In New York, homeowners who live in cooperative buildings are not considered “tenants” in the traditional sense of the word. Instead, they own shares in the overall corporation that owns the building in which they reside (and not the unit itself), and have a proprietary lease that gives them the right to occupy their apartment for a specific period. Unlike a standard landlord-tenant relationship, which is subject to landlord-tenant laws and property law, a co-op’s proprietary lease is governed by business law, the rights of shareholders, and the rules and regulations set forth by the co-op’s governing body.
While this gives the shareholder-tenants a certain degree of control over their living situation not available in a rental arrangement, there are times when disputes can arise. When this occurs, a tenant-shareholder may seek legal assistance to ensure that they are treated fairly and their rights are protected.
When a shareholder-tenant wishes to terminate their lease, the procedures laid out by the co-op’s prevailing law must be followed. This typically includes giving the board a written notice of intention to leave. The governing body must then convene and vote on the matter, with the required super-majority votes in order to terminate the share ownership interest, and to then issue a termination of the proprietary lease to the tenant.
A number of different issues can cause a co-op board to want to terminate a shareholder-tenant’s lease, including non-payment of maintenance fees, violation of building rules and regulations, or objectionable conduct. A recent decision by a New York court highlights a case in which a tenant-shareholder challenged the governing body’s determination to terminate their lease for objectionable conduct.
The Court held that the governing body had failed to comply with the requirements of their own proprietary lease, and therefore, their determination was invalid. The court’s holding stemmed from the fact that the governing body did not give the shareholder-tenant notice of the objectionable conduct, and did not demonstrate that they had attempted to correct the misconduct by giving the shareholder-tenant the opportunity to remedy it before proceeding to a termination of the lease.
Most proprietary leases include provisions stating that the governing body must attempt to resolve any dispute between the shareholder-tenant and themselves before moving forward with a resolution to terminate their lease. If the governing body cannot resolve the matter, then they must proceed to a resolution of the termination by the end of the statutory holdover period.
Many proprietary leases also outline specific building rules and regulations that shareholders are expected to adhere to during their tenure in the building, such as noise restrictions or pet policies. If the governing body believes that a shareholder-tenant is violating one of these rules, then they can issue a letter to the tenant-shareholder advising them of the specific rule they are in breach of and providing the shareholder-tenant with the opportunity to correct the behavior before the governing body proceeds to an action to terminate their lease.
New York landlords must collect a security deposit from their tenants. This helps cover any damage caused by the tenant, excessive cleaning costs, or unpaid utilities. In addition to being required by state law, collecting a proprietary lease security deposit can help landlords avoid legal trouble and keep their tenants happy. This post will outline how landlords in New York can legally handle their tenants’ security deposits.
Landlords in New York are able to collect up to one month’s rent as a proprietary lease security deposit. They must also provide the tenant with a written receipt for the proprietary lease security deposit. This receipt must include the amount of the deposit and what fees were deducted from it. The deposit must be refunded within 14 days of the tenant moving out. In addition, the landlord must also provide an itemized list of deductions from the proprietary lease security deposit so that the tenant can see what was kept and for how long.
If a landlord does not comply with these requirements, they may face civil penalties from the New York City Department of Consumer Affairs. This can be a costly and time-consuming process, so it is important that landlords follow the rules when it comes to proprietary lease security deposits.
In order to avoid legal complications, landlords must understand what expenses can and cannot be deducted from a proprietary lease security deposit in New York. This will prevent them from arguing with tenants over what is actually considered a deductible expense.
According to state laws, landlords in New York must store their tenants’ proprietary lease security deposits at a financial institution that abides by banking organization regulations. They are not allowed to combine the money with their own funds or use it for any other purpose. Moreover, the landlord must notify the tenant of the name and location of the financial institution where their proprietary lease security deposit is being stored.
When a landlord transfers their building, they must transfer all of the tenants’ proprietary lease security deposits to the new owner. They must also give the tenants a written notice of this change in ownership. This notice must include the contact information of the new owner.
Co-ops Can Charge Up to 8% Late Fee, If Authorized in the Lease
In a co-op, shareholders can agree to impose late charges on each other for unpaid maintenance charges. These charges can be collected via the monthly maintenance bill, if authorized in the co-op’s proprietary lease or governing documents. In addition, co-ops can also pursue late charges in summary proceedings to evict a defaulting shareholder.
The New York City real estate market is disproportionately skewed in favor of co-ops rather than condominiums. When you purchase a cooperative apartment, you are not considered to be the actual owner of your unit; instead, you buy shares in a corporation that owns the building where you live. Upon purchase, you are granted a proprietary lease that defines the rights and responsibilities of both you and the corporation. A New York co-op lawyer can help you review this document to understand your role and duties as a shareholder.
Proprietary leases are the primary documents in a shareholders’ rights arsenal when it comes to dealing with a cooperative corporation. They are the primary documents which register the responsibilities of a tenant, including paying monthly maintenance fees, complying with building rules and regulations, and participating in building decisions through the co-op board. A misunderstanding of the tenants’ rights and responsibilities in relation to these documents can lead to complications.
One such complication arose in this case when the tenant wanted to replace the floor of his apartment with a hardwood floor. He asked the corporation to make that repair, but they refused, claiming that it was the responsibility of each resident to have their own floors repaired. The tenant then sued the corporation, arguing that their rights and responsibilities were governed by the proprietary lease, which specifically stated that the tenants had to maintain and repair the “sleepers and underflooring.”
The complaint was dismissed because it did not allege that Blumenfeld owned any of Stable’s shares, nor was the proprietary lease amended to include him as a party. The sixth cause of action, seeking a declaration that the occupancy agreement conflicts with the proprietary lease, violates Real Property Law 235-f and public policy, was also dismissed. Peterson’s affidavit in support of the motion to dismiss, however, clearly indicates that the occupancy agreement’s provision, which permitted occupancy by Blumenfeld and his immediate family (including his spouse, children and parents) who reside with him, or any subtenant approved by Stable, was inconsistent with the proprietary lease.
As a shareholder, you must obey the terms of your proprietary lease and ensure that any renovations you conduct comply with all relevant statutes, regulations, and codes. If you do not, you could find yourself in breach of your lease. If you have concerns about your rights as a cooperative apartment owner, or want to ensure that you are in compliance with the terms of your proprietary lease, it is important to speak to a New York real estate attorney.
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