New York's Cooperative and Condominium Community
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I have seen a lot of recent co-op apartment sales listed recently as "no guarantors or parents buying for children".
What are the board positions/arguments/justification in these cases?
AdC is, as usual, right on target.
Here are some of the reasons boards ask for the things AdC suggests.
* Usually the children are in their 20's, often just a year or two out of college. Many are reliable, honest and mature adults. Some, however, are not, and believe that their apartment can be treated as a dorm or a rental unit with an absentee landlord -- who happens to be Mommy & Daddy.
* Some of them believe that paying the maintenance is optional. Or they say that it's their parents' responsibility (even if it isn't).
* They may decide to have friends stay the summer while they're out of town; you & I consider that subletting, which requires an application, a fee, maybe an interview; the young person who lives there may think he/she is just being helpful to a friend in need anda that the board should butt out.
* The child may not be prepared to understand the importance of following the rules of communal living.
* Some may have roommates who change every year.
Again, some children are wonderful subtennants; our building has wonderful examples of young people who live in apartments their parents bought for them. Part of the reason is that they are responsible people. But another part is because parents and child attended the board interview, and because parents and child filled out purchase applications.
Steve
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What is becoming more popular though is the ability to purchase under a Corporation or a Living Trust, which somewhat negates the whole guarantors or parents thing because the children are named as beneficiary of the Trust.
I do not care for this much because it is harder to sue the Trust than it is a physical shareholder.
~AR
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Hi knowledgeable colleagues,
Must managing agents be licenced? If so, who licenses them (state? city? agency?) and where/how would one lodge complaints?
--Stressed shareholder
NO. Currently Managing agents for residential buildings are not required to be certified or licensed.
If your managing agent has a certification, this you can tell by three or four letters following his/her name, you can lodge a complaint with the organization that supplied the certification.
Pg
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Alas.
No wonder so many are so poor.
I'd like to be involved in such an effort.
Thanks for your help, PG.
--shareholder
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So, beyond going to the DA, how do you deal with an agent involved in improper or questionable behavior, or simply a poor manager, who doesn't respond to problems?
If the board won't fire them, I mean.
Better biz bureau, consumer affairs, picket the office, write (ha) our state legislators?
--Shareholder
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Take charge of the situation, Shareholder. You should run for the Board. Better yet, run with group of other like minded candidates who will change the management company once you're on the Board. Best of luck.
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Yes, served on the board for a number of years myself, with a more enlightened group. Unfortunately, our successors seem to be having a harder time.
Coops as institutions are seriously flawed. An agent license -- a license one can move against, lodge complaints against, remove - might provide some firm improvements.
Why don't we contact our assembly representatives, and try to move that bill?
Thanks again all
--Shareholder (who alas much remain "anon")
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The horse is probably dead on this one. Anon (because there are so many anons out there and we dont know if there is one anon, two anons, same person etc). Give yourself a name, how about "Brad" or " Paris or Nicole"
Fat Nickie
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Hi,
"Disillusioned" might work just as well.
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Thanks, Disillusioned, easier to follow the trail now.
FN.
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To Anon: Very regretfully the answer is: NO.
According to the REBNY they are "Capable" of monitoring themselves consequently the bill to license is in moth balls in Albany.
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Please anon (no anons). Now sad to say they are not, but the good people that run your building RM/Super/handymen/porters etc spend a great deal of their time taking courses and classes to help the building run as smoothly and efficiently as possible.
Got to run (must go to school) FN
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I wasn't going to chime in on this one, but...
As a managing agent, I went to NYU for classes to achieve a CPM designation, which ethic courses are a requisite; I am a registered apartment manager (RAM) through NAHB. I also ensure that a fidelity insurance policy is in place for all sites covered. (I am currently in process of opening/starting my own management company)
My point is, that a good manager will have some sort of check and balance system, some type of ethical model and a set system for handling certain sensitive situations. These are things that should be discovered during the initial interview with the agent or management company.
Depending on the nature of the complaint you have, the authority you complain to may be different.
~AR
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I would like to know when you start up your management company, please let us all know the name and information on your company when the time is right, Good luck to you.
Mike MacGowan,
President
Manhattan Resident Manager.s Club, Inc.
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AR,
As I mention before, you have given excellent answers in the past from the management point of view. In fact, I have commended you for your integrity as a manager.
Perhaps you should "educate" the participants of this chatroom by providing us with some of the questions that shareholders who participate in selection of management should ask candidates when interviewing for a new management company.
Also, what due diligence should board exercise to ensure that the new management company will perform as they had hoped for.
Thanks!!!
AdC
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Thanks AdC for the complements!
Property managers owe the owners a fiduciary obligation, which means in simple terms to act in a position of trust for the benefit of the principal (or Cooperative/Condo).
As per my previous post..
"...a good manager will have some sort of check and balance system, some type of ethical model and a set system for handling certain sensitive situations. These are things that should be discovered during the initial interview with the agent or management company..."
Paramount to hiring an agent/company is knowing what your needs are.
Then we can establish a check list to hire.
Several principals:
~ Hire a company that only uses licensed and insured vendors, not in-house staff.
~ Hire a company that has managers with credentials (there is added accountability to him/her).
~ Hire a company that is primarily the property management business .You don’t want a company that manages your property as a loss leader to attract owners to sell them more lucrative services like maintenance or listings and sales.
The answers to those will help you decide who is best qualified to manage your property!
The individual agent/manager should be able to answer:
~ Communication – All board members should have a cell phone number for the pm, and all residents his/her email address. (I like email best because it creates a trail, reminders, and is much faster and more effective)
~ Bidding process - how are larger projects handled? How are the bids reviewed and decided on? Also, smaller day to day repairs.. how are these handled?
~ How are emergencies handled? - give a scenario: Mrs. Jones in 5A has water seepage in her bathroom, there are 6 more floors above her.. What procedure do you take to determine the cause, resolution and conclusion?
There are many more that can be added to the list, but these are what I think to be the main ones.
Check also to see if any complaints have been filed against them.
Finally, when you hire a company that will be charging you approximately $2.00 per day per unit, don’t ask how to get it done cheaper! Instead, you should be asking what efforts will be made to extend the life of your property, develop a budget to increase your equity and cash flow and assist in reaching your written goals.
