Just search this space for "Conversion" However, one of the best advice came a while back from AR. I'm reproducing it below:

AR
Re: rewriting by-laws
Fri Apr 22, 2005 8:57AM209.166.28.93

I just finished one in a building I have. This Atty was very good as well. It was the first time I used him. Perhaps listen to several Atty's and see who you like best.

Stuart Nahas, Esq.
Zraick, Nahas & Rich
303 Fifth Avenue, Suite 1201, New York, New York 10016
212-686-0855/212-779-9548 / stunahas@znr.net

Also try the lawyer who originated the plan f\during conversion, he may be best.
AR

make sure:
1) there is a rule that all residents must get the MOST energy efficient washers available (ie minimum water usage which is now much lower thn it used to be check Consumer Reports and present a list of suggested models).

2) make a rule (signed agreement) that they have the proper backflow devices installed plumbing-wise AND

3) charge a fee of $15 a month (subject to future change) for any apartments that install a washer and you should be fine.

Thanks very much for this- we're in the dark, so your advice helps (while on the board, I'm also lobbying for washers in our apartments because our current state is no way to go through life)

Question? What exactly constitutes a "backflow device"? Also- that $15/month is essentially to cover the extra water used? Is this working for your coop?

Thanks!

My take on washers in apartments is: where are you going to allow them to be connected? You mentioned old lines. Make sure you only RESTRICT the use of detergents to LIQUIDS ONLY. Powder detergents tend to clog lines.


My horror story is that we had an upper floor apartment with a clandestine washer. The waste stack had the worst clogging record with numerous incidents of major floods. Once this washer was removed due to a major flood at 6:00 am, we have reduced the clogging issues to minor issues on the line. Finally, if you have washers, you will also have dryers. So, I guess you will allow dryers as well with venting issues to address. Good luck!

Backflow devices or checkvalves are used to prevent water from flowing back into discharge drains of the apartment lines in the event that the stack gets full due to capacity issues or water handling issues.

AdC

Barbara - A "backflow preventer" is a device that, in the event of flooding, etc., prevents the outflow of water that is now rendered unsanitary (or could cause blockages due to particles or debris) from re-entering your main water system and contaminating it.

...this is all incredibly helpful. I can't tell if all of these great recommendations will translate into many dollars spent just for the luxury of clean clothes, but at this point it's worth it!

Anyone heard of "Laundry Pure"? It's a laundry device made by EcoQuest, mfgrs of air purifiers for 15+ years. Many of our residents got the purifiers. They eliminate smoke that filters in from nearby apts. We have many smokers. There's one with a "sanitizer" feature. You can put it in a closet or on a sofa/bed to get smoke out of clothes/fabrics. About 9"x10", cost $400-$500, but work great! I digressed...

Our washers don't have "Laundry Pure" but I saw it used in two buildings. It's a device that attaches to a washer and the cold water line. It eliminates need for any detergent or bleach, makes clothes whiter/brighter, leaves no residue on clothes, takes less time to wash, reduces energy costs since no hot water is needed.

It's sold only by sales reps, cost about $700 per machine, can be installed by any plumber. I don't have full info. For more facts, go to www.ecoquest.com and click the link for "Laundry Pure." Just thought I'd pass this along.

Check with a large commercial plumbing company, e.g., Citron Brothers. Usually, there is one or two master plumbers that will do this.

AdC

While I am in no way an expert on the subject, I am of the opinion that you need a qualified person to do a survey. Do you know the number of shareholders that would consider installing washer dryers? if so will one company do all the work at a bulk rate etc. While washer dryers sound like a great idea remember you are limited to the wash load (they are not like the commercial type) and the dryers also heat up the apt in summer time which is not great. Also the added electric cost and water rates. In addition other things to consider. Best of luck with the project.
* plumbing codes regarding installation.
* Lead pan
* Water shut off devises.
* Venting exhaust (self venting)
* Back flow prevention.

