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Questions re language in By-Laws - marym Mar 11, 2022

What does this clause mean: “In the event of an exchange or no-consideration transfer, the flip tax is not triggered?”

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I Am Not A Lawyer, but I believe it means that if the shares are transferred from one owner to another without "consideration" (without money changing hands), the co-op cannot collect any flip tax or transfer fees.

An example of this kind of transfer would be if someone inherits the share of a co-op apartment as a bequest or residuary beneficiary, they would not have to pay the flip tax normally imposed on the purchase transfer of the shares.

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Residency Requirement for Coop Board - Bored Member 1 Mar 04, 2022

Does the meaning of resident in the context of a Coop board eligibility requirement include only shareholders that reside in the coop full time. Are shareholders with a primary residence elsewhere considered residents.

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That's an unusual requirement, in my experience. Check the precise language in your By-Laws. In many cases, there's no restriction on directors at all. In other coops - such as ours - a director must be either a shareholder or the spouse of a shareholder.

If it just says "resident," that seems ambiguous. Obviously a person would be eligible if it's their primary residence, and not eligible if they're subletting and not living there at all. But what about all the situations in between? Someone with a summer home where they spend three months a year? Someone who plans to sublet two months after the election? Someone who says they're a primary resident but the NYC records do not reflect this (a very common problem)? There's no clearly correct answer.

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Mitchell Lama Reform Bill - Gouverneur Gardens Mar 03, 2022

What can be done if the Board of Directors of a Mitchell Lama Coop violates the new Mitchell Lama Reform Law 6412 and inform shareholders of 782 units that until they have a directive from HPD they can swim around the law?

That will continue to use proxies to achieve a quorums not use names of Directors on the minutes when they vote on coop business . Thank you

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If you don't get any better responses, try using this as a starting point:

https://hcr.ny.gov/ml

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Hi My condo has to do a roof replacement. What is the best way to get it done? Design built or traditional? Anyone dealt with this issue as a board. Open to all suggestions. Thanks!!

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Possible Leaking Roof - NYC Mar 02, 2022

The unit above me has a brown spot on their ceiling. They are new owners and have asked the manager to check the matter. He told them he would but has not made any arrangements for an inspection. I have lived in this building for 25 years and the roof has never been replaced. they have repeatedly asked for someone to check this out but are being ignored. What would the next step be?

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Here are a few suggestions. Others will probably add to the list.

* You said you asked the manager to check. I assume you mean the Managing Agent? What about board members? Have they been approached about this?

* Do you know if other shareholders are aware of the situation and how they feel about it? If your building is not too large you might try organizing the shareholders to take some action as a group.

* Do you know how long the brown spot has been visible? If it didn't just appear but has been there for months you should call 311 and ask them how to report a possible mold situation.

These are things you can do which have a low impact. Ultimately it's your board who are responsible for the condition and wellbeing of the building. If they're receptive to your notifications they should take over.

If they're hostile to you, tight with the managing agent, haven't raised maintenance in years, they're probably not going to start now. You should run for the board, or better, put together a slate of candidates to replace the entire board. Sometimes the mere threat of opposition or replacement can have a wonderfully motivating effect.

Regardless of what you do, it's going to cost money. Be prepared for an assessment to cover the cost of roof replacement.

Good luck!

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Thanks for pointing the direction. :-)

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You're welcome

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Hold Harmless agreement - herb zyd Mar 02, 2022

Anyone aware of the pros and cons of a coop board requiring shareholders to agree to a hold harmless agreement for simple contractor work - like carpet cleaning? Thanks.

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The practical uses, requirements, and drawbacks of hold harmless agreements are complex. As a first step, search for "hold harmless" in google, you'll find a ton of articles, After you've have a basic understanding and knowledge of hold harmless agreements, get in touch with you co-op corporation's insurance carrier and speak to your account rep. They should be able to answer your questions and more.

