LEGAL/FINANCIAL

In October of 2015, New York City followed the lead of the federal and many state governments when it hired Diana Leyden as the city’s first Taxpayer Advocate. Hers is a daunting mission: to help New Yorkers resolve disputes over how much they owe – or don’t owe – in property taxes, fines and penalties. Before taking the New York job, Leyden spent 16 years teaching at the University of Connecticut Law School and running its tax clinic, which provides free legal service to help low-income earners resolve their tax controversies.
“The main part of what we’ll be doing [here in New York] is property taxes,” Leyden told Habitat. “Much of what we’re finding is flaws in how processes run – or don’t run. It was very sobering to see how we’re frozen in time, as far as the way the city’s property taxes are set up. We’re back to 1981” – a reference to the year the city’s four property tax classes were established, a source of undying controversy, especially for residents of co-op and condo buildings. Then Leyden offered a radical notion: “Maybe the whole thing needs to be scrapped.”

Read more

Thousand-foot condo towers for billionaire owners may be the big New York real estate story right now, but there are, happily, little stories that continue to go against the grain.

Here’s one: a century-old synagogue has been spared the wrecking ball by an ingenious new condo development. The Adas Yisroel Anshe Mezritch congregation, which has been worshipping at 415 E. 6th St. in the East Village since 1910 but recently fell on financial difficulties, has agreed to let East River Partners create three condo units on the upper floors of the building. In exchange, the developer will pay the congregation a $600,000 up-front payment, an annual contribution of $20,000 a year for the next 198 years, and a $180,000 “fit-out allowance” to rebuild the ground-floor sanctuary and basement space, as reported by The New York Times.

Two of the three upper-floor condo units will have the synagogue’s original stained-glass windows, some of which include Stars of David. The units will sell for $2.95 million to $4.39 million.

Charles Knapp, the pro bono lawyer for the synagogue, said East River Partners “were the saviors of this shul.”

Read more

A leak that occurred in a Queens co-op raises questions. Not the leak itself, but its aftermath. The story involves what must be a relatively small building because the president also happens to be the managing agent. One day this president/manager – let’s call him “the P.M.” for short – gets a call from one of the shareholders – let’s call him Steve – who tells him he needs the super to fix a leak in his bathroom ceiling. The leak is apparently coming from the pipes between Steve’s unit and the unit upstairs. Time goes by and the P.M. and the super ignore repeated requests from Steve to make repairs.
 
“The leak had gotten so bad that the bathroom ceiling was about to collapse,” Steve wrote in Habitat’s online “Board Talk.” So, the frustrated shareholder finally called 311 and filed a complaint with the New York City Office of Housing, Preservation & Development (HPD), which eventually issued a violation. In response to HPD, says Steve, “the super did fix the water leak (although I don't think it's fully fixed)” and the P.M. “‘then turned around and gave me a one-week notice to fix the water damage, and he also instructed the building attorney to initiate the default provision of my lease. This is obvious retaliation because I filed the complaint with HPD.”

Read more

The building at the corner of Bond Street and the Bowery in lower Manhattan began life as a bank shortly after the Civil War. A marvel of cast-iron architecture, it was given landmark status in 1967 before beginning a long decline. By the time a developer converted it to a condominium in 2010, this magnificent four-story gem had lost most of its luster. It was a musty, rusty shell of its original self.

“It still looked beautiful from a distance,” says Jeroen De Schrijver, a Belgian architect whose firm, D+DS, was hired by the condo’s board as project manager and consultant on a major facade restoration. “But once you got up close you discovered the cast iron was rusting, there were pigeons living in the building, there were leaks, rust, missing pieces of cast iron. We realized we had to peel it off layer by layer and build it back.”

Read more

Though interest rates have just jumped, your building needs a major capital improvement and your co-op board has decided that the best way to pay for it is to re-finance your underlying mortgage. Before you go mortgage shopping, you need to understand a bit of jargon known as your LTV – your loan-to-value ratio.
This ratio is almost always expressed as a percentage, which is calculated by dividing the proposed new loan by the estimated value of your property. Most lenders limit their loans to a maximum LTV of 75 percent.

Read more

Only a co-op’s board of directors should have access to shareholders’ confidential financial records. What should you do if those records get into the wrong hands?

Co-op boards have a fiduciary duty when it comes to dealing with personal information. “Clearly, sharing a shareholder’s personal financial information with a non-board member would not be in keeping with the fiduciary responsibilities,” real estate lawyer Jeffrey S. Reich tells The New York Times’ Ask Real Estate column.

Sharing such sensitive information would be cause for removal from the board. An aggrieved shareholder could also sue the board for damages, but that would require proof that a specific board member leaked the information and that the plaintiff suffered damages, Reich says.

To prevent such mishaps, boards can adopt a policy requiring all board members to keep financial information private. Boards can take the added step of ordering their managing agent to remove personal information, such as Social Security numbers, from documents the board reviews in the future.

