New York's Cooperative and Condominium Community

Habitat Magazine Insider Guide



If it were a movie, you might call it The Case of the Never-Ending Meeting, or maybe The Indecisive Board. Whatever its title, it could be playing at your boardroom already. Managers and other professionals — and many exhausted board members — agree and there are a variety of common remedies, from setting an agenda to limiting the discussion.

So you're moving out of town and you've got approval to rent your condo or sublet your co-op. The rental income is sweet, but what's your tax situation going to be? Should you report your rent as personal income, or should you form a limited-liability corporation (LLC)? For most of us, the answer will be the former, writes Leigh Kamping-Carder in's "Ask the Expert" column. They whys and wherefores have to do with passive vs. active income. Either way, there's a lot of stuff you can be active about in deducting.

Some co-op boards, to say nothing of residents, are wary of reverse mortgages, a type of loan that lets elder homeowners have money to live on by borrowing against the value of a home, to be paid back from the proceeds of a home sale after the borrower's death. Habitat, since 2006, has published articles explaining reverse mortgages and examining them in detail for boards. Now The New York Times, in a survey of the latest economic research on the subject, suggests that after some growing pains and unscrupulous lending, reverse mortgages may be a highly useful tool in specific situations — and that even some early naysayers are converting.

Case Notes: Boards Waste Time and Money By Not Strictly Following Rules

Written by Richard Siegler & Dale Degenshein on September 29, 2014

New York City

Dot that "i," cross that "t" and make sure that when your condo or co-op board takes an action, it does so in accordance with its governing documents and law.

The plaintiff is the board of managers of Clermont Greene Condominium. The condo was formed by the sponsor, defendant Vanderbilt Mansions, and the board is made up of seven members, three of whom are affiliated with the sponsor. The condo board began this action because of claimed construction defects, building code violations and hazardous conditions. It retained Howard L. Zimmerman Architects (HLZA) to investigate the building conditions, and HLZA issued a report identifying several defects.

A READER ASKS: I'm fighting with my neighbor. It's gotten to the point where I want to sue her for leaving her garbage laying around and letting her dogs bark all day and night. Don't I have a right to a quiet, peaceful home? But my board wants me to try mediation. What is that? Is it worth it?

HABITAT ANSWERS: If you don't want to spend a day in court, try mediation. It can save you time, money and (possibly) some bitterness. What often happens when there is no mediation is predictable: charges, countercharges, lawsuits — and big legal bills. Besides creating bad feelings among the owners, litigation disrupts the building's budget and can quickly become a financial black hole.

Owners of single- to four-family homes in New York State get an annual cap on their property taxes. So do rich folks who own townhouses. You know who doesn't get a property-tax cap? Cooperatives and condominiums. That's because we are — and we're not making this up — Class 2 properties under the tax code, while those others are Class 1. That's right: Co-op and condo owners are second-class citizens, as far as property tax goes. So while this Associated Press story, via Crain's New York Business, may not seem immediately applicable to co-ops and condos, we like to look at it as a start. The gist? A State Supreme Court justice has tossed a lawsuit alleging that property-tax caps are unconstitutional. It may not be much for us cap-less types, but the fact that a judge affirms that caps are constitutional? Like we said, It's a start.

Thinking of perhaps keep a little pied-à-terre in New York, a little home-away-from-home where you can stay when you're in the Big Apple? Well, try to keep its market value below $5 million if a bill that State Senator Brad Hoylman plans to introduce goes to law. The idea, as reported by Crain's New York Business, is based on a proposal by the Fiscal Policy Institute noting that "because of the arcane nature of the City’s property tax, or because such units benefit from tax breaks mainly intended to benefit more affordable housing," non-primary residents "pay a very low effective property tax relative to the real market value of the property. Yet, the high value of their property depends on local tax dollars supporting the infrastructure and public services that contribute to the city’s quality of life and attractiveness."

The bill follows the Institute's math, which says a tax starting at 0.5 percent for the first $1 million in value over $5 million, rising to 4 percent for the value over $25 million, would generate an estimated $665 million from the 1,556 coops and condos in that price range and owned by non-primary residents. Which, if you're a Saudi or Chinese billionaire, is basically the change in your couch.

It is rare for a co-op to ever go without a mortgage. Most move from one loan to another at the end of each borrowing cycle since, for many buildings, the mortgage supplies a pool of capital ready and waiting for ongoing needs. "Most co-ops use refinancing to pay for capital improvements," Tudor Realty Director David Goodman explains.

The whole process of refinancing a co-op's underlying mortgage – fully investigating the issues, getting the best possible terms, and then completing the deal and the associated paperwork — can take almost a year. The worst part? That's under the absolute best circumstances. And it doesn't take into account how much the co-op may have to pay anyway. And the problems start with that matter of prepayment penalties.

A number of co-op and condo board members have reported that their neighbors are suddenly turning into watchdogs. Some of them hope to create a shadow board to monitor the elected board's every move. Others want their boards to put major expenditures to a vote of all residents. They often believe co-ops and condos be a participatory democracy rather than a representative democracy.

Ask the Experts

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Learn all the basics of NYC co-op and condo management, with straight talk from heavy hitters in the field of co-op or condo apartments

Professionals in some of the key fields of co-op and condo board governance and building management answer common questions in their areas of expertise

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