Coop sponsor apartments and maintenance charges
Curious to know: do sponsors pay the same maintenance for their apartments as the shareholders are charged for theirs? Is there a link between the maintenance and the rent control status of the shareholders apts? Our management company is evasive about answering this question. Thanks.
coopfornow
in Co-Op Related 12 years and 8 months ago
5
Please log in, in order to post replies!
5 replies
stockmarket | 12 years and 2 months ago
Just before the eight Lincoln Towers buildings converted to cooperative ownership, all of its residents were rent stabilized tenants. The buildings were converted pursuant to what was called a non-eviction plan of conversion, which meant that none of the existing renters were required to buy or vacate their apartments, as they would have had to do in an eviction plan. Rather, those tenants were assured that they could remain as rent stabilized tenants for the rest of their lives. Much details: http://www.primehomesny.com
coopfornow | 12 years and 8 months ago
Thank you so much for these elaborate answers.
reader718 | 12 years and 8 months ago
Also I forget to add the sponsor in its disclosure must advise if payment to the corporation are up to date
reader718 | 12 years and 8 months ago
The shares allocated to each apartment would have been outlined on the initial offering plan to the Attorney General’s Office, sponsors pay the same as owners. In theory, sponsors that own more than 10% of the units in a building are required to file a dislcosure amendment yearly with the AG’s office that contains the following information: Maintenace obligation to the coop corporation Rental income received from their unsold shares/units If there is a shortfall between what is the obligation to the corporation and what is collected, how does the sponsor intend to cover it Are any of the sponsors shares or units pledged as colleteral for other obligations. Also they are required to list the other projects that they are involved in. But, there are exception to this rule like so many things. If the sponsor is not actively selling there seems to be major laxness on this in terms of inforcement . Also, if the sponsor is big and has many fingers in many buildings and does not want to disclose info but is still selling they can apply for a CPS5 letter which grants them an exemption from filing yearly. The real reason the management agent may not want you to see the sponsor cash flow at this tiime is that unlike in the 80’s when sponsors were defaulting all over the place, most of them now have big positive cashflows on their unsold shares. The 80 year old lady that paid very little rent as a regulated tenant died and the apartment went to market rate. There is no incentive for the sponsor to ever sell these apartments and bring up the owner occupancy of the project. Owner occupancy is a vital number when you are applying for financing and well as investor concentration. This creates another set of problems for people that own in the buiiding besides transiet tenants. The way bank’s interpret sponsor owned has changed with this rise of sponsor owner cash positive units. The rules have always been that there cannot be more than any one investor owning 10% or more of units, since the sponsors have no intent to sell the units, the agencies that buy coop loans now intepret that the sponsors are investors and coop projects that were viable get put on a decline list by lenders, making it difficult for owner to sell or refi their units.
brokelin | 12 years and 8 months ago
In my (limited) experience, the maintenence was set per apartment, and is supposed to be set in some fair way (it can be higher for certain amenities like basement, roof or backyard access, I think, even where sq ft the same- don’t know about views, likely them to, but we didn’t have any). In my building, the maintenance was the same per square foot for the units, but the sponsor stopped paying, as many did, on their rent controlled and stabilized units when the market crashed a few years after the ’87 stock market crash. So, if they are evasive, it may be that the sponsor isn’t making the required payments on their units. Or, the maintenance could be allocated in a lousy way – less common, but possible. The coop documents are publicly available documents, I think – and certainly available to owners or potential buyers, and I can’t imagine you’d be interested in this if you weren’t one of the above, so check for yourself. You should also be able to find out if the sponsor is behind on their payments.