Feb 2, 2012

Streamlined Sale of Common Space to Shareholders

Open Elevator

On January 26, the New York State Attorney General’s Real Estate Finance Bureau announced new standards that will streamline the allocation of stock to, and the sale of, cooperative common areas, such as hallways, servants’ rooms and storage lockers, to existing shareholders.  Previously, the Attorney General had taken the position that such sales required the issuance of “no action letters” by its office in order to comply with New York State’s securities laws.  This position has now been abandoned.  In the future, cooperatives may allocate stock to common areas and sell the stock to existing shareholders without involving the Attorney… Read more

Dec 26, 2007

Amendment to the 80/20 Rule

NYC Condos

On December 20, 2007, President Bush signed into law legislation dramatically liberalizing the so-called “80/20 Rule” restricting the amount of non-shareholder income cooperatives may receive.[1]  As a practical matter, the legislation will eliminate commercial income restrictions for most cooperatives. Under the former rule, in order for a cooperative shareholder to receive the tax benefits normally afforded a homeowner, the cooperative could receive no more than 20% of its income from non-shareholder sources.  As a result of this rule, cooperatives controlling substantial commercial space have often capped the rents payable by their commercial tenants below market rents in order to keep… Read more