Julie Schechter, Partner
120 Years in Business
Because of the proliferation of new laws and regulations, we have found a need to communicate even more frequently with our co-op and condo boards and their managing agents through client alerts, educational seminars and collected content on our website. Providing the basics through these means helps focus the issues on which clients may require further guidance, as well as other new laws and regulations we anticipate in the future.
Belkin Burden Goldman
Aaron Shmulewitz, Partner
32 Years in Business
I am amazed at the constant and increasing requirements and ever-changing laws affecting boards and managing agents. I am even more amazed that they largely seem to keep up and keep complying. I see this trend continuing, and that it is likely to discourage qualified persons from becoming board members and managing agents, make those in the industry work that much harder, and risk erring. Board members and managing agents deserve enormous praise from their constituents.
Borah Goldstein Altschuler Nahins & Goidel
Eric M. Goidel, Senior Partner
42 Years in Business
Aging buildings, more onerous building code requirements, Climate Mobilization Act compliance, new Fannie Mae and Freddie Mac due diligence requiring property condition surveys and insurance industry concerns from the 2021 Champlain Towers South collapse in Florida — all these factors have created the perfect capital storm for boards. Over the next 10 years, boards will need to spend massive sums of money to address deferred maintenance issues, upgrade infrastructure and reduce carbon footprints. While cooperatives may be able to obtain mortgage financing, condominiums will find it difficult to pay for projects without significantly assessing unit-owners. Even in cooperatives, financing costs will inevitably drive up maintenance charges, making it unaffordable for shareholders on fixed or moderate incomes to remain in their homes. Boards need to start financial planning today, and cooperative and condominium trade organizations must lobby elected officials for more creative ways to finance projects at reduced interest rates over longer amortization periods.
Leni Morrison Cummins, Member
52 Years in Business
The growing body of regulations and local laws governing condo and co-op boards has significantly impacted the industry. Changes in policy occur swiftly, and missteps can carry serious financial consequences. Further complicating the situation are the unintended consequences that many regulations impose. For example, many regulations are drafted for rental buildings, but the language is so broad that they apply to condos and co-ops. To succeed in today’s regulatory environment, boards must stay informed, stay on their toes, plan ahead for compliance and surround themselves with knowledgeable advisers.
Gallet Dreyer & Berkey
Marc Luxemburg, Of Counsel
44 Years in Business
The State Legislature, the City Council, other local legislatures and the courts have in recent years been imposing ever more costly and intrusive requirements that have impacted the economics and the liabilities of cooperative and condominium boards, and it is certain that this trend will continue. Boards need to be aware that they must become active participants in the political process in order to push back against this continued excessive regulation. There are a number of organizations — including the Council of New York Cooperatives & Condominiums, the Association of Riverdale Cooperatives and Condominiums and many others — and boards should become active in these entities as well as communicating directly with their local legislators, committee chairs and the governor to stand up for their rights and make their voices count.
Holland & Knight
Stuart Saft, Partner and Real Estate Practice Group Leader
100 Years in Business
There will be tremendous pressure by the city and state to control the actions that co-op boards take — who can serve, who can be admitted, whether they should control the operation of the building and alterations of apartments. At the same time, the cost of operating the building and the taxes that co-ops will have to pay will continue to increase. The courts will also make it increasingly difficult and expensive to collect from non-paying shareholders and to get residents engaging in objectionable conduct out of the building, notwithstanding the nuisance their behavior causes. Many courts are unable to understand that although co-op shareholders have a proprietary lease, they should not be treated as rent-stabilized tenants. If co-op shareholders and condo unit owners let their elected officials know that the owners care about their homes and will vote for other candidates, who support co-op and condo owners, things might change.
Klein Greco & Associates
Richard Klein, Partner
1.5 Years in Business
Dealing with the ever-changing regulations imposed by the state and the city keeps us very busy because of all the questions and confusion. Right now the hot issue is trying to figure out whether a building needs to comply with prevailing wages to keep its tax abatement. Going forward, the energy benchmarks imposed upon buildings will become more of an issue as boards realize the need to comply.
Law Offices of Helene W. Hartig, Esq.
Helene W. Hartig, Sole Practitioner and Owner
25 Years in Business
It seems that the city and state are implementing restrictions and regulations on almost a daily basis that, in turn, potentially cost cooperatives time, money and stress. Managing agents understandably bill co-ops for the corresponding printing and administrative fees, saying this is the “new normal,” a reality they did not create and cannot control. By way of example, fire safety procedures must now be placed on residents’ doors. In addition to arranging for access from often reluctant occupants — which is no small feat — our boards must justify the additional cost. Boards need to be vigilant in incorporating these “miscellaneous” items into our budgets and meeting deadlines.
Dean M. Roberts, Chair of New York Real Estate & Finance Law Practice Group
90 Years in Business
The various unintended consequences for our cooperative and condominium clients from the deluge of new rules and regulations have been problematic. Legislators often pass new laws related to landlord tenant situations without understanding that they affect cooperatives and in some cases condominiums. A good example of this is the 2019 Tenant Protection Act, which was not intended to apply to cooperatives but directly did so. It required a legislative repair which in turn was imperfect and did not resolve the problem for regulated co-ops such as Mitchell-Lamas. It is difficult to advise and plan for clients when we are often surprised by legislation that makes cooperatives and condominiums collateral damage.
Levine & Montana
Lewis Montana, Senior Attorney
42 Years in Business
In Westchester County, the parameters of co-op board consent to sale transfers have changed dramatically. A co-op board has 15 days to determine if an application that was submitted to the managing agent is complete, and 60 days after its receipt of a properly completed application to accept or reject it. Any rejection has to be reported to the County Human Rights Commission. All board members are required to have a minimum of two hours of fair housing training every two years. There are penalties for any violation of these requirements. Boards outside Westchester County may find that their counties, including New York, will follow suit.
Marc H. Schneider, Managing Partner
20+ Years in Business
Inflation is at an all-time high and interest rates are rising rapidly, which will be a financial challenge for boards as they try to maintain their properties and comply with legislation. With the present interest rate hikes most co-ops and condos can no longer refinance at rates lower than their existing loan. Most of them have a significant balloon due, typically after a ten-year term. Ultimately, maintenance and common charges will rise, resulting in more arrears. Boards need to carefully consider their budgets and take swift action to collect arrears. They should also consider a mortgage/loan reduction account where they put aside money to reduce their debt to offset the impact of a higher interest rate on their monthly debt service payment.
Smith Buss & Jacobs
Kenneth Jacobs, Partner
31 Years in Business
I see at least three major challenges for co-ops and condos in the coming years: first, struggling with liability under the weight of disparate mandates that have not been coordinated under a single legal framework, as most other states have; second, dealing with increasing capital repair costs, especially in light of stricter insurance and reserve standards imposed by industry and lenders; and third, potential price disruptions due to changes in the tax laws to start assessing co-ops and condos like single-family homes. Counsel needs to be proactive to help owners prepare for the effect of these potential changes.
Tane Waterman & Wurtzel
Stewart Wurtzel, Member
30 Years in Business
In the last 40 years co-ops have been swept up in a sea of changing legislation, sometimes intended, other times not. We do not see this trend abating any time soon as more and more legislation limiting co-op powers get introduced into the State Legislature and the City Council. The constantly changing legislation requires us to educate our board members and managing agents on a regular basis and to try to interpret and fill in gaps in statutes that are not always artfully drafted. With each change, advice to individuals buying in a co-op or condo needs to be reevaluated. Counsel will be under pressure to stay on top of these changes so they can guide their clients through the legal landscape.