Answer provided by Neil B. Garfinkel REBNY Broker Counsel, Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP

Question:

After Submitting a Board Package, is it Legal for a Coop to request that Additional Maintenance be Held in Escrow?

Answer:

Yes, a cooperative corporation (“co-op”) may request extra maintenance to be held in escrow if the board feels that the purchaser does not meet all the financial criteria for approval. On December 22, 2021, Governor Hochul signed an amendment exempting co-ops from portions of the Housing Stability and Tenant Protection Act (“HSTPA”). The co-op is not considered a landlord under the HSTPA. To be clear, the exemption is for the co-op itself, not individual shareholders.

Co-op boards may now request and accept extra maintenance to be placed in escrow as a condition of purchase approval. It may also charge application fees and processing fees at rates deemed appropriate by the board to both purchasers and sub tenants. If a shareholder is delinquent on maintenance payments, the co-op board may impose late fees on shareholder delinquent monthly maintenance charges, not to exceed 8%. It also has the ability to send delinquent notices and collect late fees, legal fees and other expenses from shareholders.

Important Note:

Individual shareholders must still follow all requirements of the HSTPA when subletting their apartment to a sub tenant. An individual shareholder who is sub-letting their lease may only charge $20 for an application fee, request and accept one month’s rent and the equivalent of one month’s rent as a security deposit at lease signing. The shareholder must follow all HSTPA restrictions regarding additional fees charged to the tenant by the shareholder (i.e. cleaning fees, pet fees, late payment fees, etc.).