COOPERATIVE APARTMENT CORPORATIONS EXEMPTED FROM ONOROUS PROVISIONS OF THE 2019 HOUSING STABILITY TENANT PROTECTION ACT

By Jeffrey Schwartz, Steven Sladkus, and Jeffrey Reich

A new law in New York exempts cooperative corporations from certain provisions of the Housing Stability Tenant Protection Act. These important changes in the statute are summarized by Jeffrey Schwartz, Steven Sladkus, and Jeffrey Reich.

On December 22, 2021, Governor Kathy Hochul signed into law an amendment to the 2019 Housing Stability Tenant Protection Act, that previously imposed a number of restrictions on the operations of cooperative apartment corporations. Pursuant to the amendment (which can be found at https://legislation.ny.senate. gov/pdf/bills/2021/S5105C) cooperatives (other than those that have been established pursuant to the Private Housing Finance Law) are exempt from the provisions of the law which would otherwise:

1. Prevent a cooperative board from collecting a deposit in excess of one month’s rent;

2. Prevent a cooperative board from charging application and/ or processing fees and credit report and/or background search fees in excess of $20.00;

3. Limit the amount of late fees imposed by a cooperative board at the lesser of $50.00 or 5% of the outstanding payment (although, as noted below, an 8% cap is imposed);

4. Prevent cooperative boards from seeking late fees, charges or penalties in any non-payment action;

5. Require a cooperative board to send certified notices advising shareholders of any delinquent payments before being able to commence any action in connection with the collection of the delinquent payments; and

6. Prevent a cooperative board from seeking legal fees in connection with a default judgement.

These changes mean that cooperative boards may, subject to the terms of the cooperative proprietary lease:

1. Condition their approval of purchase applications upon the posting of a maintenance escrow;

2. Charge application, processing and search fees as determined in the board’s discretion;

3. Impose late fees in an amount up to (but not to exceed) eight (8%) percent of a delinquent shareholder’s monthly maintenance charge;

4. Seek to collect late fees, legal fees and other expenses related to shareholder defaults in any non-payment action the apartment corporation may bring;

5. Send delinquency notices by any method consistent with the terms of the cooperative proprietary lease; and

6. Seek the reimbursement of legal fees in connection with obtaining a default judgments against delinquent shareholders.

Endnotes

1. Jeffrey Schwartz, Steven Sladkus, and Jeffrey Reich are founding partners of the law firm Schwartz Sladkus Reich Greenberg Atlas LLP in New York City. They are partners in the Real Estate department of the firm. They can be reached at JSchwartz@ssrga.com, SSladkus@ ssrga.com, and JReich@ssrga.com, respectively.

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