Page 8 - New England Condominium June 2021

are their certificates of incorporation, bylaws, to do it right. Usually, they don’t,” says Merrill. proprietary leases, and house rules—and con- dominiums—which are their declarations run the condo as you would a business, you and bylaws, and rules and regulations—must would realize you need professional expertise. comply with the applicable laws govern- ing them. And unless restricted by laws or for advice on legal issues and shouldn’t. They the governing documents, they can be more should consult their attorney to avoid prob- stringent than such laws. “Federal and state laws always prevail over condominium documents,” concurs Michael legal counsel review any proposed changes to Merrill, a partner with the firm of Merrill & the governing documents of a co-op or condo, McGeary in Boston. “If a condo adopts any- thing contrary to a federal or state law, it’s just rule or rule and regulation. There are always not valid. A very simple example is the Feder- al Fair Housing Act as it relates to disabilities. laws affecting co-ops and condominiums. In particular, the subject of emotional support Accordingly, it is important to have counsel animals.” Merrill says that in general, a co-op review the board’s proposed changes to pro- or condo resident is entitled to an emotional tect the board members against possible legal support animal, even if the building or HOA challenges and demands for legal fees and ex- has a no-pet policy. “HUD has issued guide- lines for attorneys who represent associations to analyze an application for an emotional support animal.” When There’s a Conflict To the extent authorized in a condo or co- op’s bylaws, the board of directors may have the co-op’s proprietary lease. If such provision the authority to amend certain provisions of is not in the lease, and in order to amend the the bylaws without member approval. How- ever, any such board-enacted bylaw is subject of shareholders owning at least two thirds to repeal by a vote of the members. House — the percentage may vary — of the issued rules can be added, amended, or deleted by and outstanding shares of the co-op must be the board of directors, and such actions do obtained. A number of years ago, numerous not require the approval of the shareholders. boards of co-ops that did not have transfer tax If the board implements a house rule that provisions in their leases passed board resolu- conflicts with an existing bylaw provision or tions to enact a transfer fee, but didn’t obtain the law, the board can simply vote to repeal it; the consent of the shareholders. The resolu- nothing more is necessary. Greenstein advises that “if a rule is not in holders to the co-op as a condition to their compliance with applicable laws, or is beyond selling and transferring their apartments. The the authority provided in the bylaws, it may shareholders paid the tax in order to close on be challenged by the shareholders of the co- op or the unit owners of the condominium. was the commencement of numerous legal A challenge can be made seeking the court to actions against these co-op boards. The courts grant, among other relief, a declaration that determined that these boards failed to ob- the rule is without authority and to enjoin the tain the required consent of the shareholders board from attempting to enforce it, and pos- sibly monetary damages resulting from such able and ruled that all shareholders who paid board action.” “A rule is something the board makes up,” full refund of the money they paid, plus inter- says Brooks. “It covers what goes on in com- mon areas. A bylaw in Massachusetts restricts what’s going on within units. Boards don’t into acting reasonably. “If people are acting govern what goes on inside a unit. It’s your reasonably, these situations will work them- home. What most likely happens is that a selves out. If they don’t — and they don’t al- board comes up with an illegal rule, they call ways — they may run into a problem. The the lawyer, and the lawyer says no, you can’t truth is, you really don’t need a lot of rules. do that.” Under certain situations, explains Mer- rill, more than a board vote would be needed you need to. But they must be in compliance to amend existing rules. “If there was a rule with federal and state laws that govern the op- change to which a board agreed, you’d have to erations of condominium and other residen- amend the bylaws or master deed to remove tial communities.” the offending clause. That would require a vote of the whole association, not just the follow the law, to the letter. board.” Sixty-five to seventy-five percent of the association members — a supermajority — would have to vote to remove the clause, and the change would have to be recorded. Consulting Your Attorney “When making changes to rules boards should consult with their attorney if they want “They don’t want to incur attorney fees. If you Boards will often rely on property managers lems later.” Greenstein suggests, “It is advisable to have or the enactment of a new or modified house new court decisions and the passage of new penses being brought.” A Case in Point Greenstein cites a pertinent example: “In order to charge shareholders a transfer or flip tax upon the sale of their apartments, the law requires that such provision be contained in provisions of a proprietary lease, the consent tions provided for the tax to be paid by share- the sale of their apartments. What followed thereby rendering the transfer tax unenforce- the tax within a certain time period receive a est.” Brooks suggests that good governance ties You need them for things that might become a problem. You can always adapt them when The lesson of the story? Be prudent and n A J Sidransky is a staff writer/reporter for New England Condominium, and a published novelist. 