Fat Nickie

Hi- Thanks! This is very helpful. I guess I should have pointed out that we're (the board) not responsible for installing the washer dryers, paying for the increases in individual electricity bills, nor is it really our concern how warm it gets in the individual apartments (shareholders have the option to keep things status quo and take their laundry 3 blocks to the nearest laundromat, and probably will) but we're working on making sure that this can be permissable and, if shareholders make the choice, the building can handle it- structurally.

It's also important to point out that not all shareholders *can* have w/d in their apartments, presumably- as some are quite small.

What is a lead pan?

Thanks!

A lead pan is basin/pan that catches the water in the event of a leak so it does not leak into the unit below/restricts the amount of damage if there is a leak.

FN

Barbara, you could try having a plumber give you a consultation and maybe negotiate a deal for all residents.

Fred Smith plumbing: 212 744 1300
$99 per hour for one master plumber (insured & licensed) plus, I think, $50 to show up at your door. Again, if you could try negotiating a bulk deal.

In addition you might consider these rules surrounding washer/dryers:

1) Resident must have insurance (liability), renters/coop/condo) that covers any possible damages from the washer and they must maintain the insurance.

2) Must have a ventless dryer.

3) Must submit appliance model no. of the washer to the coop Board for apporval prior to installation or future replacement of any washers.

4) Fee of $12-15 a month (subject to increase).

5) Must have "drip pan" installed under the washer.

6) Must have proper backflow device installed.

This is from Consumer Reports:

Front-loaders. Front-loaders get clothes clean by tumbling them in the water. Clothes are lifted to the top of the tub, then dropped into the water below. They fill only partially with water and then spin at high speed to extract it, which makes them more efficient with water and energy than regular top-loaders. Most handle between 12 and 20 pounds of laundry. Like HE top-loaders, front-loaders wash best with low-sudsing detergent. Many front-loaders can be stacked with a dryer to save floor space. Price range: $600 to $1,600.

Space-saving options. Compact models are typically 24 inches wide or less (compared with about 27 inches for full-sized washers of all types) and they can wash 8 to 12 pounds of laundry. A compact front-loading washer can be stacked with a compact dryer. Some compact washers can be stored in a closet and rolled out to be hooked up to the kitchen sink. Price range: $450 to $1,700.

Washer-dryer laundry centers combine a washer and dryer in one unit, with the dryer located above the washer. These can be full-sized (27 inches wide) or compact (24 inches wide). The full-sized models hold about 12 to 14 pounds, the compacts a few pounds less. Performance is generally comparable to that of full-sized machines. Price range: $700 to $1,900.

Barbara, I tend to agree with Big AL. Fred Smith are good at specking out the work and following up. I have used them in the past for such work.Contact Dave London or Phil Krauss. Of course they will not know who FN is.

FN

Some dogs bark when they hear a noise in the hallway. Mine barks when the intercom buzzes or when there's a knock on the door. Maybe board members can walk the hallways during the day when people are usually at work to listen for dog noises? Good luck!

I have done this. It works! Soon as you walk by the front door, the dog(s) reveals themselves by barking.

Forgive me for asking what appears to be a stupid question. If (like you said you have a strick no dog policy) did you not ask the prospective shareholder when they were interviewed? Secondly, did anyone not notice, and if they did, why was in not mentioned that people had dogs in the building until now. What were the other tenants, and staff doing not to notice?

Fat Nickie

We always ask if they have a dog, and each shareholder must sign a paper stating they do not have a dog. However, people break the rules.

The neighbors are reluctant to report the violations for a variety reasons. I also can't ask the maintenance crew to spend their time searching for dogs, its not their job. Granted they will try their best, but the challenge is in locating which apartment the dog resides.

We have 27 buildings and 287 units spread over 3 addresses. Pinning down the specific apartment is a bit of a challenge, and we can't send a violation until we have this info.

In our co-op, at every admissions committee meeting with the prospective buyer, we reinforce the "no four legged animal" rule.