Hope this helps!!
~AR
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You've given great food for thought! I'm glad you placed a value on managing a unit per day, i.e., $2.00. I'm sure many of those who complain about management companies may see the value rather steep. However, they get the services that they are paying for.
Over the years, I have come to respect the value that management may provide and fully understand that the price you are quoting is more than fair. In fact, I have told many shareholders that what do they expect by way of services if the cost of our management has remained the same for the past 7 years? Obviously, the services will be according to the current price they pay.
Thank you.
AdC
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Yes, managing agents ARE required to be licensed in NYC!
How is it that nobody seems to be aware of this. Any person collecting rent, or maintenance in a co-op, or common charges in a condo, on behalf of someone else must hold a real estate brokers license under the Division of Licensing, State of New York.
Any complaints you may have against a managing agent can be brought to the Division of Licensing for disceplenary action. If an agent loses his license, he can no longer operate his business.
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Mike, you are a godsend! Thanks ever so much. Will follow up!
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No anons please anon
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Sorry Mike - apparently managing agents are not under domain of New York State Department of Licenses - Brokers yes - and no you cannot piggy back a complaint against a managing agent for wrongful conduct onto their broker dealers license - it would have been wonderful if true but unfortunately as many of us know there is no agency that will undertake action against Management companies, board members, etc that includes the District Attorney, Attorney General which under New York State Law is the enforcement for the laws that are on the books which are violated - which is why the problem persists - and of course going to court for this type of action starts at $100,000 - if you have any ideas about how to rectify these problems count me in
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We could start by emailing
1. Habitat and asking them to write an article or put the issue in the magazine for discussion
Should Managing Agents be Licensed.
2. There are 2 large organizations that represent Coops and Condos I can't find the other one.
Education Federation of New York Housing Cooperative and Condominiums 61 20 Grand Central Parkway
Forest Hills, NY 11375 718. 760. 7540. - (V) www./fnyhc.Coop
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Managing agents must be licensed Real Estate Brokers in NY, IF they are collecting rent (including maitenance charges). Currently, there is no separate "managing agent license" but NY legislators have been contemplating one for years.
Therefore, if your managing agent is collecting your coop's maitenance, make sure he or she is licensed as a real estate broker. You can easily check for broker license at ny.gov.
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Legal Eagle -could you please state what agency(s) licenses managing agents and where a complaint should be lodged - thank you
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Managing agents collecting rent or maintenance charges (thus acting as fiduciaries) must hold a real estate broker license in New York. Real estate broker licenses are issued by the Division of Licensing at the New York Department of State. Anyone who believes that he or she is a victim of an untrustworthy or incompetent licensee of the Department of State, or who is aware of unlicensed conduct by a person or business engaging in the occupations or businesses regulated by the Department of State, may file a complaint with the Department of State at (212) 417-5790.
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To Legal Eagle - Thank you
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Legal Eagle I called the number listed for complaints against management co - NYS - not them, they gave me another number and unfortunately it turns about to be the Attorney General's office and I like others on this site have gone down that path and they will not do anything which of course is why these things exist and get worse - also I see that another J also responds to you - two different persons
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Hi J: I have had success on several occasions by dialing this number to report managing agents collecting rent who are not licensed as NY real estate brokers (as required by NY law), and in fact have followed up in writing to me in each instance advising if it agreed that unlicensed activity was occurring.
Perhaps there was confusion about how you posited your query? There is often confusion around this issue because there is not a separate "Managing Agents License" in NY, but again, if an agent is collecting maitenance fees on behalf of coop then they are acting as fiduciaries and must be licensed as NY Real Estate Broker. Here's a link to Dept of State's Licensing Complaint Procedures, whereby you also have option to file complaint online:
http://www.dos.state.ny.us/cnsl/complain.html
Hope this is helpful.
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Sorry J - Mike is correct and your response is inaccurate on several grounds. If a managing agent is collecting rent/maintenance charges (thus acting as fiduciaries), then Article 12-A of the Real Property Law of NY absolutely requires such agents to be licensed by the NY Dept of Licensing as real estate brokers (a real estate salesperson license is not sufficient). Currently there is no separate "Managing Agent License" but the NY legislature has been considering one for years. Therefore, for now, the only licensing requirement is a NY brokers license if the agent is collecting money on behalf of coop.
Those engaging in unlicensed conduct, or who are licensed but acting in an untrustworthy manner, can and should be reported to the NY Department of State. Complaints can be lodged via phone or online.
J - I don't understand your point about needing $100K to go to court? Private citizens do not enforce licensing violations, the Dept of Licensing does. However if a managing agent has breached his/her fiduciary duty to you, then a private cause of action can and should be brought and those actions do not "start at $100K" as you say.
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I know this is a sensitive issue, but we have a homeless man living on the street, in an alcove of our building. He has a sign saying that he is trying to raise money to go home. We offered to take him to the Port authority and buy him a bus ticket -- but he refused.
He has yelled obsenities, but so far that is all. We have learned that he lived on another street and may have broken car windows... We are trying to find out more..
Does anyone have any advice or information?
Question: Have you called the police and your lawyer to see what rights you have to have this person removed from your property?
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The Board was notified (they offered to take him to the bus). This is fairly new. He came a few times and left, but as of last week, he seems to have moved in.
We are going to contact the lawyer, but wonderded if anyone at Habitat had this problem, and how it was handled
BM
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He is trespassing. Call the police and your attorney. He turned down help and could become a danger to the residents. He just wants to squat. In jail he'll get three hots and a cot.
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If he's on your property (not sitting on the curb or something) call 911.
(Yes, it sounds like that's going overboard, but the police want you to call 911 when there's an issue like trespassing.)
We had similar ('tho not identical) problem at our building that went on for a several days. We spoke with our beat office, who said:
"Call 911 and report a suspicious person in your building."
In your case, the suspicious person would be in the alcove (or wherever). DO leave your phone number! When I called to report a suspicious person, the officer who responded called me to get access to the building. (In other words, if they have a question, they will call back.)
In short, let the police handle it. That way, if the vagrant gets mad, he gets mad at the police and not the building staff or residents.
Tell your neighbors, and encourage them to call 911 when they see this guy there. The police will help! You don't need a board member to make the call, and a lawyer isn't really going to make a difference in this situation.
