While writing several recent pieces about cooperatives, I learned some interesting things about them.
These facts had somehow escaped me, despite having lived or managed real estate for 56 years in New York City, the parent line of housing cooperatives.
One that stood out to me: Cooperative unit sales — which are essentially stock sales — were not recorded in ACRIS, the city’s property information database, before 2003. The sales in HDFC cooperatives are exempt from transfer tax, so they still do not need to be registered in ACRIS.
This made it difficult for me to research the bizarre history of the unit transfers at 123-25 East 102nd Street in East Harlem. In fact, this would have been impossible if attorney Gregory Byrnes had not subpoenaed the co-op’s records, which showed that insiders were passing units back and forth like baseball cards.
I asked Adam Plotch, a veteran of co-op foreclosures, how title insurers can verify the chain of ownership when the data is kept not in a public database or municipal office, but in the co-op’s dusty filing cabinets. The answer was that title companies don’t necessarily rely on public records for cooperative deals.
“An original stock certificate and a proprietary lease are immutable proof of ownership,” he replied. “A cooperative will not issue shares [certificate] and rented to a new owner until the old one is terminated. They won’t allow it either [them] be transferred, unless their own administration shows that the transferor is indeed the sole owner of the shares.
“So if you own shares and leases, and you link that to the co-op’s records, it’s as clear evidence as any valid ownership.”
The system seems archaic to me. What would happen if a fire destroyed a cooperative’s records and stock certificates? How would anyone know who owned what?
But I don’t want to exclude the cooperatives. Real estate transfer records could also be modernized, as evidenced by the frequent reports of theft and fraud.
“A nefarious or careless property owner could theoretically do multiple acts involving the same property to more than one person,” Plotch noted. “This actually happens – and there is legal and case law that determines how such conflicts are resolved: the first person to register their deed in the land records is deemed to be the owner.”
What we’re thinking about: Yiatin Chu and I had disagreements about X, but I couldn’t argue with it her message on being a landlord in New York City: “Here’s what happened to my family members. The tenant sublet to someone who didn’t pay. The squatter knew how to game the legal system to avoid a delay. It took three years to evict. They don’t get the $80,000 in unpaid rent and the tenant destroyed the property. It cost $70,000 to renovate the place. Many small property owners fear these situations and prefer to take their units off the market.” Send your thoughts to eengquist@therealdeal.com.
Something we learned: A Chicago judge is considering ordering tenants to move from a building where many violations have occurred. In New York City, tenants aren’t evacuated unless their building poses an immediate danger — because with the city’s 1.4 percent vacancy rate, they have nowhere to go.
Elsewhere…
An update on an item I wrote last week about a new state law banning algorithms that allow landlords to negotiate rents:
The Real Estate Board of New York sent a statement explaining its strong opposition to the bill.
“Efforts to prevent collusion are commendable, but this legislation goes further than regulations in other states, to the point of prohibiting the evaluation of public data outside a property owner’s portfolio when considering rental rates,” said REBNY President Jim Whelan. “We believe that greater transparency and market analysis usually benefits consumers and that this bill will lead to unintended consequences, such as higher rents and reduced market efficiency.”
That’s quite a contrast this tweet by Jay Martin of the New York Apartment Association, which represents rent-stabilized owners (and is not always aligned with REBNY):
“We spent zero time and energy opposing this bill. Why? We couldn’t find any members who ‘use algorithms to conspire and raise rent.’”
With characteristic sarcasm, he added: “But congratulations. Ultimately, we will arrive at policy solutions that will make housing more affordable.”
Closing time
Residential: The highest housing deal recorded on Tuesday was $5.8 million for a 2,500-square-foot condominium at The Caledonia at 450 West 17th Street in Chelsea. Joseph Pullen and Taylor Durland with The Corcoran Group had the mention.
Commercial: The best recorded commercial deal was $170.3 million in front of the Dominick Hotel at 246 Spring Street in Soho. The hotel has 46 floors and 391 rooms.
New on the market: The highest price for a home that came on the market was $18.5 million for a 4,689-square-foot condominium at 65 West 13th Street in Greenwich Village. Noble Black, Connor Cuccinelli and Cory Cahlon of The Corcoran Group are credited.
— Matthew Elo
#Daily #Dirt #Strange #Fact #Cooperatives