Real Estate Questions Answered

Obtaining Your Original Stock and Proprietary Lease

A seller who is going to sell their cooperative unit is required to deliver at the closing their original share/stock certificate and proprietary lease that was issued when they initially purchased. However, unfortunately, many people have wound up losing and/or misplacing their stock and lease. As such, a very typical question arises: ” I am selling my New York City Co-op but can’t find my stock and lease. Will I be able to sell my apartment? We will deal with this issue in a moment.

As an owner of a coop apartment, your ownership interest consists of shares of stock in the coop corporation and a proprietary lease which entitles you to possession of the apartment. When you transfer ownership of the apartment, you will need to give up the original stock certificate and proprietary lease at the closing of your sale. If you purchased your apartment with a loan from a bank, the original stock certificate and proprietary lease would have been taken by the bank’s attorney at the closing of your purchase and held by the bank until your loan is paid off. As such, the first question to ask when you are looking for your original stock and lease is whether or not you have a loan/mortgage on your property.

If you do, the bank will have your original stock and lease. Or, at least, they certainly should have your stock and lease. When you are under contract to sell your apartment, your attorney (not you) will need to contact your bank well before the anticipated closing date to arrange to have your bank deliver the original documents to the closing. It takes the bank several weeks to locate and send these documents to their attorneys. The bank’s attorneys will then send a representative to the closing to deliver the stock certificate and lease upon receipt of a check paying off your loan. It is very important, that you do not take any actions to try to obtain your stock and lease from the bank. Many sellers attempt to unilaterally, without consultation from their attorneys, obtain their original stock and lease. This can be an extremely confusing maze placing your entire transaction into a severe delay. You’re trained real estate attorney (Kishner & Miller) will take all necessary actions to obtain your original stock and lease. As such, if you are considering selling, all you need to do is to advise your attorneys that you have a loan on your property. The burden should then be on your attorney to obtain your stock and lease.
If you purchased your apartment without financing, you would have been given the original stock certificate and proprietary lease at your closing. When you are selling your apartment and cannot locate the original documents do not panic. Kishner & Miller are very experienced in dealing with these types of issues. In such a situation where you have lost your original stock and lease, we will contact the co-op’s management company or their attorney to see what their policy is concerning lost stock certificates and leases. Some co-ops, actually most of them, only require a “lost instrument affidavit and indemnification” which you will sign at the closing. You will be charged an additional fee for the preparation of these documents. Generally the charges are anywhere from $100-$500. If the management company is not familiar with the preparation of such documents, then this office will prepare the necessary documents. This document is not complicated. It is basically just a guarantee that you have not given your stock and lease to somebody else and that somebody else would have the right to claim ownership. However, there are some instances, in which co-ops are a bit more strict and they will require that you purchase a lost instrument bond from a surety company, the cost of which depends upon the amount of the bond. Hence, the lesson to be learned, is that once you receive the original stock certificate and proprietary lease when you bought your cooperative apartment, keep it in a safe place like a safe deposit box or you might be faced with additional costs and delays if you can’t locate them once you decide to sell. Even if you believe you have the original documents, it’s a good idea to let your attorney review them prior to closing to make sure you won’t have any problems.

As such, if you have any issues regarding the location and/or whereabouts or have lost your stock and lease…….

Lot Line Windows

Many people have used the definition of Lot Line Windows in an incorrect manner. A lot line window is not discussing only a blocking of a view. To block somebody’s view from a window may occur almost no matter where somebody lives. There is never a guarantee of a complete view from one site to another site. However, when we are dealing with lot line windows, we are dealing with something a lot more dramatic. Purchasers need to be aware of lot line windows. Lot line windows are windows located directly on edge of the building’s property line. These windows are unfortunately rather common in New York City where space is limited and developers try to maximize square footage. Lot line windows may devalue a property and have strict guidelines.

