Thursday, May 12 2022

On December 22, 2021, Governor Hochul enacted a law that exempts most private cooperatives (cooperatives) from the Housing Stability and Tenant Protection Act 2019 (HSPTA).

In our alert of September 5, 2019, we explained that the HSPTA, which aimed to protect tenants in rental properties, had the unintended consequence of turning to cooperatives and warned against its impact. Lawmakers have now corrected this error and co-ops are no longer subject to many of the harsh provisions of the HSPTA. However, such legislative changes will only apply to the landlord-tenant relationship between co-ops and their shareholders. Where a board of directors of a condominium rents a unit owned by the condominium or a shareholder sublets their apartments, thereby acting as owner and / or sub-lessor, the restrictions of the HSPTA will continue to apply. apply to these leases. .

MAJOR CHANGES TO HSPTA AFFECTING COOPERATIVES

  1. Security deposits and rent advances can now exceed one month of maintenance.
  1. In the event that the rent under a property lease is increased by more than 5 percent above the current rent, a co-op no longer needs to provide written notice as previously required under the HSPTA, unless required under the Property Lease or any other applicable law.
  1. Fees or charges billed to potential shareholders that are necessary to compensate a management agent and / or transfer agent for the processing, review or acceptance of a potential shareholder’s application can now exceed $ 20. The costs of any background or credit checks can also exceed $ 20, as long as those costs do not exceed the actual costs of those background or credit checks. If fees are charged for such audits, the requester should still receive copies of the reports.
  1. Penalties for late payment of maintenance or rent will no longer be capped at $ 50 or 5% of monthly rent, whichever is less. Rather, the cap will be increased to 8 percent with no dollar limit for co-ops.
  1. Co-ops are permitted to send notices of default on rent by methods other than certified mail, as long as these methods are permitted under the exclusive lease.
  1. Co-ops can now claim legal fees, late fees or any other “fees, charges or penalties” in a landlord-tenant proceeding brought against a shareholder, provided that the exclusive lease authorizes the recovery of such additional costs in such a manner. procedure.

While the above usually summarizes the changes to the HSPTA, boards of directors of co-ops should contact their legal counsel for specific advice on how these changes may affect the operation of their buildings.

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