Written by Bill Morris on October 23, 2015
Last week, we learned a little more about the Wallace Avenue co-op that faced the threat of being downgraded to a rental, after missing some pretty crucial red flags. Besides those red flags, a couple of professionals offered their insights on what other boards can learn from this nightmarish scenario.
"Don't take anything on faith," says Abbey Goldstein, a partner in the law firm of Goldstein & Greenlaw. "A lot of it depends on the language in the bylaws and the offering plan, what it says about the rights of the sponsor. Some plans don't limit the number of seats the sponsor can cast his votes for. If the sponsor holds half of the units in the building and is the managing agent in the building, you need to have heightened vigilance."
Written by Bill Morris on October 16, 2015
The Wallace Avenue co-op is filled with ordinary people who just wanted to have a home of their own. Michael Williams is typical. In 1990, Williams, a contract administrator for the city, moved into the recently converted co-op with his bride. He was elected to the co-op's board, on which he would serve in various positions over the next dozen years. He felt right at home in a building that's solidly middle class. His neighbors didn't have bottomless pockets, but they were working people — teachers and nurses, with a few lawyers and doctors as well.
Written by Bill Morris on October 09, 2015
It was a few years ago — when Michael Williams was board president at the 190-unit co-op on Wallace Avenue in The Bronx — that he got "the call."
It was from a vice president at Marine Midland Bank, the holder of the building's underlying mortgage. The banker had grim news: he reported that "the sponsor was not paying the mortgage and the building was in trouble." For Williams and the rest of the board, it was "a wake-up call." Indeed: if the building defaulted on its mortgage and went into foreclosure, shareholders could end up losing their only assets and still be responsible for their personal mortgages. It would be, in the words of a veteran real estate lawyer, "the worst of all possible worlds." As one distraught shareholder at the co-op put it: "You don't want to lose your investment, your future, your children's future."
September 02, 2015
It's no news that the city can be tough on its many residents, but things are about to get much tougher for thousands of properties — co-ops and condos, included. According to The Real Deal, the city has filed "in rem" actions against not just apartment owners but also building owners in Manhattan, Brooklyn, Queens and the Bronx. It's a move that could spell foreclosure for owners who owe taxes. There's still a chance to pay up or set up installment agreements. "The deadlines are September 22 in Manhattan, September 29 in the Bronx, October 6 in Brooklyn and October 13 in Queens," according to the article. And if they miss the deadline, those affected will still have 20 more days from their respective deadlines "to file answers in court." Gulp!
Written by Tom Soter on August 13, 2015
With 12 New Yorkers dead (as of August 12) from an outbreak of Legionnaires' disease in the South Bronx, boards with cooling towers may want to review the facts and take a few cautionary steps. Here are some questions and answers:
What's the Difference Between a Cooling Tower and a Water Tank? The two serve very different functions, says Doug Weinstein, executive director of operations and compliance at Akam Associates, a management firm. A water tank provides drinkable (and fire department "reserve") water and, therefore, requires an annual inspection. (Until last year, Weinstein says that the inspection results merely had to be kept on file at the building. But after a New York Times investigation found that a number of properties were not inspecting their water tanks, the city health department required that the reports be filed with the city.) A cooling tower is used for the HVAC system and does not contain potable water; therefore, the city did not require buildings to have them inspected. Cooling towers are only used in the summer, and most properties shut their systems off during the winter.
The real estate market in the South Bronx is on fire. And didn't we tell you that gentrification, once started, tends to build up momentum? It's good news for the middle class, which is scrambling for reasonably priced homes amid a city that is getting more and more expensive by the day. But it tends to spell out bad news for the poor who will most certainly be priced out of their homes. It may already be beginning. According to a new report from the Department of Finance on the banking needs throughout New York City, nearly 30 percent of all home loan applications were denied in The Bronx. DNAinfo reports that the "amount is well above New York's denial rate of 23 percent and almost twice as high as Manhattan's 17 percent," adding that "Assistant Commissioner Elaine Kloss attributed the high denial rate to a variety of possible factors, including the borough's comparatively low income levels and banks' reluctance to give out subprime loans following the 2007 recession." Driving up the denial rate is the number of people who could have qualified for subprime loans and are now getting denied. However, the data is from 2013, so Dr. Daniel Miles, director at Econsult Solutions, the economic consulting company that submitted the report to the finance department, told DNAinfo that the South Bronx's newfound popularity as the next It neighborhood might not be evident in those figures yet, nor will it be for another one or two years.