In addition, before we interview we have the prospective owner sign a special letter that indicates that the “co-op” has a ban on four legged animals.

I see why people wouldn't want to snitch on neighbors about having a dog but maintenance staff should help locate them. You don't have to identify who tells you about dogs. That would make staff feel more secure that they won't "get in trouble" with owners if they report them.

We have a security videocam for our lobby. People with dogs have to go through the lobby to take them out to walk them. The videotape will show who has a dog. If you have more than one way that residents can go in/out of your building, additional videocams to cover the other areas are not that costly once a main system is installed.

I agree with you on security cameras to identify dogs and owners. However I am not in favor in using the building staff as snitches. It just puts the staff in harms way and in the line of fire. If staff snitch somehow it works its way back to the shareholder. First hand experince on this one.

FN

FN, I respect your opinion on not using maintenance staff to report dogs. Our staff knows they can trust our Board not to reveal who reports what - because WE don't know. We only asked our staff to report on dogs and one other issue in the past. Both times, our Board agreed the only person staff should report to was the prop manager - by putting an unsigned note in the locked "Staff" box in his office which residents can't access. So even he doesn't know what staff person reports what. The only thing we care about are the findings and that they're accurate, not who reports them. Our staff feels very secure with this system. It may not work for some buildings. Things do have a way of getting around. But it's worked well for us.

I must applaud your confidentiality on this issue. Unfortunately our board promised to keep "the informants" anonymous but when certain shareholders who were violating the house rules challenged, the board members they revealed their sources. Sad but true. Needless to say, the staff are not willing to cooperate on such issues anymore for fear of being outed. Good to see it works for you.

FN

why woud you have a dog free building anyway? ridiculous.

Don't misunderstand. I love dogs. I love all animals. But why might some bldgs not want dogs? Because they:

-- have been known to bite or jump on people in elevators
-- frighten some people, especially big or unfriendly ones
-- tussle with other dogs in the elevator, lobby, etc.
-- have "accidents" that mess up bldg rugs and floors
-- can also damage lobby or other bldg furnishings
-- bark a lot and drive neighbors crazy
-- howl when they're home alone - sometimes for hours
-- are sometimes allowed to run free in bldg hallways
-- stomp on, chew or do their business in the landscaping

Dogs that do these things make some residents uncomfortable and damage property. I was in a bldg lobby recently and saw a woman sitting in an armchair with a dog on a leash. The dog was chewing on the wooden leg of the chair and she did nothing about it. And yes, she saw what he was doing. Bldgs have the right to say "no dogs". If someone doesn't like it, live somewhere else.

Anonymous - Did you ever have people above you with no rugs or carpeting and had to listen to a dog run and skittle his nails across the floor every day and night? Or get in an elevator and step in a puddle of dog urine? Or had to weave your way around two dogs barking and jumping at each other in the lobby as their owners held them back? If you had, maybe you'd think differently. And remember, I like dogs. wouldn't

I like dogs as well but it's their owners I have issues with, I argued with one dog owner because she allowed her dog to urinate on the trees outside the co-op and thought nothing of it. During the summer months that rancid smell rises from the trees and makes the entire block smell bad. We own the sidewalk as well, I told her. She keeps telling me that the rain will come and wash the smell away. I asked her does a rain cloud follow her around? I asked her how would she like to be a tree and have dogs come along and pee on her? She would have to stand in the urine and could not go anywhere. She saw my point. She doesn't allow her dog to pee on the trees anymore. Allow dog owners to have more respect for trees and property. I understand now why landlords don't like dog owners or dogs. Dog urine kills trees and dogs damage property. Not to mention dog owners who won't clean up after their pets after the dog makes a mess in the lobby and/or in the elevators.