8 NEW ENGLAND CONDOMINIUM -JUNE 2021 NEWENGLANDCONDO.COM LAWS VS. BYLAWS... continued from page 1 continued on page 9 Electric Vehicle Charging Stations Another bill that has echoes in Massa- chusetts and New Jersey legislatures relates to electric vehicle charging stations. Massa- chusetts House Bill 3425, says Gaines, “says that a condominium may not prohibit or un- reasonably restrict a unit owner from install- ing an electric vehicle charging station in his parking space.” Similar legislation has been passed in Boston, he says, but this law would apply statewide. There is concern, however, that the prac- tical application of this law would be prob- lematic in many condominiums. Connecting any parking space to electricity regardless of its proximity to existing wiring is one issue. The infrastructure required to supply wiring to a certain spot, such as running a trench from the building envelope to the site of the parking space, might be cost-prohibitive. “And then,” Gaines points out, “one owner does it and then three months later another owner wants it, then you have to run the trench again.” So while the spirit of this bill is important, notes Gaines, “having a law that mandates that you can’t stop these \[electronic charging stations\] from coming in seems a bit harsh right now, at least initially until con- dominiums can sort it out themselves.” Perhaps New Jersey’s A3367, which went into effect at the end of last year, addresses this issue more moderately. Ramsey ex- plains that the law provides for “reasonable requirements” for the installation of electric vehicle charging stations by owners in com- mon interest communities. Acknowledging that the demand, needs, and types of vehicles requiring electric charging will only expand, Ramsey notes that dealing with such provi- sions now is easier than playing catch-up down the road. HSTPA Corrections Back in July 2019, New York legislators passed the Housing Stability and Tenant Protection Act (HSTPA), providing a range of protections to residential renters, and en- acting certain limitations on landlords and other types of housing providers. But as with certain other legislation geared toward ten- ant protections, the language in the HSTPA “inadvertently” wraps co-op corporations in with “landlords” and co-op shareholders in with “renters,” since both categories of hous- ing operate under a leasehold agreement—or so think proponents of Assembly Bill 350/ Senate Bill 5105. The difference is that rental tenants and landlords are two separate entities, whereas cooperatives are run by and for the mutual interest of their shareholder-occupants. As such, HSTPA has had undesirable effects on cooperatives throughout the state, prompt- ing lawmakers to propose new legislation that would “correct” the inadvertent inclu- sion of co-ops. However, that new legislation got held up at the onset of COVID, leaving co-ops without the ability to, for example, hold more than a month’s worth of carrying charges in escrow, as a co-op board might propose for a prospective shareholder whose finances were on the margin, but who would otherwise be deemed a positive addition to the community. The bill is currently in committee. Co-op lawyers and others throughout the state who live in, work with, or support co-ops are ea- ger for it to be taken back up, with legal ex- perts arguing that its passage would clear up a lot of unintended harm in an otherwise be- nevolent law. Good Cause Eviction Also in New York State, the Good-Cause Eviction Bill, as it is commonly known, is yet another example of tenant protection legisla- tion that inadvertently includes co-ops—to their disadvantage. This bill, A5573 in the Assembly, pro- hibits eviction or removal from a housing accommodation for anything other than good cause. Attorney Margery Weinstein of law firm Ganfer & Shore and Chair of the New York City Bar Association’s Co-op and Condominium Law Committee explains that “‘Good cause’ is defined to include nui- sance and illegal use and violations” but that “there’s a rebuttable presumption in this law, that the failure to pay rent is not good cause if it results from a rent increase of more than 3%, or one-and-a-half times the increase in consumer price index (CPI).” As such, with passage of this bill co-ops would not be able to increase their mainte- nance charges more than 3% or one-and- a-half times the increase in CPI in a given year. “This effectively prohibits co-ops and condos from enforcing maintenance or com- mon charge increases that are over these kept figures,” says Weinstein, “even if they have vastly increasing operating costs or tax in- creases or other obligations—such as all the carbon emission control rules that they have to now comply with.” The vast majority of co- ops do not have other means of raising funds to operate their properties, so without being able to adjust carrying charges to meet rising costs, many co-ops will be hard pressed to meet their expenses if this bill passes. Weinstein adds that the bill also pertains to renewal leases and subleases, which might have consequences for individual condo owners who rent out their units. “You can’t recapture individual units, except for quote- unquote ‘good cause,’” she adds. “So let’s say you lease your unit out. You may not be able to take it back.” In short, she says, “this bill could severely restrict the board in maintaining its build- ing, and will prevent individual unit owners as well from renting their apartments on a short-term basis and getting those apart- ments back. So I think it has detrimental po- tential on multiple levels to affect the housing supply and the ways in which a co-op or a condominium currently operates.” Reason for Rejection Another swath of legislation getting a lot of attention in New York are Senate bills LEGAL & LEGISLATIVE... continued from page 1