Steve
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Any experience with facade conservation easement tax deductions for your building? If so, which organization did you donate to and did it work out well for everybody, in terms of the IRS accepting these charitable donations?
A question: what is the policy in regard to con ed bills?
Up until 2 years ago utilities were a part of maintenance charges. So it was a non issue. Now we have been submetered. Do we have to absorb his families electric charges? I am a new board member and I noticed $4000 arears for his apartment.
Why are there arrears on the apartment in the first place?
Was the prior Board responsible for this payment?
Traditionally, the Coop pays the utility bills for the super; however, if there was some other arrangement with the super and he was aware of his responsibility to pay, then there is no reason the Coop should pay for his negligence (unless he reimburses the coop)
It sounds like when the building went to sub-meter, the supers apartment just fell through the cracks. In which case you were paying his con ed prior and are responsible now. Best bet, work out a payment plan (also ensure they are not charging late fees, interest, tax, etc) to defer the 4000 layout if you can't take the hit right now and ensure it is paid on time moving forward.
Just my opinion
~AR
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Our board pays the super's utilities.
I agree with AR's take on what probably happened that resulted in such a large bill, and suggest you follow his/her suggestions.
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make sure it (or they) have an EER of 11.0. If he has old crapy ones, remove them. This is probably why it is so high. are there also power tools being used on it somehow? that is very very high.
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Since the corporation is paying for the electric bills, they also must provide the super with an energy efficient air conditioning model despite what he says or may feel. If he wants to keep the old air conditioner, he can pay the electric bills on it also.
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We are not sub metered and we pay for the super's electrical use. Some residents are not happy with this because our super runs his air conditioner 24 hours a day. Even when he is not home so he takes full advantage of the free electricity. The board will not even consider having him pay a portion of the electrical bill past a certain point each month to prevent abuse. I feel for conservation sake, he should use less electricity.
I don't know why Con Ed allowed the bill to mount to $4,000 dollars. I guess they assumed the corporation would pay it.
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Al dente - You have $4000 arrears on the resident mgr's apt. What does that amount represent? It can't all be for Con Ed. I seriously doubt they'd let overdue payments go so far without turning off service! Just wanted clarification on this. Thanks.
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the 4000 is what is showing up on our monthly accounting statements and will eventually be written off by the corp.
our electric charges are added to maintenance and then the corp pays the monthly con ed bill. so the bill has been paid but its showing up as being owed to the corporation.
i was wondering what other buildings do. there should be a "reasonable allowance" for a 2 br apt. and anything over that allowance he should pay. what if he leaves a/c on all day, lights on, tv on for his dog, etc. that is going beyond normal use into "abuse"
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Al, you are baseing your opinions on a lot of guess work (forgive me here) Find out the facts first. There may be other factors causing this high cost. Other eletric items may be run off the meter he has (for example hallway lighting, lobby lights etc, I have heard of such in the past). The meter could be giving a faulty reading, did you look into it. Did you discuss the high cost with your super already?. Finally I am not sure if I agree on a dollar amount on electric usage, and I am not in favor of it. If the super means so little to you in the first place (as it appears why have him/her)
FN
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In my experience as a Resident Manager, my apartment was hooked up with the hallway lights, when the there was a problem with the hallway lights, my power went off to my apartment thats how I knew it was connected. $4,000 in electric bills is very high for a apartment, how long was it in arrears?
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you need to tell the Super that the coop will pay a maximum of $100 per month for the electric in his apartment (with an adjustment every year for price increases) and that anything over and above that will be billed to him.
You need to be 100% clear about this. you also need to buy him 11 EER energy efficient air conditioners. Tell him to put them onthe timers that now come incorporated into them so they are not on 24 hours a day.
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In what country is $100/mo considered adequate for electricity for a modern apartment?
Even WITHOUT AC, my bill runs twice that. And if ConEd gets their latest price hike, it will go up even more.
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I agree with you RLM. It looks like the super means nothing much to the building. I personally would start looking at other areas in a building where money could be saved, rather than "giving someone a hard time" over a few bucks.
FN (my ac runs all day at 72 degrees)
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As to not quibbling over a few bucks for the AC for the Super. Thses "few bucks" perks start to add up. And extra $200 a month, is 2400 a year. A hundred here a hundred there, and it starts to add up.
Two of our past Supers have had to have a cap put on their ph bills (they and all thier friends called home) and we are now looking at the Electric bills. The Super keeps the AC on even when he is away. When you are not responsible for the bill, you dont care.
ConEd is going up 33% and counting. If you are not careful now and continue adding perks, in a few years, you wont be able to afford a super.
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I think a well-run building is a tightly run building. Money leaks in seemingly small places are what really add up. Watch everything and be smart and have creative solutions and you will hjave a fantastic building.
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One has to look at what we term "normal use" and abusing the service. So before we go to war on this one,my previous posts mentioned to look into what was causing the high demand/usage. In addition a good superintendend can save a building hundreds of thousands each year so a few bucks for his electric use is like a drop in the ocean. Now you decide.
FN
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OK so give it $175. but pick a number and get organized.
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OK so give it $175. but pick a number and get organized.
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Does anyone have experience with having the individual units (apartments) submetered for water usage? Is this even possible in NYC?
I use a company called Vantage
609-860-2990
~AR
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Is water submetering permitted and ever done in condo buildings in NYC? It certainly would be a good way to reduce monthly charges and fairly have owners pay for usage, as with electricity. I've heard it can be expensive to have the individual meters installed. Is that true?
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Individual meters may be cost prohibitive for your desired purpose.
There is probably more than one apartment on a line in your building; in other words, everyone in the same vertical line will be on the same riser, so in order to truly isolate the usage you would have to meter from within the apartment or re-pipe the water supply.
Ensuring that everyone has low flow water devices (shower heads, aerators, 1.6< gal bowls, etc) with a periodic reminder to residents to conserve water (outlining the environmental benefits and the possibility of raising maintenance to pay for higher bills, etc.) should yield you better results.
~AR
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Two questions please...
what is the average amount of money in reserve for a coop with 300 apartments.
Also, is it usual to have a mortgage that balloons after 7 years. This is a second mortgage to pay for improvements that was not covered in the reserve.
Thank you.
