co-ops Co-Ops In New York City
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What Every Tenant Should Know...



Assemblywoman Millman A Message From
Assemblywoman
Joan L. Millman
NYS Seal

Dear Friend,

It is important tenants know the basic laws of co-op conversion and cooperative ownership. This brochure will acquaint you with the latest information on this topic.

You must decide for yourself the pros and cons of co-oping. Regardless of your decision, however, you should be aware of the basic steps to take to protect your interests.

If your building faces the possibility of going co-op, there are three essential things tenants should do. First, form a united tenants’ council. Next, take a survey to learn how your neighbors feel, so the council can represent the best interests of all the tenants. Finally, get professional advice from an experienced lawyer as well as an engineer or architect.

Know your rights! While the offering plan is being circulated, you are entitled to all essential services. Also, the building’s owner has specific obligations to rent-controlled, rent-stabilized, senior citizens and disabled tenants.

Please be assured that I will continue to work for additional tenant protections. For more information, contact my district office.

Sincerely,
signature
Joan L. Millman
Member of Assembly



co-ops
In New York City — What Every Tenant Should Know...
Co-Ops in New York City

What does it mean when the building in which you rent an apartment goes co-op? Basically, it means that the landlord is selling the building to a corporation owned by persons who have leases for individual apartments. Purchasers are given shares of stock in the corporation and a proprietary lease for the apartment in which they reside. The number of shares allocated to one unit is based on the apartment’s size and amenities. Such purchasers do not actually own their individual apartments.

Cooperators elect a board of directors which runs the co-op. The board develops policy based on by-laws which govern their actions. The board also may hire a managing agent to oversee the day-to-day operation of the building.

The "Red Herring" and Offering Plan

The first thing the landlord must do is develop a preliminary offering plan which he/she submits to the Attorney General for review and revisions. It contains the proposed terms of sale as well as other information regarding financing, maintenance fees, a draft of the by-laws, etc. Tenants must receive a copy of this preliminary plan, commonly called a "red herring." It alerts them to the possibility that their building may be co-oped. Cooperative shares may not be offered for sale or purchased until a final offering plan is accepted for filing by the office of the Attorney General. The "red herring" is a signal for the tenants to organize and plan their response. The terms of the final deal can be negotiated and such negotiations usually take place between landlords and tenants.

The law requires that once the offering plan has been filed, the sponsor must post the percentage of tenants who agree to purchase under the plan. The sponsor must continue to post this information periodically until the plan is declared effective or abandoned. The law requires that a plan be declared abandoned if it does not become effective within 15 months from the date the plan was accepted for filing by the Attorney General. Also, if a plan is abandoned, no new plan can be submitted for 12 months.

Cost To Tenants

When the selling price of an apartment has been agreed upon, each tenant must arrange to secure financing for his/her individual apartment. A separate monthly maintenance fee, determined by the cost of operating the building and not limited by any rent regulations, is charged by the corporation to each cooperator. New York City local law requires the sponsor of the co-op conversion plan to establish a reserve fund of at least three percent of the total selling price of the shares in the building to meet future expenses. Because preservation of the initial level of the maintenance fee depends in part on the reserve fund, tenants should be sure to negotiate a fund that will be adequate. Tenants should also investigate the tax consequences when considering the purchase of a co-op.

Non-Eviction Plan

A minimum of 15% of the units in a building must be purchased for a non-eviction plan to take effect. Non-purchasing rental tenants retain all the rights in effect under rent control or rent stabilization laws if their building is converted under a non-eviction plan. Rent-controlled tenants are guaranteed occupancy and rent-stabilized tenants are guaranteed lease renewal. Non-purchasing tenants cannot be evicted by a purchaser who seeks the apartment for family or personal use. Renters must also be given the same level of services as before the building was co-oped.

Shares for apartments not sold to tenants are retained by the building owner, who may sell them. If he/she does, the tenant’s rights remain the same with the outside investor becoming the landlord.

Rent-controlled and rent-stabilized tenants with complaints should contact the District Rent Office which is operated by the State Division of Housing and Community Renewal. The Attorney General also provides assistance to tenants with harassment problems.

Eviction Plan

Following is an outline of your rights and privileges under an "Eviction Plan" for co-op conversion:

  1. 51% of all tenants in occupancy on a co-op plan’s acceptance date would have to agree to purchase their apartments before an eviction plan could become effective.

  2. Non-purchasing tenants can remain in occupancy as renters for three years after a plan’s effective date.

  3. Senior citizens are protected against eviction regardless of income or tenure of residency, provided they fill out forms available through the Attorney General’s office.

  4. Disabled tenants who are not capable of substantial gainful employment are protected against eviction, provided they fill out forms available from the Attorney General’s office.

  5. Tenants are allowed to hire engineers or architects to inspect buildings.

  6. Tenants are given the exclusive right to buy their apartments for the first 90 days following acceptance of the plan for filing. They are also given the right to match an outsider’s offer during the subsequent six months.




Where To Get HELP
Brooklyn Housing and Family Services
718-435-7585
Assemblywoman
Joan L. Millman


Room 510 Capitol
Albany, New York 12248
(518) 455-5426

341 Smith Street
Brooklyn, New York 11231
(718) 246-4889

millmaj@assembly.state.ny.us



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