Lawmakers seek co-op exemption in new tenants law
by Benjamin Fang
Nov 12, 2019 | 1227 views | 0 0 comments | 88 88 recommendations | email to a friend | print
When the state government passed landmark tenant protections in June, legislators expected the new law would help hundreds of thousands of renters across the state.

But the law has created confusion for cooperatives shareholders and management about whether or not they are included in the new provisions.

Co-op owners, who are also known as “tenant-shareholders,” buy shares in an apartment corporation and are entitled to a long-term lease to the apartment. They do not pay rent to a landlord, but rather maintenance fees.

Shareholders also elect a co-op board, made up of other shareholders, to run the apartment complex.

Last Thursday, state lawmakers representing large co-op communities announced a new bill to exempt co-ops from the new tenant protections.

“Our bill here is to clarify the point that co-op owners and boards are not part of tenant protection laws that passed,” said State Senator John Liu. “Some of those provisions could, in the long run, actually weaken the finances of the very constituents that we seek to protect.”

Assemblyman Edward Braunstein, who will introduce the bill in the Assembly, said provisions in the tenant protection law include limiting security deposits, limiting how much a landlord can charge for a background check, and limiting penalties for late payments.

While those are effective measures to protect tenants, Braunstein said, they are not as applicable to co-op shareholders.

“In a co-op if people are not making their payments, it’s the other shareholders who bear the burden of that cost,” Braunstein said. “If people don’t like the rules that are in place, they can go to the co-op board members that they elect and make those changes themselves.”

Assemblywoman Aravella Simotas added that “there’s no question” that there’s an ambiguity in the law with respect to the definition of a tenant. She said that confusion could have unintended consequences on co-ops.

“It’s an issue of fairness,” said Simotas, whose district includes many renters, but also co-ops and a Naturally Occurring Retirement Community (NORC). “It’s a small clarification we need to make.”

The issue was first brought to lawmakers by the Presidents Co-op & Condo Council, which represents more than 75 properties in Queens.

Co-president Warren Schreiber said after the tenant protections passed, the council approached Liu and Braunstein to draft legislation to exempt them from the law.

Schreiber, who is president of the Bay Terrace Gardens Co-ops, where the announcement for the bill was made last week, said most co-ops are “affordable housing for middle-income families.”

They house older families seeking to downsize, younger families seeking affordable homes and seniors with no regular income, added co-president Bob Friedrich of Glen Oaks Village.

According to Schreiber, if co-ops were included in the tenant protection laws, there would be some applicants who would no longer qualify for co-op housing.

“We don’t want to turn people down,” he said. “We want to give people housing.”

He said some applicants who are “on the borderline” of meeting the co-op’s financial criteria are sometimes asked to give six months’ worth of maintenance. That money is put in an escrow account, Schreiber said.

When all of the applicant’s payments are made after six months, the deposit is given back to the shareholder.

But the new tenant protections limit the amount that landlords can take in security, so if co-ops fall under the law those applicants wouldn’t have that option.

“Under this bill, we can no longer do that,” Schreiber said, “and we would have no choice but to turn people down.”

State lawmakers said they are optimistic the new bill will pass next year.

“We need to do this right away when we get back to Albany in January,” Braunstein said. “We’re going to make this our number-one priority.”

“We don’t want to negatively affect co-op owners and co-op buildings in any way,” Liu added. “We want to make sure co-ops continue to be the mainstay of our bedroom communities.”
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