On June 10, 2021,
the New York State Legislature passed Assembly Bill A350
/ Senate Bill S5105C
(“Bill”) which set forth exemptions for cooperative housing corporations (co-ops)
in relation to their tenants who are unit owners, purchasers, or shareholders. Once signed by the Governor, the Bill takes effect immediately.
While unit owners, purchasers, or shareholders of co-op units are generally considered “tenants” under their respective proprietary leases or occupancy agreements, if the bill becomes law, co-ops will be exempted from the usual landlord-tenant requirements and prohibitions set forth below:
- Security Deposit or Advance (GOL §7-108): A co-op will be
allowed to collect more than one month’s rent for a deposit or advance from
tenants who are unit owners, purchasers, or shareholders of owner-occupied
units;
- Notice of Non-Renewal or Notice of Rent Increase
(RPL §226-c):
A co-op is no longer required to provide the RPL §226-c Notice of Non-Renewal
or Notice of Rent Increase to tenants who are unit owners or shareholders of
the co-op;
- Application Fees (RPL §238-a): A co-op may demand
any payment, fee, or charge necessary to compensate a managing agent and/or
transfer agent for processing, reviewing, or accepting a tenant’s application
where such tenant would become prospective unit owner or shareholder;
- Credit and Background Check Fees (RPL
§238-a):
A co-op may charge more than $20, but such fees should not exceed the actual
cost;
- Monthly Maintenance Fees for Late Payments
(RPL §238-a): A co-op may
charge up to 8% of the monthly maintenance fee for the late payment of such fee
if provided for in the proprietary lease or occupancy agreement;
- “Rent” in a Summary Proceeding (RPL §702): A co-op may
demand more than the rent in a summary proceeding against a unit owner or
shareholder provided that the proprietary lease or occupancy agreement allows
for the recovery of other fees, charges, penalties or assessments in a summary
proceeding;
- 5-Day Notice of Non-Payment (RPL §235-e(d)): A co-op may provide another method of sending notice by mail other than certified mail as long as it is set forth in the proprietary lease or occupancy agreement; and
- Attorneys’ Fees upon a Default Judgment
(RPL §234(2)):
A co-op may be awarded attorney’s fees in the event of default judgment against
a unit owner or shareholder if the recovery of such fees are set forth in the
proprietary lease or occupancy agreement.
Essentially, the
Bill aims to correct the unintended effects of the Housing Stability and Tenant
Protection Act of 2019 towards unit owners or shareholders of co-ops who are
“tenants” only because of their proprietary leases or occupancy agreements.
Do you agree with the Legislature’s corrections? Is it too little, too late?
For pending litigation, it sure seems that this new law affirms that co-ops that previously breached the Housing Stability & Tenant Protection Act as applicable to tenants, are liable, no?