Sandy - How much to have in reserve depends on many factors including the type/age/condition of the bldg. How and when to build up reserves should also be an ongoing function of a responsible board. It's tough keeping up with expenses and eliminating payables but a small increase or assessment now that's spread over time and won't make a major monthly dent in shareholders' wallets can give you most or all of the $300K for the new boiler or roof you'll need in a few years so you don't have to touch a line of credit or take out a loan to pay for it. Planning ahead for the "known" also lets you preserve your reserve for the "unknown".
Someone told me a good rule of thumb is to keep 6 months maintenance in reserve. Our posters here who are financial mavins can say if that makes sense. I'm just passing this along. So if a coop collects $50K a month in maintenance, its reserve fund should be at least $300K.
I'd appreciate hearing other opinions on this.
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Our accountant recommends that we hold 2-3 months of maintenance even if a building is in excellent physical condition. Of course, no building is in perfect shape, so he then recommends holding an amount in reserve equal to the expected cost of upcoming capital projects. He views the 2-3 months of maintenance as a contingency, e.g., you think the roof is in great shape but it turns out it needs considerable patching. When I checked with our property manager, he said that most buyers' attorneys have told him they look for 2-3 months of maintenance as a minimum and then read the Board minutes to see if any capital projects are coming up. If so, they then want to know how those projects will be funded. Based on this, I'm guessing our accountant's advice is a rule-of-thumb.
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Good reply - but also your Certificate of Incorporation should also have a specified amount that must be kept in a reserve account and also if you have a mortgage you will also have to keep money in special account for that - I also agree that it is better to reserve for capital improvement than borrow - if you can set aside amount that is deducted for depreciation - that is noncash amount but could be put into reserve account for replacement - because all these things boilers, sidewalks, etc have to be repaired and replaced - Unfortunately in mine like so many coops they don't obey the law and don't understand and that is why buildings go bankrupt
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Both our comptroller (the managing agent's accountant) and independent account say that a reserve fund equal to 3 months' maintenance is a good goal. Mind you, that's a minimum goal. Certainly, 6 months' worth is fantastic.
With lots of extra money you can pay capital improvement bills up front; you can invest it (wisely & safely!!!) to earn more interest than a savings account; you can pay down principal of your mortgage; if you're truly flush you could even give some back to shareholders (with, say, one month without a maintenance fee).
Before you do any of those, however, be sure you run it by your accountant(s), your lawyer, your managing agent, and of course your fellow board members!
Steve
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It is not unusual. I even thought about one a while back when we held a self-amortizing mortgage at 10.3% INTEREST(Yes!!! - huge burden) in which for the first 10 years the co-op could not be refinance. OUCH!!! VERY PAINFUL! Therefore, since we lacked money to do bladly needed capital investment, and the intersts rates had come down by our 5th year of that burdensome penalty, I thought that a second mortgage with continguous expiry would have been a solution to our needs then. The second mortgage was going to be done through the same bank that held the first self-amortizing mortgage.
Again, you may think WHAT a bad thinking? Well, at the time there were no lines of credit being given; so, it was out of the question. Also, the capital improvements if they would have been done then, I'm sure would have saved a bit of money. There are times in which capital improvements are like CANCER. If you do not catch them in time, the costs will be 3X greater.
However, you should weigh your alternatives quite carefully.
AdC
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Info: A sponsor can sell an apartment in a Coop without board approval or paying flip tax.
QUESTION: What is the legal defination of "Who is a Sponsor"?
SITUATION: Our building was converted to a CoOp about 17 years ago, but all apt were not sold. The original sponsor sold to investors, who were deemed sponsors, who sold to investors who were also called sponsors.
We recently had a mini converson, in that occupied apartments were once again offered to tenets, however most were sold to various "Sponsors".
One apartment has now been sold again, Sponsor to Sponsor, HOWEVER, we now find that the new Sponsor (who will not have to pay have board approval or pay a flip tax if they sell) is a couple that are moving in. They are not investors, but bought an apartment to live in. Our old Board Pres was doing people favors signing off on these sales, in hopes of getting reelected (he was not reelected)
HELP.............
It's been my understanding that a Sponsor is the "holder of UNSOLD shares" -- when the Sponsor SELLS those shares to someone as a resident, those shares are no longer "sponsor" shares or "unsold" shares.
Bottom line.... consult your co-op attorney, ASAP.
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I agree with RLM -- contact your attorney right away.
Chances are that your proprietary lease defines, very specifically, who is and who is not "the sponsor," and I don't expect you or me or Oscar the Grouch could become the sponsor just because the seller says so.
As the previous post says, typically one is the sponsor only if one holds "unsold shares."
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If a holder of unsold shares (an investor) uses the apartment for their personal use...then they are no longer are legally entitled to holder of unsold share status. They, in effect, become regular shareholders subject to all covenants and fees and rules and regulations that all other shareholders are subject to.
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Dave, Thanks for your answer. Where do you get your info.
The new "sponsor" (this is the fifth sponsor for this apt, and they dont own anyother apts) is letting her children live in the apt....
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alice - if the "kids" are responsible and bills getting paid who cares if they are there? so what? sometimes, i hate coops.....
assume these are adult kids. whcih makes them adults, not kids.
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You missed the Point: This apartment was sold as a Sponsor to Sponsor apartment. Making the new owner about the Sixth sponsor to own this apartment.
1-Sponsors are allowed to sell apartments WITHOUT board approval. The Board has no idea who the new neighbors are or, no personal recomendations, no idea of thier history. Or if they can pay the maintenance.
2-Sponsors are not required to pay the CoOp a flip tax. Which, if you sell your apartment, you have to pay.
All of which, defeats one of the objectives of a CoOp. For example, one sponsor sold a group of studios to a few SouthAmericans who for years, allowed thier friends to use the building as a hotel. After numerous (some serious) problems, we were able to stop this. And, the Sharholders are also losing money on the Flip tax.
Safty Issues: Sponsors generally dont care who they sell to, just so they get top price. We have had prostitutes and bookies living in our building.
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I don't what is the ratio of apartment retained by sponsor and those individually subscribed, if you have a co-op counsel hired by the co-op. The issues here are many:
1."Sponsors are allowed to sell apartments WITHOUT board approval. The Board has no idea who the new neighbors are or, no personal recomendations, no idea of thier history. Or if they can pay the maintenance."
