Significant Changes May Be Coming for Co-ops!

In 2019 under the Housing Stability Tenant and Protection Act (“HSTPA”) a massive overhaul of the Landlord Tenant Law occurred. While HSTPA was intended to be a vehicle to protect Tenant/ Renters rights, it unintentionally impacted Purchasers and Sellers of Cooperatives. Since the enactment, Co-ops have been unable to accept pre-paid maintenance, applications fees in excess of $20 and Court fees. Currently there is legislation approved by both the Senate and Assembly now before the Governor for signature that would change this.

A) Security Deposits:

The law presently only permits one month rent to be accepted in advance and one month security deposit. The act has been interpreted to include Co-ops, thereby limiting the board’s ability to issue approvals conditioned upon a six (6) to twenty-four (24) month maintenance deposit in escrow for Buyers with marginal credit or excessive DTI.
Under S5105-C, the Bill currently pending will provide an exception for owner-occupied cooperative apartment (excluding units under Private Finance Law) therefore relieving the cap on the security deposit and pre-paid maintenance payment provision.

B) Application Fees:

The Bill will also remove the twenty ($20) dollar cap on Co-op application fees (other than those subject to Private Housing Finance Law). Removing this cap will alleviate the extra financial burden on Sellers, Buyers and Boards.

C) Summary Proceedings:

Currently, under the HSTPA, Co-ops and Management Companies are only permitted to seek maintenance in residential summary proceedings. The proposed Bill will except Co-ops from these rules in summary proceedings between the Cooperatives Housing Co and a unit owner/shareholder. This exception will only be permitted if allowed under the proprietary lease or occupancy agreement.

The concerns of the Brokerage community and Cooperatives were finally heard. We now await the Governor’s final approval.

The proposed bill can be found at: https://www.nysenate.gov/legislation/bills/2021/S5105

As always we will keep you informed.
Have a great day!

Steven, Jamie & Eric