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Mortgage Originators' Requests for Insurance Coverage Increases - Steven424 Feb 23, 2022

Lately, some of my shareholders who are looking to refinance and at least one new purchaser have approached the board with requests to increase insurance coverage limits. What I don't understand is, the increased coverage amounts are minuscule. For example, one ReFi requested an increase in Fidelity Bond (theft and embezzlement) from $435K to $450K. Another was for a D&O increase for some similar small amount.

Has anyone on here been hit with these kinds of requests? If so, how did you handle them with your shareholders, and also with the offending.... errrr... requesting banks? If you said or did something that worked and caused the bank to forego their increase request, please post it on here so the rest of us can benefit.

Thanks!
--- Steve

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Flip Tax - Glazer Feb 22, 2022

I was a holder of unsold shares in a coop. One of the benefits of that status is not being subject to the coop's flip tax. Then, 23 years after I purchased the apartment I moved in. That triggered loss of unsold share holder status. Now, 13 years later, I am selling the apartment. Our Coop has a flip tax based on profit. Do I use the initial purchase price (from 36 years ago) or measure the value of the apartment at the time of loss of holder of unsold share status in computing the flip tax?

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You'd need to ask an accountant (or a lawyer) to be sure, but it's hard to see how you could argue that the base price is anything other than your original acquisition cost. You were the owner from that point forward and your stock and lease surely carry that date.

Also, as a practical matter, unless you had an apartment appraisal done when you lost your status as a Holder of Unsold Shares, you'd be hard pressed to establish its actual value at that point.

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Management company requiring “Refinance Application” - J Feb 07, 2022

My Mom is refinancing her co-op. She is almost done with the process and the management company emailed her today saying she had fill out a refinance application before the recognition agreements were signed. I said to her “wth is that?” She showed me the application and its a blank financial statement as if she buying a co-op asking for all financials credit report and asking for $250 application fee. I told her don't fill it because there is no reason to give this info when she is already a shareholder.
There is nothing in the by-laws, proprietary lease talking about this. She already paid $500 for the questionnaire which ok.
Has anybody every heard of refinance application required by management?

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This is very common, especially if the shareholder is borrowing additional money against their apartment. The coop's shares are being used as collateral and the board has a right to guarantee financial security.

That said, board review of the whole financial package for a straight refinance is pretty silly. We did away with that requirement in our building many years ago. All you have to pay now is the fee for the managing agent to fill out the bank's Coop Questionnaire. No board approval is required for a basic refinance. But other coops can and will vary on this policy.

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yes, many co-ops require financial disclosure for refi. co-op has to sign the agreement so needs to know the details. although most re-fis are for less money i have seen folks take additional cash in the re-fi and impact debt to income ratio.

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Cleaning out Deceased' Unit - NYC Feb 06, 2022

Does anyone know if there is a time frame to clean out a unit by the beneficiaries once the owner has passed?

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I'm very sorry for your loss. I'm assuming you're asking about a standard market-rate co-op unit, so the first questions are, what was your relationship to the deceased, how was the stock certificate titled, and did the deceased have a will. If *any* questions come up about your needing to clean out or vacate the deceased's apartment, they should be referred immediately to the attorney handling the estate.

Very broadly, the answer is, there is no time limit. Depending on a lot of factors, the deceased's ownership of the stock (full or shared), usually passes to a spouse, or the deceased's estate and ultimately to the beneficiaries. As long as monthly financial and habitability obligations are met, things can and should continue pretty much as they were for a very long time.

If there are immediate environmental and health issues like the deceased was a hoarder, maintained more than one or two pets, or there are other sanitary concerns, then correcting those issues take precedence and the board has an obligation towards the rest of the shareholders.

If you could describe in more detail the circumstances behind your question, it would help narrow down responses.

--- Steve

[I am not an attorney and nothing I write is to be considered legal advice. My wife practiced Trust & Estates law and regularly dealt with these issues.]