Read more

Score one for the little guy – and maybe for little buildings.

After a drumbeat of recent news about condo towers slated for hallowed New York City ground – on the campus of Union Theological Seminary in Morningside Heights, at Frederick Douglass Circle in Harlem, and on the site of the Brooklyn Heights public library branch – we now get the shocking news that a controversial condo tower will not be built at the former site of the Fulton Fish Market in lower Manhattan.
 
“There will be no residential tower on that site,” Christopher Curry, executive vice president of development for the Howard Hughes Corp., told a Community Board 1 meeting on Tuesday night, as reported by DNAinfo.
 
The scuttling of the proposed 494-foot condo tower – scaled back from its original 600 feet – marks a significant victory for Seaport Working Group and assorted residents, preservationists and activists who howled at the prospect of a high-rise tower disrupting the low-rise waterfront neighborhood and blocking views of the nearby Brooklyn Bridge.
 
Score one for the little guy. For now, at least.

Read more

What happens when a disgruntled (or perhaps a “principled”) apartment owner creates a website for the purpose of discussing events and conditions in a building and allegedly posts defamatory statements? In the case of Trump Village Section 4 and Igor Oberman v. Yuliya Bezvoleva Aka Julia Bezvoleva, Inna Yeselson, Josef Stalin, Aborigen, www.tv4news.org, two shareholders were sued by the cooperative corporation, Trump Village Section 4, and its board president, Igor Oberman.
 
The defendants, Julia Bezvoleva and Inna Yeselson allegedly started a website for the purposes of discussing events and conditions in Trump Village. According to the co-op, the website was designed to provide information, announcements, and advice to and for residents of Trump Village. The co-op asserted, however, that the website was not being used as a forum to benefit the Trump Village community but instead was being used as a site to post 19 separate defamatory statements throughout a one-year period. Although the complaint asserts that Bezvoleva and Yeselson authored the statements, there is no proof of that since they were posted anonymously.

Read more

New York City real estate professionals are split on what effect the Federal Reserve’s expected raise in short-term interest rates will have on property values and real estate development. According to the latest survey by accounting firm Marks Paneth, 41 percent say an interest rate hike will cause co-op and condo values to decline, 34 percent say they will stay the same, and 18 percent believe they will actually go up.

The survey was conducted among more than 130 property owners, brokers, engineers, accountants and lawyers. Half of the respondents predicted a rate hike will slow co-op and condo construction, 41 percent said it will not slow construction, and 8 percent were unsure.

One thing most respondents – 62 percent – could agree on: a rate hike will do nothing to slow the galloping investment in New York co-ops and condos by foreign buyers.

Read more

The board, management, staff, and residents of a large Manhattan co-op suffered the harassing conduct of a shareholder but delayed legal action for many years. As the misconduct continued and spread to yet another category, the board decided that it could not delay any longer using the Pullman doctrine to terminate the shareholder’s proprietary lease. The board faced the daunting task, however, of securing the approval to move forward from two-thirds of its shareholders, even though the board struggled, as many do, to secure the presence of a majority of its shareholders at its annual meetings.

Worse yet, the board decided that it must act as the November and December holidays rapidly approached, and many shareholders would be focused on them, if not away altogether – and possibly having the holidays cast the harassing shareholder in a sympathetic light. The board decided to proceed nonetheless, and mostly within the confines of those holiday months, gathered and set forth in writing precise details of scores of harassing events, and other events of misconduct, as reported by more than 20 individuals, and formally presented them for votes first by the board itself, and next by the shareholders.

The board vote for termination was, not surprisingly, unanimous, with one abstention. But it was the shareholder vote that was particularly noteworthy. After reviewing the events and misconduct that the board presented, the termination was approved by the holders of more than 90 percent of the co-op’s shares. And soon afterward, the harassing shareholder communicated her willingness to vacate her apartment without requiring the co-op to prosecute.

Takeaway

The boards of large co-ops can secure super-majority votes of shareholders for Pullman-type proprietary lease terminations, but they should attempt to do so only if they are fully committed to the substantial and varied work that this will entail, including gathering information, soliciting proxies, and conducting the necessary meetings. If the shareholders sense a lack of commitment, they also might begin to doubt the validity of the grounds underlying the board’s request that they vote for termination.

Co-op shareholders might not always be so content with their board representatives, but they also will not tolerate a harassing shareholder. These shareholders realize that co-ops face far too many hurdles already, so at the very least it’s expected that they all will treat one another with a decent level of civility and cooperation. Even a harassing shareholder might get the message if a very high percentage of her fellow shareholders decides that she is no longer wanted as a resident of the co-op’s building. This shareholder’s offer to move out following such a vote was perhaps because she felt as Groucho Marx did when he resigned from the Friar’s club: “I don’t want to belong to any club that will accept people like me as a member."

Read more