BBWG’s summer newsletter contained an article pointing out several ways that the new State rent laws adversely affected co-ops and condominiums, probably inadvertently. One such way was a new Real Property Law section 238-a, which imposed a cap of $20 on application fees that could be charged in connection with a new tenancy. It was feared that such limit would apply to co-op purchase applications, as well as to subletting applications in co-ops and condos.
On September 13, the New York State Department of State issued a Guidance Memo which states flatly that the $20 limit does not apply “when a property is being sold, including within a co-op or condo”, or to “application fees imposed by a co-op or condo Board”.
While the Guidance Memo is not absolutely dispositive since it is technically not binding on Courts, which are still free to interpret the new law as they wish, the Guidance Memo is entitled to great weight By Courts considering the law. It would appear that the Guidance Memo is likely to be followed by Courts, thus likely resolving this issue.
It is hoped that the Department of State, the Legislature or the Courts will soon address and refine other aspects of the new rent laws so as to render them inapplicable to co-ops and condos.
– Aaron Shmulewitz heads the firm’s Co-op/Condo practice.