A: This is true and approved by the General Attorney's Office. For your info, this is how the co-op became a co-op.
The reason for this is to be able to complete the conversion of the building. Although a mixed blessing at times, you are better off to have the co-op convert and have the board "bring into the fold" the new shareholders, than have the sponsor keep renting units.
If you have a good relation with the sponsor, you may ask to have the new purchasers meet the board to go over any questions they may have. JUST and INFO EXCHANGE, not an ADMISSIONS NIGHT! Some SPONSORS have agreed to this.
2-"Sponsors are not required to pay the CoOp a flip tax. Which, if you sell your apartment, you have to pay."
AGAIN, I don't care for "flip taxes" and they may not make too much sense in a high percent sponsor represented building. After all, the flip tax will subsidize the sponsor by the % it controls. INSTEAD, an assessments makes the SPONSOR responsible for the improvements of the building and building reserves.
"All of which, defeats one of the objectives of a CoOp. For example, one sponsor sold a group of studios to a few SouthAmericans who for years, allowed thier friends to use the building as a hotel. After numerous (some serious) problems, we were able to stop this. And, the Sharholders are also losing money on the Flip tax. "
-- If it was stopped years later, why wasn't it stopped years before??? Sometimes it takes boards to consult the problem with co-op counsel and clarify issues. Don't know if this was your case. Finally, if the investors were South Americans or Jews or Australians or Chinese or UFA (for Unidentified Foreign Aliens) the bottom line is that boards as well as residents have to be atuned to what is going on in the building...some may think that this should be left TO HOMELAND SECURITY!!!
Safty Issues: Sponsors generally dont care who they sell to, just so they get top price. We have had prostitutes and bookies living in our building.
--From "have had" means that you do not have them anymore. So, the conversion worked and these individuals, considered society "scums" are no longer present. Well if the sponsor rents to the same individuals, you have the same situation. The main thing is to be ALERT and discuss the problem with SPONSOR if you have a good relationship or with you co-op counsel as to any irregularities that might be going on in a building.
Finally, ADMISSIONS COMMITTEE, may have similar problems. The bad guys also know how to look like GOOD guys too. So, no matter how much due diligence you do, there is something that may INFILTRATE TOO! Also, while we do not call "PROSTITUTION" certain life-styles, you may end up scratching your head as to who will be the "transient" roommate of some perfectly dignified individuals (I'm sorry if I strike some a sensitive cords with this statement!).
AdC
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Alice: As I understand it the "sponsor" is whoever converts a bldg to a coop - usually the owner-landlord of the bldg as a rental property. Shares for apts the sponsor doesn't sell and holds onto are "unsold shares" and the sponsor is thereby a "holder of unsold shares" (an HUS).
Also, I think a sponsor who's an HUS has to file certain documents with the city/state - every year - to retain that status. If he sells unsold shares to someone who buys them only as an investment (to rent the apt) and doesn't live in the apt, I believe he is also an HUS and must comply with the same annual legal requirements as the sponsor. BTW, the law stated that if an HUS occupied an apt for even 24 hours that was enough to qualify as having "lived" there. The laws on all this may have changed - ask your attorney.
We went to court 10 years ago with a man who bought shares from the sponsor and said he was an HUS because he never lived in the apt and was exempt from the same coop rules and fees as the sponsor. Long story but he was essentially claiming "sponsor status". How can anyone beyond whoever sponsors a coop conversion be considerd a "sponsor"? A sponsor of what? And how can there be 5 sponsors for an apt? As I understand, if a person who buys an apt lives in it or his children do, that person is a coop shareholder.
If I'm interpreting this incorrectly, I'd appreciate some clarification. Thanks.
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You (and others) make sense. I will let you know the outcome....
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Sponsor questions and occupancy are to be brought to the co-op counsel for handling since occupancy is one of the most litigious issues for co-ops. If the family of the sponsor is living an apartment, it might as well become now an individual shareholder's apartment.
Since now you have a "good board" according to "the power of the e-mail" postings, they should know how and where to spend the money to assert the rights of the co-op.
Good luck!
AdC
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The children of Holders of Unsold Shares (forget sponsors...these are holders of unsold shares)living in the apartment...effectively...nullify the status of the holders of unsold shares.
These shareholders are now regular shareholders and should be made to follow all rules, regulations (board approvale for sales/sublets etc..), and payment obligations (i.e. flip tax, sublet fees etc.) that any other shareholder must.
These shareholders ahoudl be informed by the board, through your management company that the board no longer recognizes them as holders of unsold shares.
I do not know where I can refer you to, to confirm this...but speak to your attorney...cause I am certain I am correct here.
Good Luck.
Revoke their holders of unsold share status. They are no longer entitled to it...and one less HUS is better for yoru building in the long run.
Dave!
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I posted this yesterday, but it never appeared. (?)
Two board members want to see all proxies for our annual meeting. They say they have a right to everything related to coop biz. Mgmt says they can only see proxies they're named on but they want to know who's named on all proxies and what shs submit them. They also wanted to know not just final tallies for each candidate but also who votes for whom but mgmt flatly said that's confidential. They gave up on that but still want to see all proxies. Mgmt won't give them that info but they say they'll take the proxies on meeting night if they can't see them beforehand. They won't listen to anything I say.
What is proper/legal regarding who can see proxies and how can we enforce it? Our annual meeting is next week ~
After the meeting the management company should inform you of the following:
total shares of coop
total shares represented
number of shares by proxy
number of shares voted for each candidate
names of voters either by proxy or on person are not provided
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Adding: what if the Management gives all this info to the Board President at the end of the meeting before filling in the proxies?
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If the Man co gives this info to the Pres of the Board, they are more than likely breaking the ByLaws... As an owner you have a right to a copy of the ByLaws... We have now discovered that the more SH who have the BYLaw, the better.
The Bylaws are not difficult to read or understand.
Once more EMAIL POWER: We have brought this kind of nonsense to a stop with Emails. The Man or certain Board members do not want an Email trail.
But, and this is so hard to get people to do, everyone must BCC or CC the board, other SH and the man co. We found that the more people we involved, the less tricks they tried to play.
Our man co is in so much trouble with the SH that they want to discontinue using Email, but its toooo late..