Re: dog urine killing trees, we planted flowers around the trees on our block, but people (not from our bldg, we don't allow dogs) walk by and let their dogs urinate on them. We put short wire stake-in fences around the trees but people let their dogs hop over them. Bricks didn't work either. BTW, kids run across tree beds and cars back into them, and they ruin trees/flowers too. One thing that keeps dogs and others out is a solid iron tree pit guard. Most are black but can be painted any color. NYC recommends getting ones that are 18" high. You don't need NYC permission to install them. They're costly but protect greenery, are attractive and last for years. Go to www.treesny.com. The site has good info on tree pit guards + a list of companies that make them or look in the yellow pages under "iron works".

Thanks!

I will look into this! We have the same problem with other people's dogs as well.

Sorry, accidentally had the word "wouldn't" at the end of my message about no dogs. I hate when that happens. :-)

I lived in a dog free building and liked it. No loud barking, no messes in the hallways. The super didn't get fined for not cleaning up behind other dogs. No dog fights in the lobby. Less hassle overall and noise, what's not to like?

Do you mean a roof deck for residents to enjoy and that is part of a roof replacement may be considered capital improvement?

The answer is yes. A capital improvement is any major outlay of money (usually above $5,000) that improves the conditions of the property. A capital investment may be on new projects or replacement projects such as replacing an old mechanical elevator with an integrated circuit elevator or buying new cabs. Even, the cost of replacing floors or carpets are considered capital investment, unless this is done on a yearly basis, and is then considered a recurrent event.

AdC

get a lwyer on it and ask for buildoing records to see if any similar incidents ahve happendd in the past. this does not sound right since it is techincally not a sale (ie it was never put on the market) - probably just a reassignment of shares to a family member.

This is an outrage!!!!!

There is a flip tax if a shareholder sells, yes! But there should not be a flip tax for a stock certificate transfer to someone in the same family especially if it were willed to you as part as your grandmothers estate.

Hire an attorney at once!!! Any real estate attorney familiar in condo/coop. law will suffice.

Good luck and you should get your money returned. If not because if was right; then because they insitituted a "new rule" immediately after taking your money.

I would fight big time!!!!!!!

Let me know how you do!

Signed
Furious!!!!!!!!

Something is not right.

Call Dennis Greenstein, esq. 212-218-5520, former asst AG in NY.

Before you go on a major battle, you may want to approach the board with great diplomacy. I believe that when people communicate sicerely will get more than yelling or threatening to sue.

If the board reconsidered flip taxes for estates, two or three months after yours changed, it may mean that the board thought about the reasonableness of such a fee and decided to repeal at a later time the rule.

Again, a rule may be repealed by the board or changed without having to reconsider a rejection made two months ago under a rule and now considered acceptable. If you read the proprietary lease, you will find that a board may enact or change rules to preserve the interest of the co-op. This is similar to Uncle Sam; if a certain tax advantage was eliminated in a tax year, if you are late just for one day to take advantage of the old tax rule, well... YOU MISSED IT!

Since co-op boards are sometimes more benign than other institution, you may always act with diplomacy and obtain more because you and your mother are now part of the shareholder family. If not! Be happy that you got your grandmother's apartment w/o much of an investment except for the flip tax which will remain with the co-op for future work in your own co-op!

AdC

Whoa, whoa, whoa, people! Go back and look at the first reply, from AdC.

First, remember that your board is made up of people like you: non-experts who are trying to run a business so that it benefits you.

So if you immediately get into a legal battle, the board will have no other option than to get its lawyer involved. Perhaps you would rather have a conversation with them first, instead.

You could say, "I understand that you have changed / are considering changing the the flip tax rule so that it no longer applies to trust transfers. Of course, I just paid a flip tax in just such a situation. Can you tell me the reason you're going to change it now?"

Second, remember that, as AdC put it, you may have transfered your apartment a few months too soon to take advantage of the benefit. This happens all the time in life -- you're either a shade too early or a shade too late. It is not an outrage, it's the way the world works. So prepare to accept that, in this case, fortune didn't shine on you.