The Department of Buildings will deem lot line windows whenever the windows on the wall of a building are flush against the property line. If the adjacent property ever builds up to the height of the window, the window must be permanently boarded up, usually at your expense. As such, if you have a lot line window, you may completely lose the window. In other words it is as if the window was never even there. And, to top it off, you are responsible for closing off the window if the adjacent property builds up along your property line. Lot line windows can prevent a room from being considered a legal bedroom. To be characterized as a bedroom, the room needs a window that provides a certain amount of natural light. Lot line windows will not satisfy this requirement because they may have to be closed up, depriving the room of the required natural light. If a room has only lot line windows, this room is not a legal bedroom. A property with this type of room cannot advertise the property as if the room was a bedroom. Usually, listings will refer to a room with only lot line windows as a ‘home office’. Also, if a lot line window has not yet been required to be boarded up, it must meet certain specifications to protect from fires spreading to and from the building. The window must be made of a fire-rated glass, which is more expensive than normal glass. Also, sometimes a sprinkler will need to be strategically placed by the window.

If you are concerned that a property you are interested in may have lot line windows contact a real estate attorney.

Recognition Agreement/Aztec Agreement

When you are financing and the Commitment is issued, you will receive some documents from the lender’s attorneys. These documents are as follows:

1. A UCC-1 Authorization Form. This form allows the bank attorneys to register the loan with the County Clerk’s office so as to ensure that they have a lien filed against your stock and lease prior to the actual closing (the cost ranges from $50-$200). The form and payment should be sent back to the lender’s attorney. It is very important that this document timely and accurately reach the lender’s attorney so as to avoid any delay in your sale process.

2. Lien Search Request Form. This form is requesting that the bank have permission to run what is commonly known as a lien search. Generally, you should always check the box which states that you do not want to have the bank run the lien search but rather have your attorney run the lien search. The lien search itself is a completely different document which searches as to whether or not there were any liens and/or other encumbrances that would impact and/or interfere with you obtaining good and marketable ownership to the shares and/or the lease. Basically, in sum and substance, the report shows all liens against the apartment. Ultimately, your real estate attorney will be ordering a Lien Search.

3. Three copies of the Recognition Agreement (also called the Aztec Forms). Do not get confused by the name as a recognition agreement is the exact same thing as an Aztec form. It should be noted that the word Aztec has nothing to do with any type of regional background but Aztec is the name of the company that produces the form. In summary, a recognition agreement is a three-party contract between the borrower, lender, and coop. The agreement contains the responsibilities and obligations towards each other, in case there is a loan default. All 3 will be pre-signed by the lender and you will need to sign them as well. Once signed you must deliver them to your real estate broker or to your real estate attorney and they will forward them to the coop board. If you are financing, it becomes very important that all three copies of the recognition agreement are annexed/attached to your board application. Failure to have these documents properly annexed could lead to a severe delay in your closing. The recognition agreements are prepared by the bank in order to give its lien the first priority over the co-op’s lien in case the shareholder defaults. The co-op has to notify the lender if the owner fails to pay maintenance or other fees to the co-op. The co-op is prohibited from allowing additional financing or the cancellation of the shares/lease without the lender’s permission. This protects the security interest of the lender. The co-op, on the other hand, is given a superior lien on the equity. In the event of a default, a co-op’s lien is prioritized over that of the lender. Only a few lenders will do Home Equity Loans in coops since they will be a third lien. The co-op has to inform the lender if the borrower’s monthly maintenance payments fall into arrears (3 months). This serves as an early warning system of a borrower’s financial difficulty to the lender. In return, the lender will make payments on behalf of the borrower in order to prevent the co-op from foreclosing. The co-op board has a right to review the transfer of shares in the event of a foreclosure. The terms of the Recognition Agreement must be agreed upon by the co-op and lender before a loan can close. Some co-ops only allow use of their own recognition agreement and will not accept the lender’s version. As part of this agreement the mortgage holder will pay maintenance and repossess the apartment. If shareholders don’t pay their maintenance, the mortgage lender will pay after a while. The coop board initiates a foreclosure, because co-op units are not considered real property, foreclosures do not go through the court, and will go to auction. The coop building is safe financially (as opposed to condos with owners in arrears) as long as shareholder/owners have a mortgage. The Aztec protects the coop. For this reason many coops prefer that a purchaser has a mortgage (even a small one) with assets left over rather than an all cash purchase.

Balcony or a Terrace.

