Recent Legislation on Short-Term Leasing and Powers of Attorney

Power of Attorney Paperwork

Two newly enacted laws in New York State affect cooperatives and condominiums:  one prohibits the leasing of apartments for less than 30 days; the second involves the effectiveness of powers of attorney which are often used in cooperative and condominium transactions.

 

Short-Term Leasing

Chapter 225 of the Laws of 2010 prohibits the leasing of apartments in Class A multiple dwellings, which includes virtually all residential cooperatives and condominiums, for time periods of less than 30-days.  This effectively eliminates the use of apartments as hotel rooms, “bed and breakfast” accommodations or other short-term rentals.  There are some exceptions.  Non-family members may occupy an apartment for less than 30 days when the owner is temporarily absent, provided that no monetary compensation is paid to the owner for such occupancy.  Thus an owner may swap apartments with other apartment owners or permit guests to use his or her apartment, provided that the condominium or cooperative permits such arrangements.  In addition, multiple dwellings owned or leased by not-for-profit colleges, universities and hospitals are exempt, subject to certain limitations.

The new law is expected to affect condominiums more than cooperatives, because condominiums often lack the subletting restrictions that already exist under most cooperative proprietary leases.   The law does not affect existing restrictions on subletting; buildings are free to impose additional restrictions under their governing documents.

 

Powers of Attorney

A year ago, the state enacted an amendment to the New York General Obligations Law[1] requiring certain terms and imposing a new form for all powers of attorney.  Unfortunately, the amendment had negative consequences.  Its terms were poorly drafted, and there was a great deal of uncertainty as to requirements for creating an effective power of attorney.  This imposed substantial burdens on transfer agents for cooperatives and condominiums, and jeopardized the effectiveness of the standard power of attorney given by condominium unit owners to the condominium’s board of managers.

Recognizing these problems, the state has again amended the General Obligations Law.[2]  Under the new enactment, which takes effect on September 12, 2010, the requirements for an effective power of attorney are clarified and simplified, and the validity of unit owners’ powers of attorney is no longer in doubt.  These changes are retroactive to the effective date of the last change to the law,  September 1, 2009.  Although this enactment simplifies the power of attorney requirements, any power of attorney used for a cooperative or condominium closing should be reviewed carefully.

If you have any questions concerning these new laws or would like us to review your by-laws, proprietary lease, or occupancy policies in connection with compliance with the new occupancy requirements, please contact us.

[1]  C. 644, L. 2008, codified at sections 5-1501 et seq. of the New York General Obligations Law.

[2]  C. 340, L. 2010, modifying sections 5-1501 et seq. and creating section 5-1501C of the General Obligations Law.

 

This memorandum was initially issued by the cooperative/condominium practice group of Balber Pickard Maldonado & Van Der Tuin, PC which joined Smith, Gambrell & Russell, LLP on February 1, 2017 and now practices as part of SGR’s cooperative/condominium practice group.

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