Third, understand that these trust inheritances are a legal maneuver to get around laws and regulations that apply to all of us. (One real estate lawyer told me that in the legal business, the trust inheritance is called Poor Man's Estate Planning.) So realize that all the trust does is transfer shares -- it does not allow you to live in the apartment or to sublet it, unless your board has specifically allowed that.

Fourth, before you get steamed about this, understand that as shareholders YOU are part owners of the business. If YOU don't want to pay in to support the business, then you are expecting your neighbors to shoulder YOUR financial obligation. That's not fair to them. If cooperative ownership is not your cup of tea, you should sell the apartment.

Finally, do talk with a lawyer if you wish, but do so to find out your rights and responsibilities under the proprietary lease (I assume you haven't read it -- almost no one does). Don't let the lawyer start sending letters until you A) understand what you may and may not do in a co-op, and B) before you have had a reasonable discussion with the board.

I hope this helps. You may e-mail me if you have other questions.

does the below also hold true for a coop?

Q & A; Assessments Can Affect the Tax Basis

Published: October 1, 2006

Q -- Can regular monthly payments that are made along with common charges but are listed separately under Capital Reserve Fund be used to increase the tax basis for a condominium when calculating capital gains?

A -- Martin M. Appelbaum, a certified public accountant in Manhattan, said assessments levied by a condominium board for capital improvements, whether paid as a lump sum or in monthly increments, can indeed be used to increase the tax basis of individual units, thus reducing the profit when the apartment is sold.

This assumes that the board has complied with Internal Revenue Service guidelines. Mr. Appelbaum said that under I.R.S. regulations affirmed in numerous court decisions, the board must pass a resolution and notify unit owners that the funds being raised will be used for capital improvements only and not for operating expenses or ordinary repairs.

In addition, he said, there should be a separate line item on the monthly bill for the capital assessment. And finally, he said, money collected for the capital assessment should be held in a different account than the one used for other funds collected by the condominium.

"The condo board should consult with its C.P.A. firm to ensure they are following the proper procedure for billing and collection of the funds," Mr. Appelbaum said.

Yes, it holds true. Assessments and general improvements to your apartment add to the original value of the price you paid for your unit and (if the co-op is not your first home that you sold) so, what you get on the sale of the unit is now subtacted to the original price + assessment.

What many times happen is that the IRS provides you a break on the first home that you sell. So, if your profits are not greater than the break you get, you deduct zip.

AdC

If it is a question is Yes. If it is a statement, you have just reaffirmed my explanation. But remember, the IRS give the deducion once. After that, you must declare the profit. So, if you are selling another home that you have owned in a series, then the IRS deduction does not apply; capital improvements become handy to reduce your profit or increase your losses.

AdC

Our 500 unit co-op is forty years old. We have capital improvements every year in accordance with the AICPA required engineering study and capital improvement plan. Our plan says that we need to spend about $15,000,000 over the next fifteen years, in current dollars.

It does not mean we schedule the capital improvement precisely in the year estimated by the engineering study as many year to year maintenance events can prolong the life span of a capital feature.

However, for a number of years we have had a yearly assessment that garners about $1,000 per unit (yes, apportioned by the number of shares), and thus we have an annual capital improvement income stream of $500,000.

In addition our original mortgage was retired without ever refinancing or expanding the principle. In turn, rather than lower the monthly maintenance costs by the like amount, we kept this item in the income stream but change it to capital income and now we use this income for capital improvements. In total, we now accumulate $900,000 a year for capital improvements.

The rationale is that as the building ages, more of the original infrastructure and even some of the newer more recent items need replacement. Thus, we are replacing windows over a six year program without borrowing, we are replacing our central AC (used buy all apartments) chiller devices, we upgraded our lobby, we completely overhauled our elevator systems and cabs, we built a new mailroom, put off street parking decks were completely refurbished, and soon we will replace all wallpaper and carpeting in the hallways of all floors.