Many people when searching for their unit, see the word Balcony and/or a Terrace associated with it. It is very commonly asked what is the difference between a Balcony and/or a Terrace. There is a difference. A terrace is an open space that is either attached or detached to a building. Balconies are small elevated platforms that are affixed to a given room in the house. A terrace can have multiple points of access, but a balcony is only accessible through a room.

• Size – A terrace is considerably larger than a balcony. For this reason, it facilitates itself to large venues like a get-together or a party. A balcony on the other hand, is good for a romantic dinner for two overlooking the city lights.
• Location – A terrace is built on the ground (raised a bit) while a balcony is elevated typically on a second story or higher. In modern architecture, there are variations of this including the “rooftop” terrace which is a terrace built on top of a flattened roof.
• Construction – A terrace can be a standalone structure since it can be attached or detached to a building. This is not the case with balconies which have to be affixed to buildings/houses.

Pets

Some co-ops and condos allow pets. Others allow certain types of pets, or set limits on the number of pet and others do not allow pets. Some buildings have no policies, some have informal policies, and some have strict policies.

In terms of size limit, many co-ops and condos take their cue from the New York City Housing Authority, which limits pets to 40 pounds when fully grown. Policies may also include fines for pet misbehavior or a cleaning fee if a dog soils in the common areas or on the sidewalk in front of a building, which city laws require the co-op/condo to keep clean.

Usually pet-friendly buildings allow cats, dogs, fish, small caged birds and pet rodents such as hamsters or mice. Turtles may or may not be allowed because of salmonella concerns, and snapping turtles are generally not allowed. Wild animals such as iguanas, ferrets, monkeys and snakes are illegal to keep as pets under New York City Public Health Code 161.01.

Some co-op/condo pet policies include requiring proof of city licensing and up-to-date vaccines, and pets having a collar with the name and phone and apartment numbers of the owner. Some buildings required a signed and notarized document stating that you understand and agree to the pet rules. They may also require having your pet’s photo on file. A building may require a pet “security deposit” that covers cleaning if your pet soils a common area. A building may also require that animals be spayed or neutered. The Humane Society of the United States advocates it for pets over six months old, and suggests exceptions be made for pets certified by a vet as being too old or sick for such surgery. In the rare cases of show dogs, which generally aren’t sterilized, a board may or may not make an exception based on proof and provided you don’t breed dogs in your apartment.

Buildings may also require proof of obedience training. They can also specify “pet only” washing machines and dryers for pet owners, who might have allergy-inducing animal fur and dander on their clothes.

In New York City the Pet Law or The Three-Month Rule states that if a lease (including a co-op proprietary lease) or a condo’s by-laws has a no-pet policy, then the landlord or the board has 90 days to file an objection to anyone housing a pet openly. A pet owner isn’t required to take the pet outside the apartment, but you also can’t hide the pet when a building worker comes to fix the toilet. The 90-day starts when any “agent” of the owner sees the animal. And not just doormen and supers, this even includes independent contractors that a building may hire for just one day. After those 90 days are up, the pet is legally entitled to stay. You may, however, suffer the criticism of neighbors who bought into a no-pet building and may have allergies or other reasons to want to live in a no-pet building and acting in disdain of that is not neighborly.

BBQ Rights

In New York City, grilling anything outdoors is not allowed if your grill is within 10 feet of anything that will catch fire; this includes building walls, trees, wood deck surfaces and furniture. Also, there must be a garden-type hose attached to a water supply or a 4 gallon pail of water available when needed. Fire-escape grilling is never allowed under any circumstances. Electric grills are allowed (if the 10-foot requirement mentioned above is met) in a NYC apartment building. Charcoal grills are sometimes allowed, but not on small balconies (versus terraces) and not on the roof. Propane grills are never allowed. However, natural gas grills may be okay with a properly, professionally installed natural gas line, so long as your grill is made for residential use. You can be charged with fines of up to $10,000 or more if you don’t comply and run into trouble with your building for violating its rules on grilling. To minimize problems, more and newer developments are installing communal grills on their roof decks.