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alicet wrote: "Once more EMAIL POWER: We have brought this kind of nonsense to a stop with Emails. The Man or certain Board members do not want an Email trail."
Yup. Our problematic board president hates the fact that we started conducting business via email over the past year because he prefers ex parte discussions that leave no trace. Easier to bully and manipulate people that way. He's upset because he got caught (thanks largely to email) in quite a few mistakes and misrepresentations.
I've been following this discussion of proxies with interest. We recently had an election that was fairly close. Many people find the board president reckless and would like to see him off the board. Unfortunately he managed to get himself re-elected.
Tonight I had dinner with a fellow shareholder, whom I'll call G, and learned something interesting. G arrived at our recent annual meeting a few minutes early (I hadn't yet arrived). She told the managing agent that something had come up and she wouldn't be able to stay for the meeting, and asked if she could give me a proxy vote. (Proxies in our building are discretionary; in other words, the proxy votes for whomever he or she deems best.) The managing agent gave G a proxy form, G filled it out, and the agent said that she would give it to me. She didn't give it to me. Tonight was the first I heard of it.
G was absolutely appalled. I'm appalled, too, but I can't say that I'm surprised. The managing agent is completely under this bullying president's thumb; she knows that I think he is bad for the building, and she certainly knew how I would vote. We did have a trustworthy shareholder count the votes, but this person wouldn't notice that one of the proxies was either absent or forged.
I'm sure that things like this happen occasionally. I'm not sure what can be done about it.
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Unfortunately the by-laws are silent regarding appropriate or specifiic procedures to handle proxies, elections, etc. This is why a board's work is to also provide sound procedures, not just come up with house rules.
In the absence of guidance, speak with the co-op counsel as to how the proxies should be handled. When I mean speak with counsel I mean invite the professional to talk to the board via telephone, in person or give his/her opinion in writing. With such professional opinion on hand, the board should come to a resolution as to HOW to handle the proxies in a professional and unbiased manner that complies with a court of law in the event of a challenge.
Unfortunately, there are many individuals sitting on boards who are giving opinions without first thinking that boards may be taken to court and their conduct may prove deleterious to their person and to the corporation. It is time to recognize that board members, if they don't know how to act or where they are threading water, then there is a need to consult the legal counsel so that a professional conduct on handling matters, ie., proxies can be followed and may pass the litmus test of a court if legally challenged.
To conclude, boards must learn when to rely on advice from a professional to comply with the law. Even if we dón't like the advice given by the professional, we must learn to accept it as something that protects the board and the co-op from unfairness and lack of ethics.
Good luck!
AdC
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Just to add something...
In addition to what AdC is saying and my original answer, you want to appoint a neutral party who is not a shareholder, or someone who is not party to the vote at hand, to act as an overseer (an atty is best).
When I feel a vote is going to be close, possibly disputed, or in contest somehow, I will always have a third party to watch me (as managing agent)count.
Hope all this helps.
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In our co-op we have the independent accountant and the co-op attorney with our property manager do the counting of the votes and the proxies to certify the votes. The board stays totally out of it.
The only thing that we do is prepare a spreadsheet with the apartment numbers and # of shares. Proxies received by the board are only entered for purposes of making sure that a quorum is reached. The spreadsheet is then used to tally the votes by those named before.
AdC
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Management is correct, No one may see any proxies. Shareholders asked for them at my building and they were denied by the board.
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The Vote has to be secret. We had this situation and one board member intimitated shareholders who did not vote for him. He stayed on the board 17 years, and did some pretty nasty things to people.
This is a very bad idea..And according to our bylaws, someones lawyer can look over the ballots to make certain the election was legal. And you can get a copy of your own proxy.
Check your bylaws or the AG office www.NYC.Gov
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I agree with most of what's been said:
* Voting is private.
* An independent (non-shareholder) vote-counter is ideal; my co-op has used two (or three) shareholders, none of whom were board members, to count them in front of everyone (while maintaining the privacy of the voters' choices).
* When in question about the procedures, check with your counsel about such things. A conference call with multiple board members is great; a written memo from the lawyer is excellent.
One thing to add --
Although only the vote counters should see who votes for whom (whether by proxy or in person), someone MUST SEE & VERIFY the PROXIES proffered -- BEFORE the vote -- to ensure that they are properly filled out, signed and dated.
Usually the managing agent's representative does this. If your lawyer attends, she/he would probably do so.
Steve
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This year our proxy has a "Witness." My reaction was good for a contested election, but in a builidng where there is a 20% attendance and there is a need to "pull teeth" to get proxies back, and 94% subscribed building, then it will tell you that you will have no quorum. So, the board members collect (door-by-door) proxies so that at least a a quorum may be attained and there is business transacted at the annual meeting.
Of course, I elevated my concern to the attorney (not that I expect to perpetuate myself on the board by collecting proxies)his answer I am sharing with you:
"As a matter of law, even if the proxy has a witness line, a proxy is legal without the witness signing."
Hope this helps too!
AdC
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The board members going door to door collecting proxies sounds like a good plan. We have trouble getting quorums in our building as well for meetings. One-third of the building's shareholders refuses to vote at all making it impossible for things to get done and for us to get a quorum.
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AdC - If your board members go door-to-door collecting proxies so you have a quorum for your annual meeting, are they given the proxies in sealed envelopes? They should be. (Goes to my question on proxies a few days ago) I've now been "advised" by the AG's office that proxy info should be confidential except for whoever is appointed on each proxy.
BTW, our attorney says proxies can be used to attain a quorum so the meeting can be held - but they can't be used on any vote (including board elections) if the appointed proxy person isn't present at the meeting. We had a Sh who named his renter as his proxy. The renter mailed the proxy form to mgmt but he didn't come to the meeting. We also had a Sh who named her sister as proxy but the sister couldn't attend the meeting and told mgmt to use the proxy to vote whatever way "board member Mary" voted. Neither of those proxies were considered valid.
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Although we do not seal them, as we enter them to ensure that enough shares are represneted, they are all gathered and put in an envelope and given to the attorney who will be there. Again, we do it for the purpose of a quorum. If the person comes or supersedes the proxy with another one at the night of the meeting, the proxy that the attorney holds is invalidated.