The point is that assessments should be a recurring yearly income stream and now sprung on residents as ”specials”. By having assessments as regular yearly event, residents can plan budgets accordingly (in our case) for years to come.

how do cap expenses have to be listed and budgeted to remain deductable when a person sells their apartment? our coop is assessing for "general" purpose of offsetting future expenses without earmarking the assessment for anything.

Essentially, the co-op's auditor should assist in segregating the funds in a separate line item in accou8inting and a separate bank account. Yes, the monthly billing statement should show the assessment as a separate entity.

Has the MA started a legal action? Is the MA still representing your co-op? How were the wrongdoing accusations raised? In a public forum? What is the extent of the damage?...Have you discussesd the problem with your co-op counsel?

AdC

Just an FYI re defamation of character....Libel is written. Slander is verbal. Call your attorney today.

It consists of several public open forum statements accusing the current Managing Agent of wrongdoing which appears to be heading toward his termination. No legal action has been filed, but there is concern that the coop could now be drawn into a libel suit.

if you have facts and evidence of wrongdoing you will be OK.

There's an archived article on this topic. The board member who cannot prove their claim could be sued and then drag your coop into the lawsuit. You should look into your coverage.


June 4, 2000
YOUR HOME; Liability And Boards Of Co-ops
By JAY ROMANO

ON April 11, the New York Court of Appeals, the state's highest court, addressed the issue of whether corporations, including co-op housing corporations, can be required to pay punitive damages assessed against their board members. The court's answer -- a qualified no -- has been unsettling for co-op corporations and their board members.

''I think a lot of people are nervous about this decision,'' said Richard Siegler, a Manhattan co-op lawyer. ''It's going to make people more hesitant to serve on co-op boards, and it will make those who do serve more reticent about making decisions that could be controversial.''

The case in which the court ruled, Biondi v. Beekman Hill House Apartment Corporation, was the final chapter in a legal case that began in 1995.

At that time, a shareholder in the apartment corporation, a co-op at 425 East 51st Street, sought permission to sublease her apartment to Gregory and Shannon Broome. When the board denied the request, the Broomes filed suit under the federal Fair Housing Act and other antidiscrimination laws, charging that the denial was based upon Mr. Broome's race. He is black; his wife is white.

After a jury found in favor of the Broomes, the couple was awarded a total of $640,000 in damages. Of that amount, Nicholas A. Biondi, the president of the board, was ordered to pay $230,000 in compensatory damages and $125,000 in punitive damages. After subsequent settlement conferences, the compensatory damages ended up being paid by the co-op's insurance carrier while Mr. Biondi remained personally liable for $124,000 in punitive damages.

Mr. Biondi then filed a lawsuit against Beekman Hill House seeking indemnification, a form of reimbursement, for that amount. The basis of his claim was a clause in the co-op's bylaws that required the corporation to indemnify board members for any ''judgments, fines, amounts paid in settlement and reasonable expenses'' incurred as a result of their good-faith actions on behalf of the corporation.

In 1999, after a lower court dismissed Mr. Biondi's claim, he appealed to the Court of Appeals. In April, the court affirmed the lower court's dismissal, saying that in this case, indemnification for punitive damages was prohibited by public policy.

''What the court is basically saying is that it is against public policy to reimburse an individual director for capricious, arbitrary or illegal conduct,'' Mr. Siegler said, adding that while this may seem reasonable for conduct clearly undertaken in bad faith, it becomes a bit more murky in situations in which a board member, acting in what he or she may believe to be in good faith, nevertheless crosses the line and does something for which a penalty is assessed.

And it is that uncertainty -- coupled with an increasing number of federal, state and local laws that expose board members to punitive damages, fines or other penalties -- that Mr. Siegler and other lawyers say make it harder to find volunteers to serve on co-op boards.

''I don't think people will be as willing to serve if they feel they won't be indemnified for actions taken on behalf of the corporation,'' Mr. Siegler said, adding that in addition to the potential liability board members face when dealing with federal, state and local laws against discrimination, there are also some less obvious exposures.

