seat.
How can a co-op or condo board ensure that construction runs smoothly in its building? Boards should implement construction and renovations policies into the house rules so that shareholders and unit owners agree to the procedures, and understand the limits of what they can and cannot do. These policies must be written clearly and apply equally to all shareholders, unit owners and board members. Construction and renovation policies are a way for the board to fully control the process of any renovations from when they need to receive notice from shareholders and unit owners to ensuring the construction is completed in a timely fashion.
The process of seeking approval for renovations = can and often does include filing the requisite forms, construction plans, the contractor’s insurance, and the size and time-frame of the project with the board. The co-op or condo board’s choice of engineer and architect can then assess the renovations. This should be done regardless of how large or small the alteration is in order to prevent any damage to the building. The board can explicitly require that shareholders and unit owners must have board approval, after inspection from the architect and engineer, before construction begins. However, in regards to repairs, written notice to make the board aware should suffice as opposed to undergoing a review and obtaining board consent if the repair does not interfere with the common elements or structure of the building. How should board members deal with the nuisance of construction? Construction times should be explicitly stated in the house rules so that neighbors are not unduly burdened by the dust and noise.
At the same time, it is important that these rules do not unfairly constrict shareholders and unit owners. A common issue is that board rules prohibit certain types of renovations that are actually legal under the building code. Boards should aim for a consistent track record with approvals and rejections of proposed alterations to avoid conflict and potential litigation for unfair treatment. Additionally, in a city with a large number of landmark protected buildings, it is important to ensure that renovations in New York are mindful of preserving the city’s history. It is also essential that the board and unit owner hire professionals who have experience in preserving and using materials such as limestone and brick. Condos in landmark buildings should ensure their construction and renovation policies have explicit guidelines on how owners can renovate or repair their unit.
Having pre-existing written procedures and rules will expedite the whole process and avoid conflicts and even litigation. Co-op and condo boards have a significant amount of flexibility as to what they can regulate. It is just important to be consistent and fair to all shareholders, unit owners, and board members.
Looking for ways to save on your property taxes? The New York State STAR program (School Tax Relief) grants property tax relief to qualifying homeowners. The benefit applies to school district taxes and for city taxes in New York City, Buffalo, Rochester, Yonkers and Syracuse.
There are two types of STAR programs for partial tax exemption or credit. Basic STAR is accessible to all homeowners and their spouses if they both earn less than $500,000 a year. The exemption is based on the first $30,000 of the full value of a home. The benefit is approximately a $300 tax reduction. Enhanced STAR is targeted for senior citizens (65 years and older) and their spouses with a collective income of $86,000 or less. This benefit is for the first $65,000 of the full value of a home. The benefit approximates a $600 tax reduction. For both programs, at least one owner must use the property as a primary residence.
Gov. Andrew Cuomo and the state legislature have altered the STAR program for 2016-17. A provision has been added to the New York state budget to provide new homeowners with a check for a partial amount of their school property taxes rather than a tax credit. Cuomo’s budget spokesperson, Morris Peters, assures homeowners that “[t]here is no change to the amount of the STAR credit for taxpayers, only the mechanism used to claim the credit.” Cuomo and his administration changed the system because it is expected to save New York state roughly $180 million a year. This method is meant to curb any corruption in the system with registered users receiving STAR benefits for more than one property. The money saved by the state will “pay for new spending in the state budget, such as the $1 billion income tax cut” (Joseph Spector Albany Bureau Chief).
The STAR program can be applied to condos and co-ops, which is a great way for your building to save on property taxes. For co-op shareholders, the credit normally went to the corporation and reduced maintenance fees for all shareholders by cutting the cost of the property tax payment. Due to the recent changes, shareholders who purchased their unit after August 1, 2015, will receive a direct check. However, since the co-op pays the property taxes as a whole, this amendment is not significant. Condo owners also receive a direct check. Unfortunately, properties that are eligible for the 421a taxabatement are not eligible for the STAR program.
The STAR program does not affect income taxes, but you will usually have to deduct the credit from your paid real estate taxes. In all, the changes to the STAR program will mean that co-op shareholders and condo owners will have to pay a slightly higher property tax without the automatic credit, but will receive a partial reimbursement after they made the payment. To get your savings this year, make sure your register with STAR at https://www.tax.ny.gov.