Roommate Law

The Roommate Law states that under certain circumstances, it permits a residential tenant to bring in persons, other than those listed on the lease, to live in the tenant’s apartment without the landlord’s prior review or consent. The owner has more flexibility in taking in someone without going through an approval process. You must inform your landlord of the name of a new roommate within 30 days after the roommate moves in, or within 30 days after your landlord requests that you provide the roommate’s name. Failure to notify your landlord that you have a roommate carries no statutory penalty.
Roommates who are not named on the lease have some limited rights, but their tenancies are the most vulnerable. Roommates are covered by laws that protect tenants from being illegally evicted and that ensure tenants access to basic services (water and electricity). Also, roommates are entitled to enforce provisions of the lease or roommate agreement with the primary tenant of the apartment, so long as the agreement does not violate applicable laws nor the primary lease for the apartment.
As a roommate, you are protected against illegal evictions. The laws regarding evictions apply if:

• you have lived in the apartment for at least 30 days (whether or not you have ever paid rent), or
• you have a valid lease (including a roommate agreement) signed by both parties, or
• the prime tenant of the apartment accepted rent from you. (you must be able to prove that you paid the rent. Receipts are better than nothing, but cash payments can pose problems. The best proof of payment is a canceled check or receipt from a money order, which can be traced if necessary.)

If any of the above applies to you, the prime tenant of the apartment must start an eviction case against you in court to legally remove you from the apartment. You must be served court papers, and you have a right to appear in court and present defenses. If a warrant of eviction is ordered by a judge in the case, the eviction must be carried out by a marshal or sheriff. It is illegal for anyone else – including the prime tenant of the apartment – to:

• remove you or your belonging from the apartment, or
• prevent you from entering the apartment or your room, or
• change the locks to the apartment entrance or to your room without giving you the new key, or
• cut off essential services that you do not control – like hot water, heat, or electricity

Roommates are vulnerable to unexpected evictions when the prime tenant of the apartment is evicted through legal means by the landlord. Sometimes, prime tenants do not inform their roommate of eviction proceedings. When prime tenants are legally evicted, the order of eviction usually applies to all occupants of the apartment – including roommates.

Is there a maximum amount of rent that I can be charged?

The type of apartment you live in determines whether or not there is a limit to the amount of rent that you can legally be charged as roommate. If you live in an unregulated (market-rate) apartment, there is no limit to the amount of rent that you can be charged as a roommate. If you live in a rent stabilized apartment, you cannot legally be charged more than a ‘proportional share’ of the rent – up to half of the total rent for the apartment. Even if you occupy a larger bedroom than the primary tenant, the most you can be charged is half of the total rent. In cases where there is more than one roommate, the share of the rent should be divided by the number of roommates. Note that New York’s Roommate Law only gives the right of tenants to have one additional roommate except when the lease for the apartment permits additional roommates.

The landlord of the building objects to choosing me as a roommate. Is that legal?

If the prime tenant has a right to a roommate then the landlord must have a valid reason for objecting to you as a roommate. Reasonable objections include:

• a criminal history
• causing problems at the building; or
• someone in the building has a restraining order against you
• It is illegal for the building’s owner to object to you based on a form of discrimination that is outlawed by law.

The landlord of the building is not entitled to know your social security number, to obtain a copy of your credit history, or to know other personal information about you. The landlord cannot force you to prove your ability to pay your share of the rent, or refuse to allow you to be the roommate of someone in the building based on a belief that you cannot afford to pay your share of the rent to the prime tenant.

Smoking Law

A number of buildings in NYC have made the decision to implement 100% smoke-free indoor rules. However, there is no law that specifically prohibits a neighbor from smoking in his or her home (unless it is part of a residential healthcare facility or a children’s institution). Some owners do prohibit smoking in residences, in which case smoking indoors could be a violation of a lease or rental agreement. Under NYC’s Smoke Free Air Act, smoking is not permitted in common areas (hallways,
common rooms, etc.) of buildings with 10 apartments or more. There are two additional legal concepts that may apply when smoke travels from one apartment into another, known as (1) nuisance and (2) constructive eviction. Depending on the circumstances, the passage of smoke into an apartment might constitute a nuisance. Constructive eviction may protect a tenant from conditions that are dangerous or hazardous. It is important to speak with a lawyer to discuss if the legal concepts apply to you.