For example, he said, failure to comply with the city's window-guard law, the elevator-inspection law and the federal lead paint disclosure law could all subject directors to substantial fines and penalties.

Bruce A. Cholst, another Manhattan co-op lawyer, said that while current and prospective board members may understandably be concerned about the impact of the Court of Appeals decision in the Biondi case, there are subtleties contained in it that could still make it possible for co-ops to reimburse board members for punitive damages under certain circumstances.

''The Court of Appeals held that public policy prohibits boards from indemnifying directors for punitive damages imposed for acts of bad faith,'' Mr. Cholst said. ''But what is significant about this decision is the court's definition of the term 'acts of bad faith.' '' The court, Mr. Cholst said, defined ''bad faith'' as the absence of a ''reasonable belief'' by board members that their conduct served ''the best interests of the corporation.'' In other words, he said, it is still possible for a board member to be reimbursed for punitive damages if he can adequately demonstrate that he was acting in good faith for the benefit of the co-op.

Accordingly, he said, punitive-damage awards, fines or penalties arising from errors of judgment -- following another person's misguided advice, for example -- can probably be reimbursed if a board member can establish that he was acting in the best interests of the co-op.

''The first precaution that should be taken by boards concerned about this issue is to review their bylaws to make sure that all existing loopholes are adequately plugged,'' Mr. Cholst said, adding that if the bylaws do not permit reimbursement for ''judgments, fines, amounts paid in settlement and reasonable expenses,'' they can be amended to do so. In addition, he said, the bylaws can also include a provision permitting reimbursement of legal costs before a final decision in the case.

''If they don't,'' he said, ''then board members who are individually sued are required to pay their own defense costs upfront and then seek reimbursement from the co-op only after the proceeding has been concluded in their favor.''

The bylaws should also contain a provision, Mr. Cholst said, that protects board members from liability to shareholders for anything they might do in good faith on the corporation's behalf.

Finally, Mr. Cholst said, if a board is particularly uncomfortable about the potential for having to pay punitive damages, it should talk to its insurance broker about finding coverage. While New York law bars insurance companies from selling such coverage in the state, he said, it can be obtained from ''offshore companies,'' as they are known, most of them in the Caribbean.

Martin Eveleigh, a manager at P. D. Insurance, in Tortola, British Virgin Islands, said his company offered coverage for punitive damages when they are imposed concurrently with compensatory damages, as was the case with Mr. Biondi.

''We draw a distinction between punitive damages and fines,'' Mr. Eveleigh said, explaining that insurance from his company specifically excludes fines and penalties.

He said that the maximum coverage now available is $500,000 and that the individual or company seeking coverage must also have a standard liability policy. The yearly premium for punitive-damage coverage starts at about $1,500, Mr. Eveleigh said, depending on the deductible and the amount of liability coverage.

There are, of course, some drawbacks to dealing with an offshore insurer. Donald Gabay, a Manhattan lawyer, said that New York's insurance guarantee fund, which protects policyholders if an insurer goes bankrupt, would not apply here. In addition, he said, offshore companies may operate with less regulatory oversight.

Arthur I. Weinstein, a Manhattan lawyer and the vice president of the Council of New York Cooperatives and Condominiums, said that if a co-op determined that punitive-damage coverage from an offshore company was ''affordable and enforceable,'' the board should consider it.

''It is always in the best interest of the co-op to get the maximum amount of insurance it can reasonably afford for its directors,'' he said. ''How else are you going to get good people to serve?''

* Copyright 2006 The New York Times Company

I asume from your posting that you have a sponsor or investor.

If you have one and it has not said a word about past assessments,in fact, it has paid for the assessments without giving you problems, then you should not worry. The sponsor has given its blessings.

re: "issued shares" - I believe that a sponsor has no say in the matter (yay or nay) . it merely seems to be a rul that , as long as he has shares, there may be no assessment over 15k.

2) can you define what is meant by "issued share"?