A message we always send to shareholders is an annual meeting is expensive proposition for the co-op; not only does the board pay for the accountant and the attorney to come to the meeting to answer the questions of the shareholders, but there are tons of administrative costs associated with the meeting. Finally, and most important message that we try to drive is: to be a truly democratic co-op, shareholders need to participate. In fact, the most important contribution a shareholder does to a co-op is to exercise their vote at the annual meeting.
AdC
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Although we do not seal them, we FIRST RECORD them to ensure that enough shares are represEnted, THEN PROXIES ARE gathered and PLACED in an envelope and given to the CO-OP attorney who will be AT THE MEETING. Again, we do it for the purpose of a quorum. If the person comes or supersedes the proxy with another one at the night of the meeting, the proxy that the attorney holds is invalidated.
A message we always send to shareholders is an annual meeting is expensive proposition for the co-op; not only does the CO-OP (not the board) pays for the accountant and the attorney to come to the meeting to answer the questions of the shareholders, but there are tons of administrative costs associated with the meeting. Finally, and the most important message that we try to drive is: to be a truly democratic co-op, shareholders need to participate. In fact, the most important contribution a shareholder does to a co-op is to exercise their vote at the annual meeting.
AdC
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I know this has been touched on before but I think it could be given a more in-depth discussion. we live in a coop with about 30% sponsor owned. we used to have one managing agent but the coop caught the sponsor's agent doing some naughty things and terminated. the coop then got a new agent but the spnsor kept the orgiginal agency. I just noticed the below statement the other day. it seems illegal to have 2 manang agents. (a similar quote appears in our offering plan) - ok so some could argue it is somehow cheaper to have 2 mng agents, (for the coop), but is that true? seems like it is bette rto have one agent to create better , more direct communication.
The statue is very clear,'' said Arthur I. Weinstein, a lawyer specializing in cooperative matters who is vice president of the Council of New York Cooperatives, citing Section 352eeee(3) of the state's General Business Law. ''It says that all dwelling units in cooperatives occupied by nonpurchasing tenants shall be managed by the same managing agent that manages all other dwellings in the building. The law applies to both units owned by the sponsor and those by individuals.''
I have googeled around and so far it looks as if this is not a legal situation and the attorney general's office might be notified. no?
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currently there are 60 sold units and we pay $575 per year per unit to the Managing Agency. The other 28 are sponsor owned.
Is $575 per unit high for an upper west side cooperative - 99th st?
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We pay about $511 per apt (in a building with fewer apts than yours) in Hudson Heights.
As for hiring a managing agent ... the corporation hires a managing agent to handle the corporation's affairs.
I don't understand how the sponsor can hire a managing agent to run the building as well. I mean, the super reports to the board, not any one shareholder, even if it's the sponsor.
Have a discussion with your corporate counsel. He/She can figure out what's going on.
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The discussion that was there a while back is still valid:
1. The sponsor retains its own management comapny to handle its units.
2. The co-op handles the co-op affairs, the individual shareholders and the sponsor.
3. The co-op management works for the co-op not for the sponsor. The co-op management may need to interact with the sponsor for preparation of amendments, sales, etc., but the loyalty is to the co-op, not to any individual shareholder or sponsor.
4. What the sponsor pays its management for managing the different builidngs they may have, its their own business and does not impact the co-op costs.
5. A maangement company not only represents co-ops, but sponsors. Just make sure your current maanagement company does not represent the sponsor in your co-op and everything is save.
The rest is bogus!
AdC
4.
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You gotta bone up on your facts, man. Your posting makes no sense. PLEASE read the bylaw of our coop which we posted previously.
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"All dwelling units in cooperatives occupied by nonpurchasing tenants shall be managed by the same managing agent that manages all other dwellings in the building. The law applies to both units owned by the sponsor and those by individuals.''
What this means is as follows:
1. The managing agent designated by the board of the co-op (if this were independent) represents the co-op at large. It does the maintenance collections, it pays the co-op payables, it contracts general contractors to take care of co-op responsibilities (boiler, heat companies, plumber for infrastructure, etc), it sends the letters to individual shareholders and to the sponsor management for house rules violations, it may act as the transfer agent for the co-op at large, it interfaces ith the banks, unions, etc as the agent of the Corporation.
2. The sponsor management is the AGENT for the sponsor. In its capacity it does not overlap with the CO-OP management because its role is as follows: manages the units the SPONSOR owns in your building and other buidlings by collecting the rents, following eviction notices for its own tenants that do not pay their rents, PAYING the co-op for the MAINTENANCE OF THE AGGREGATE NUMBER OF APARTMETNS IN YOUR BUILDING,will respond to the basic needs of its own subtenants in your buidling and other buildings, e.g., fixing old refrigenerators, dishwashers, changing faucets, crack toilets, etc. It RAISES problems that its subtenants may have in your co-op on their behalf, i.e., NOISE, parking needs, water penetration, etc. AGAIN, the level of interaction may have to do with procedures that boards establish within their co-ops, represent the sponsor on the board if it retains a sit, does the budget for the SPONSOR for internal repairs of units, changes of appliances, MAINTENACE and ASSESSMENTS that different co-ops may pass, etc.
So, to conclude, the activities of both managements are different and the SPONSOR management's role is the same as that of an individual shareholder. I for one, must pay my maintenance on one unit, replace or repair my refrig, A/C, dishwasher and look for a contractor to do any improvements in my apartment.
So Mr. BIG AL, think before you speak!!!
AdC
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I know you may not like the suond of it - but all apartments are part of the corporation and there is to be ONE managing agent according to the law. This certianly seems to be a better envoronment for communication - to one source - one agent. than having the consusion of two. You may not like it - but this is the law.
what do you dislike about it so much?
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If you have made up your mind, then thee is no enlightenment and you have closed your mind to all sort of reasoning. So, there is nothing else to talk about. It's illegal in your mind and that's what counts to you.
In my mindset, an owner of multiple units may have its own agent to manage its investments and represent in public the interests of that investor.
Good luck with your reasoning!
AdC
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you have some hidden agenda thing you are not saying. the attorney general says no to tow managing agents and that is that.
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The discussion that was there a while back is still valid:
1. The sponsor retains its own management comapny to handle its units.
2. The co-op management handles the co-op affairs, i.e., the individual shareholders and the sponsor, plus all the managment issues on behalf of the co-op.