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Thank you Steve424, I am sorry I was not very clear regarding my question. This is not a high rise comunity, rather garden apartments. The members died 2 and 3 years ago. There is a will leaving the co-op to family members. There are no issues with anyone contesting the will. I had spoken to the family at the time of their loss. They said they needed time to mourn. Since then the family has not removed anything from the unit. The other members are concerned about living in a building with an unmaintained apartment. The concern is not that the unit is uninhabited but rather unkept. We have noticed water bugs in the hallway and the member below hears scratching sounds. Just wanted to know before approaching management again, does the beneficiary who the shares were transferred to, have a time frame to clean out the unit. Our rules do state the co-op can go in once a year to check that the apartments are well maintained although this has never been done since I live here.

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Hi NYC - Thanks for the explanation. As far as I'm aware, there is no time limit in any co-op governing documents (proprietary lease, bylaws, house rules, etc). The shares are owned by some entity, either the decease's estate or the beneficiary if the probate is complete and the shares have been distributed. The new owner has all the privileges and responsibilities of your deceased friend.

What the family needs to be *very* concerned about is the apartment's sanitary condition. If other shareholders complain to the board or board members notice for themselves bugs, vermin, foul odors, etc, the PL should grant them the emergency right to enter the apartment at any time to ascertain its condition. This is in addition to the annual cleanliness check.

If the board discovers any unsafe and/or unsanitary conditions, the board has the right to take whatever actions are required to eliminate the conditions. It can also impose a very short time limit if the conditions are serious. At worst, and if the current shareholder is unresponsive, the board can start a proceeding (called a Pullman Proceeding) to terminate the lease and then evict your friend. That's very messy and your friends can lose everything.

Something else to be concerned about is if there is someone living in the apartment and they are not the share owner or immediate family, the arrangement can be considered an illegal sublet with it's own bag of problems.

It's more complicated than this, and I am not a lawyer, so my advice to you is to contact the attorney who handled the estate and probate, and make them aware of what you wrote above. You can also contact the family, but it sounds like they have their head in the sand

Best of luck.

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Hi Steve424, we don't want to cause the family any problems. I know how difficult it is to remove a loved ones possessions. We, the others living in the building, have agreed to wrote a letter, signed by all of us, to the management company and the B.O.D., requesting they do a walk through, to make sure there no dangerous conditions or vermin taking up residence. :-(. Hopefully the beneficiary will be emotionally ready to clean out the unit and sell. Co-Op's sell very quickly here. Thanks again for the great advice. :-)

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Wouldn't it be nice of all of you to volunteer to help the family. Why don't you slip a note under the door offering your help if needed to clean the apartment.
If it was me I'd tell you guys to MYOB How would you feel in that families place? You all have some nerve. How do you sleep at night? Good Luck

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I sleep very well thank you but I might suggest you take a chill pill.

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This is a sensitive topic, and there are lot's of thoughts about it. The forum is designed to help other board directors, so we ask that personal thoughts on board actions be voiced in the privacy of your space, but not written here.

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Whatever actions you and/or the other family and friends decided to take, I recommend you do it sooner than later. Anyone in the building can lodge an anonymous complaint to 311 or the Dept of Health. If that happens, your friends will have lost control of the situation and will be subject to the whims of government.

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Steve424- I will share your good advice with the others in the building and take immediate action. None of us want that to happen. Regards, NYC, BTW, so glad Carol put a report field up :-)

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I hope this all works out to everyone's satisfaction.

RE: Report Field. I use it extensively on that poor soul who's forever trying to convince us to use his friend to recover all our lost cryptocurrency.

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Adding/Removing People from Stock Certificates - Christian Jan 28, 2022

Hey All, we've had two shareholders recently want to add and remove a family member from their stock certificate. In both cases the transfer attorney our co-op employees charged them $5,000. This seems like an outrageous amount of money to me. Our Treasurer who is friendly with the transfer attorney said it was possible that recent changes in how co-op shares are treated for tax purposes may have led to the high bill. But I've been doing research online and cannot find a single article mentioning this change. Is there a validity to this or are our shareholders being gouged.

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