Last night I checked my proprietary lease and ours is more generous. It limits the sponsors position to only 28%.

In other words, if the sponsor in the builidng has equal or more than 28% of the shares, our board needs to request authorization of individual shareholders (issued shares)v. sponsor (unassinged shares). Luckily, we passed this number and the board is now free to assess without consulting first the sponsor for its blessings.

This measure protects the sponsor from high cash demands by the co-op that it did not plan for during a given fiscal year. So, a board needs to first count with the sponsor's blessings because the sponsor may block the assessment by voting against it and by speaking out at the special meeting. As you probably know well, if there is a vote on an assessment, there are individual shareholders that will oppose it and you will end up borrowing from your reserves to patch your operating budget.

As I said previously, if your sponsor has gone along with the assessment without invoking its powers, it has given its blessings. However, if you prepare to raise a large reserve through assessment, make sure you explain it to the sponsor the reasons so that it sees your point. Since you are usually communicating with a management representative of the sponsor, then give sufficient time for such a plan so that the management representative may convey it to the owner.

AdC

you will see that it says all shares. approval of ALL shares.

No need to re-read, but here I go again!

If you are technical about it, it was not illegal that you did not try to obtain a vote from your shareholders. It only meant that you should first count with the sponsor to make sure that it is in posiiton to provide your support or not. If not, then, you need to look for the support of the rest of the shareholders.

In your case, the sposnor is in control even if it owns one apartment or one share to sour your proposed assessment. If you wish to assess, you need its blessings. This is why, äs long as it owns a share, an assessement requires the vote of the shareholders." However, if you remove the shareholder, i.e., it does not say a hoot or it has sold or its assets, the assessment is valid.


You may argue that this is not what the language suggest. True... if you have not encountered oppositions, then it means all the shareholders have given their blessings as well. Otherwise, they could say, well! what about the sponsor...it owns shares; is it happy about the assessment?

Recommendations: now that you know what to assess means in your builidng, then you should look for an amemndment of your proprietary lease to give you more flexibility to impose assessments as needed or before you adopt one (for fear of being challenged) you should follow to the T what your proprietary lease says. Let the sponsor know what is going on and let them challenge your assessmen.

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No need to re-read, but here I go again!

If you are technical about it, it was not illegal that you did not try to obtain a vote from your shareholders. It only meant that you should first count with the sponsor to make sure that it is in posiiton to provide YOU support on your assessment. If THE SPONSOR DOES not AGREE WITH YOUR PROPOSED ASESSMENT, then, you need to look for the support of the rest of the shareholders TO REMOVE THE OBJECTION.

In your case, the SPONSOR is in control OF THE DECISION TO ASESS, even if it owns one apartment or one share OF YOUR BUILDING. IT HAS THE POWER to sour your proposed assessment. This is why, äs long as THE SPONSOR owns a share, an assessement requires the vote of the shareholders." HOWEVER, IF THE SPONSOR AGREES WITH THE ASSESSMENT, YOU HAVE INDEED REMOVED THE NEED TO GO TO YOUR SHAREHOLDERS AT LARGE.

You may argue that this is not what the language suggestS. True... if you have not encountered opposition FROM YOUR SHAREHOLDERS AT LARGE, then it means all the shareholders have given their blessings as well. DON'T THEY HAVE A COPY OF THEIR BY-LAWS AND PROPRIETARY LEASE TO RAISE THE OBJECTION? What about the sponsor...it owns shares; is it happy about the assessment? WE NEED TO VOTE.

Recommendations: (1)now that you know what to assess means in your builidng, then you should look for an amemndment of your proprietary lease to give you more flexibility to impose assessments as needed or before you adopt one (for fear of being challenged) you should follow to the T what your proprietary lease says. (2) Let the sponsor know what is going on and find out if there are any obejctions to the assessment for which a general vote may be required. (3) Ask your attorney for a deeper interpretation of your proprietary lease / bylaws in regards to this clause.

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