On June 10, 2021 the New York State legislature passed Assembly Bill A00350C/Senate Bill S05105-C (View text here), legislation that unshackles co-ops from the effects of various provisions of the Housing Stability and Tenant Protection Act of 2019 (the “HSTPA”). While most observers agree that the inclusion of co-ops in the tenant-protective provisions of the HSTPA had likely been inadvertent, the adverse effect on co-ops’ ability to perform various fundamental managerial functions vis-a-vis their shareholders was very real. The new legislation passed on June 10 undoes that.
Under the new legislation:
- co-ops can once again require maintenance escrow deposits and lump sum maintenance prepayments as conditions for approving purchasers (under the HSTPA, these were limited in amount to one month’s worth of maintenance);
- co-ops can once again impose annual maintenance increases in excess of 5%, if needed (under the HSTPA, co-ops were limited to 5% maintenance increases);
- co-ops and managing agents can once again charge application and processing fees for things like background checks, without any statutory limit on amount (under the HSTPA, these fees were capped at $20);
- co-ops can charge late fees of up to 8% of unpaid maintenance (under the HSTPA, these were capped at $50/month);
- co-ops can pursue late charges, legal fees, and other amounts in addition to maintenance and assessments, in non-payment proceedings commenced after the effective date of the new law (under the HSTPA, co-ops were limited to seeking only maintenance and assessments);
- co-ops can seek and recoup attorneys fees if the proprietary lease provides for that (under the HSTPA, co-ops were barred from doing so); and
- non-payment demands to shareholders can now be sent in the manner prescribed by the proprietary lease, not necessarily only by certified mail, as required by the HSTPA.
These provisions of the new law will restore much of the managerial authority and flexibility of co-ops that had been stripped by the HSTPA, a welcome development for co-ops throughout the City and State.
The new law awaits only the Governor’s signature, which is anticipated to be forthcoming shortly.
If you would like to discuss the particulars of the application and whether you or your tenants might qualify, please contact your attorney BBG.