3. The co-op management works for the co-op not for the sponsor. The co-op management may need to interact with the sponsor for preparation of amendments, sales, etc., but the loyalty is to the co-op, not to any individual shareholder or sponsor.
4. The sponsor pays its OWN management for managing their units in your builidng and other buildings. The co-op does not pay any money for the sponsor's management..
4A. The sponsor management may represent the sponsor on your board. So, treat the person as a professional because this person usually knows his/her business better than you do. So, getting along with this person will be a good source of informaiton, but REMEMBER, that person is there to represent the sponsor, not necessarily your interests. In other words, the interest of the co-op and the sponsor may be similar, but not 100% the same. The reason the person serves there is to make sure the board makes reasonable decisions on maintenance and assessments that does not greatly impact the sponsor's interests.
5. A maangement company not only represents co-ops, but sponsors. Just make sure your current maanagement company does not represent the sponsor in your co-op and everything is save.
The rest is bogus!
AdC
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In our Coop the Management represents us and works for the Sponsor!!
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Miriam,
What does your plan of conversion tell you about sponsor giving up its control? This is the most critical aspect of the governance of the co-op. When does the sponsor is supposed to relinquish in great part its influence over the co-op for purposes of conversion?
Again, boards must understand their documents and read them to get some very basic answers. The second part is getting assistance from co-op or independent counsel to interpret and act on behalf of individual shareholders so that they may start taking over governance.
AdC
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Thank you. I'll have to rescue it, read it carefully and I'll come back to you all
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I have several buildings where i manage the sponsors end and the coop end of the building. This is not a conflicting situatino for me or the building.
It needs to be realized that the sponsor has more of a vested interest in the property than any individual shareholder and wants the apartment and property value to raise, probably more than you do. All my decisions as a manager are exclusively with the interest of the cooperative in mind... if it prospers, the sponsor prospers.
A good manager is not a slumlord type of manager, if he has this mentality, then you have a problem as he will not want to spend adaquately on repairs and upgrades. In this case, he/she should only manage for the sponsor.
I have an excellent relationship with all 4 of my buildings where i manage both ends. My Boards like me, are not bound by a sponsor who maintains control, or any agreement... 100% free will. As a matter of fact, one building had a change of board and the new boards mission was to "graduate to a level where the sponsor is not managing the building..." Long story-short, they have since asked me to manage the building again because they didn't realise that I went way over and above in my duties as manager (in part because I managed 100% of the building).
So, like anything else, do your homework on the sponsors mindset, the management company, the manager himself and then make an informed decision based on your individual needs and findings...
Good luck
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Read his/her answer. Very interesting and I don't disagree with the point of view expressed. The real issue is INTEGRITY and from your answers in the past, I believe you have it!
Thank you for your contributions.
AdC
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Thank you for your complement!
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Can you tell me how to contact you directly.
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email me and i will give you my cell #
reapllc@aol.com
AR
(Anthony)
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Right, we checked it out with an authority. A coop , comprised of both sponsor-held apartments and regular shareholders may NOT have two Managings. Period. THEY MUST HAVE ONE. Otherwise it is a violation of the General Business Law. Complaints can be made to various city agencies to remedy this.
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Taking a Stab at Clarification
One Cooperative Apartment Corporation- One Managing Agent- A cooperative apartment corporation, in the eyes of the federal, state, and city governments, is one legal entity. As such, the cooperative corporation provides one point of contact for “legal service” for everything pertaining to that specific cooperative apartment corporation. This ‘entity’ can be a managing agent, and in the case of a self-managed coop, that can be either an officer of the corporation or corporate counsel to the corporation; not both in any combination. The operative phrase is one corporate entity with one legal respondent.
Two Responsible Entities For One Coop Apartment Unit in a Cooperative Apartment Corporation- The cooperative apartment corporation is known as the lessor. The tenant-shareholder (known as a lessee) owns a specific number of shares assigned to a specific apartment unit. The lessor and lessee enter into a proprietary lease which delineates the specific rights and obligations of each party to and with each other. This is a one to one relationship within the cooperative apartment corporation.
With Three Comes Potential Confusion- Should an apartment be occupied by a rental tenant, the rental tenant’s “landlord” is the tenant-shareholder of that specific apartment unit. Therefore, the “landlord” to the renter is also the lessee, not the lessor. The lessor has no direct legal responsibility to the rental tenant. The lessee can have a direct person to person relationship with the tenant renter or may engage another to act on his/her behalf as the ‘agent,’ for all things s/he is obligated to in the landlord-tenant relationship. This arrangement does not imply that a cooperative apartment corporation has two managing agents. This ménage a trios involves both an internal and external set of relationships based on different rights and responsibilities of each.
Sponsors And All That Jazz- In a cooperative apartment corporation, a sponsor is, in a sense, a lessee of the units under
his/her control and may engage his/her own agent to act as landlord for his/her responsibilities to a tenant. It is possible this ‘agent’ may turn out to be one and the same serving as a sponsor delegate on the board of directors and even potentially as the cooperative apartment building’s one managing agent. For sake of this post, the topic on whether or not such cross representation works or does not is confined to mentioning that I’ve seen it work in harmony and integrity and I’ve seen the opposite.
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Seems very fudgey wudgey to me.... one managing agent is one agent. The bils, repairs etc of rent controlled/regualted tenants still inthe coop must all be managed by the same office as the shareholders. The other descriptions just seem to be a long flowery stretching of things. NO?
Plus it is inthe interest of the coop to keep the sponsor as seperate from things as they can.
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Or guarantors???
Again... there are many ways to help children. Even when we are grown up children, we never get old for our parents!. We used to buy brand new cars to children; why not an apartment or our house now while alive?
But, what is the maturity of the occupant and the ability to pay that is important in your case.
Position:
(1) The child has to appear with the parent as co-shareholder if you have a sublet policy in place with occupancy limits before being able to sublet.
(2) Your child and parents must comply with financial and references. Everyone that would live in the unit must be interviewed by the admissions committee.
(3) Why is the parent buying for a child? To attend the university, to provide the first home for a child as the child is trying to start a career in NYC or suburb?
(4) Any roommates from the onset must be interviwed for rules and character references must be provided.
AdC
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