New York City enters Phase 4 of its reopening on Monday, which has been scaled back due to fears of a new COVID-19 spike like the ones now ravaging the Sun Belt. Still off-limits to New Yorkers are indoor dining, museums, malls, movie theaters and gyms.
Shareholders at a Manhattan co-op who paid a premium for its amenities package – including a gym, billiards room and children’s playroom – have been barred from using those facilities for months, with no prospect of reopening anytime soon. Can the shareholders demand a credit for loss of services?
Despite the long-term closures, most buildings are not offering relief for residents, replies the Ask Real Estate column in The New York Times. Options are limited for unit-owners and shareholders because in most condos and co-ops, the cost of amenities is baked into the common charges or maintenance fees. Boards are not likely to be offering residents discounts or credits because the cooperative corporation or the condo association may be under considerable financial strain. Even if a building is saving money with the gym closed, other costs have likely risen to cover expenses such personal protective equipment, extra cleaning supplies and overtime pay for staff. Added to the financial pressures on boards are loss of rental income from commercial spaces, plus the loss of monthly payments by residents who have lost their jobs or suffered other reversals during the pandemic.
“Even if the board was willing to provide some kind of credit on everyone’s monthly statement, it would just get collected later on with a higher charge next year or an assessment to make up any budget shortfall,” says Lisa Smith, a partner at the law firm Smith, Gambrell & Russell.
If shareholders or unit-owners pay for amenities separately, it might be possible to withhold that line-item fee – while still paying monthly charges for the building – and see if the board pushes back. “It will be an easier discussion if the dispute is over only the amenity fees and not the common charges themselves,” Smith says.
The good news for shareholders and unit-owners is that those amenities will be desirable once they reopen, so the added value to the apartment won’t be permanently lost. The bad news for everyone is that the behavior of some New Yorkers is jeopardizing the already watered-down Phase 4 reopening. Gov. Andrew M. Cuomo has threatened to roll back the reopening after hundreds of unmasked revelers packed streets in Queens over the weekend, ignoring social-distancing orders, overwhelming police and leaving behind mountains of trash. “It has to stop,” Cuomo says.
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