April 10, 2015
Back in the day, people who couldn't afford to live in pricey Manhattan would take the next best thing. The goal was a nice apartment in a nice neighborhood in one of the outer boroughs with a commute that wasn't too tedious. The payoff was that rents were significantly cheaper in the outer boroughs — even in Brooklyn. But times have changed, and as Brickunderground astutely notes, the price difference between Brooklyn and Manhattan is shrinking. First quarter 2015 sales reports generated by real estate firms like Douglas Elliman confirm that "Brooklyn has set a new record for median sales price, coming in at $610,894 — that's a 17.5 percent increase over the same time last year." It's not news for people who have been priced out of Brooklyn. Brooklynites have been scrambling out of their home borough in search of better prices for a few years now. Some of those folks have ended up in Queens. The good news is that, according to Douglas Eliman's report, the median sales price there is still nearly $200,000 less than it is in Brooklyn. The sobering news is that it's increased by 20.7 percent compared to last year. So it looks like for co-op and condo buyers the time to consider Queens is now, and don't forget that all eyes are also now on The Bronx.
Photo credit: Postdlf for English language Wikipedia, licensed under CC BY-SA 3.0 via Wikimedia Commons.
Do you remember when The Bronx was burning? The decay that became synonymous with the borough, particularly the South Bronx, began in the sixties. By the seventies it was in the grip of abject poverty, the result of total economic collapse. Property values plummeted. Slumlords abounded. Gang violence was rampant — indeed, gangs set up shop in abandoned buildings. Do you remember the arson epidemic? So many buildings burned every day throughout the seventies that the fire department couldn't keep up. Something had to give. It finally did in the late eighties, when the South Bronx finally began to experience urban renewal. The upward trend has continued: crime has dropped significantly, and property values have started to climb. You can guess what's starting to happen now. Real estate news has been abuzz with news of New York City's population soaring faster than expected. When the city is too damned crowded, its people are going to look for places to live in areas that they may not have before considered. And it looks like The Bronx is burning again, for a different reason entirely.
April 06, 2015
The owner of a sponsor unit in a non-eviction co-op in The Bronx wants to move in now that the original tenant, who was protected under rent-stabilization laws, has died. But there's a complication. The original tenant's son moved into the apartment about 18 months before she died, and has now claimed succession rights. Can the sponsor unit owner evict him under the owner occupancy law? That's one of the questions Ronda Kaysen fields in this week's "Ask Real Estate" column in The New York Times. "Noneviction co-ops were designed to protect rental tenants from eviction if they did not buy their apartments when the building converted to a co-op. If the son successfully claimed succession rights, he is entitled to all the rights the lease provides — including the right to not be evicted, even if the owner wants to occupy the unit," explains Kaysen. That means the original tenant's son can stay, as long as he follows the terms of the lease and rent stabilization law. But it also may come down to timing. To claim legitimate succession rights, the son would have had to have moved in two years "before the time the rent-stabilized tenant vacated the apartment." In this case, the son is a few months short, unless his mother was disabled or elderly — in which case he would only have to have lived in the apartment for one year.
It's been a couple of weeks since we told you about Marion Scott Real Estate's lawsuit against RiverBay, Co-op City's board of directors, which controls the 50,000-resident complex. The management company's lawsuit in state Supreme Court claims the corporation's move to suspend it was illegal. Furthermore, the New York State Homes and Community Renewal agency urged the board to reinstate and retain Marion Scott until it wraps up an investigation into the allegations. Which it didn't. So here we are, two weeks later. Marion Scott remains locked out, and the New York Daily News reports that a Manhattan Supreme Court judge denied Marion Scott’s request for a preliminary injunction, although "Justice Paul Wooten [did agree] that the directors acted inappropriately when they cited a host of alleged missteps and suspended the management company." The lawsuit is still pending.
Engage, enrage, ask questions and give answers with your community of board members. Submit your questions and comments here!
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.
A free digital resource for co-op/condo board directors. Published twice a month. Read now on all digital devices.