Currently our building allows maximum financing of 80% for shareholder loans. In light of incredible valuation increases for apartments in our midtown Manhattan building there has been some talk about reducing the maximum financing allowed to a level of 70%.
What do your buildings require....and is this a valid concern?
A Sh in my coop (lives in NYC) used to sublet her apt but the last tenant left in 1995 and the apt's been vacant ever since. I know her and we talk a few times a year. She's a nice woman and she's asked me many times how the market is and if she should sell or sublet. I give her my opinion and say anything's better than paying maintenance on an empty apt - sell and get a nice chunk of money, or sublet, offset her maintenance and get some income. (She has no mortgage.)
She always says she has a demanding job, an elderly parent lives with her, a lot going on, can't deal with this apt until things settle down. Things never settle down. There's always something we have to deal with. Our prop mgr sends her a cordial letter every 1-2 years to ask what her plans are for the apt, and she always says she isn't sure yet.
Besides the fact that she's losing money, we could have a Sh in there who'd potentially be a coop asset (or at least a sublet tenant) instead of an apt that's been empty for 12 years. Shs in adjoining apts offered her a good price to buy it but she said their prices weren't high enough. I think she was just putting them off. She can't seem to put her attention on this and make any decision.
Our bldg is nice and we're in a great midtown location. She wouldn't have any trouble finding someone for her apt. We can't force her to occupy, sell or rent it. Any ideas on how we can convince her to do something with it?
Just a theoretical question: What would a Board/building do if an investor was unable to either sell/rent out his unit and then stopped paying his monthly charges? If the Board was later also unable to sell, what could be the outcome? Has this ever happened in any of your buildings?
I know the super and his immediate family (spouse and children) are allowed to live in his apartment paid for by us shareholders. But is anyone else allowed to live in his apartment, parents, siblings, cousins, etc? Does the super need to ask the board for permission to do this?
I don't have proof yet but our super might be allowing his brother to live with him.
Don't know what to do now.
I have just been recruited to serve on my board and have found out something about our income streams.
It appears that because of the IRS 80-20 rule our cooperative actually has to forego income, sometimes in excess of 20,000 dollars a year, that we could otherwise collect from two store we rent space to.
Actually collecting this income would have significant consequences in loss of shareholders ability to deduct real estate taxes and morgage interest from income taxes as well as the treatment of sales proceeds for those who sell.
I have also been told this maybe more common than I would like to think.
Therefore, how many of your buildings face the same situation? How many of you also actually have to leave monies uncollected?
It seems the stores we rent to benefit in lower rents at the expense of the cooperative and all its shareholders.
For complete ruling, see:
See news article:
Court backs homeowners associations
Committee for a Better Twin Rivers v. Twin Rivers Homeowners' Association (A-118-122-05)
Argued January 4, 2007 -- Decided July 26, 2007
WALLACE, J., writing for a unanimous Court.
The issue before the Court is whether the rules and regulations enacted by the Twin Rivers Homeowners’
Association governing the posting of signs, the use of the community room, and access to its newsletter violated
New Jersey’s constitutional guarantees of free expression.
Twin Rivers is a planned unit development consisting of privately owned condominium duplexes,
townhouses, single-family homes, apartments, and commercial buildings located in East Windsor, New Jersey. The
community covers about one square mile and is populated by about 10,000 residents. The Twin Rivers Community
Trust (Trust) is a private corporation that owns Twin Rivers’ common property and facilities. The Twin Rivers
Homeowners’ Association (Association) is a private corporation that serves as trustee of the Trust. The Association
is authorized by the Trust to make rules and regulations for the conduct of its members while occupying the land
owned or controlled by the Trust, to provide services to its members, and to maintain common lands and facilities in
Twin Rivers. The Association maintains the Trusts’ private residential roads, provides street lighting and snow
removal, assigns parking spaces in its parking lots, and collects trash. By acquiring property in Twin Rivers, the
property owner automatically becomes a member of the Association and is subject to its Articles of Incorporation
(Articles) and Bylaws. The Association is governed by a Board of Directors (Board), whose members are elected by
all eligible voting members of the Association. The Board is responsible for making and enforcing the rules, and for
providing services to its members that are financed through mandatory assessments levied against residents pursuant
to an annual budget adopted by the Board.
If we convert to a condo, we know that we have a small number of residents that are in arrears for modest amounts.
On the date pf a conversion wherein stock certificates are exchanged for deeds, what is the best way to ensure that the surviving homeowners association (HOA) is not saddled with any “debt”.
One thought is to place a lien on an apartment such that a title search will disclose a claim against the owner. In effect, this should establish a primary claim against the owners.
However, if the shareholder cannot convert a coop loan to a condo mortgage or obtain a reverse mortgage, this encumbrance may thwart the orderly conversion process.
In effect, the HOA would operate a coop corporation for a limited period of time until the arrears are satisfied.
May I have some views or interpretations?
Yes, we are seeking advice of counsel, but with so few coop-condo conversions there is not much to review any outside assistance would be welcomed.
I am a new condo president of a brand new condominium of 20 units- 7 doorways with 3 units per doorway. We are managing ourselves at the moment. One of our owners has a hard time remembering he lives in a condo-- he likes to do what he wants. He has just put a lock on the door to the basement and given the 2 other unit owners a key. He didn't get approval from the Board-- he never gets approval for anything he decides to do-- so he is a bit of a challenge. Obviously, we have to confront him with this. Could the lock on the basement door be a fire code issue? Thanks!
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