Hi David,

My Co-op was invested with almost $1 million in reserves in short-term US Treasuries. However, with the US at its debt ceiling and the potential for near maturity bonds to be defaulted, we are holding all investments as cash. We rejected Money Market accounts for the near term too as they are also heavily invested in short-term US Treasuries. Also, with the FDIC fund in the shape it is in (it is currently negative), the US guarantee of “full faith and CREDIT of the US” rings a little hollow so CD’s are out. The FDIC fund’s own projections do not call for a positive balance until 2012 and will not reach the statutory minimum until 2017 as per here: http://www.fdic.gov/deposit/insurance/memo3.pdf

Let's be honest, I don't believe that even if the US defaults, that the funds would never be repaid. However, getting access to the funds could be delayed - and my Co-op needs those funds this year for Capital Projects. My Co-op can’t afford to delay a roof project while Congress debates the broader issues.

My Co-op has decided not to reinvest until the debt ceiling debate has been answered. To us, a lousy 1% return or even a 4% return is not worth the current risks.

Sincerely,

$50 per apartment he owns, which is our standard late fee.

The power and terms to implement a late charge is normally stated in the prop lease. Please review and understand your options. If your prop lease states interest charge, the fee would have to match the acceptable level of interest. If your governing documents don’t allow for a late fee or place restrictions, I would approach with caution.
We just implemented a late fee in our building which is based on interest rate – we took the lowest maintenance and came up with a standard fee – though it’s relatively low of $15, it’s what our governing docs and the law allow for in our building.
If your sponsor is paying late, this may signal a potential issue, my suggestion would be (1) meet with them and reinforce that your trying to work to improve the building and need the funds on time in accordance with the governing docs (2) ask for the latest sponsor amendment – in fact your bylaws or prop lease or offering plan may require them to provide it. This will display the income vs. maint expense.
I hope this helps.

At the very least, you're probably in violation of the bylaws of your Coop. You can try to get some more information from the board / management or spread a petition with signatures calling for a special meeting, as noted in your bylaws.

I agree. You should check your bylaws. I can't imagine that it doesn't stipulate you have to have one. Are you on the Board of Directors? The annual meeting is a great opportunity to discus whats going on in the community and provide a year in a review. I did a Power Point for ours. Part of it was dedicated to what was accomplished in the previous year. Even though we communicate via Newsletter all year long, the meeting allows for open discussion and for residents to ask questions about our Capital Improvement Projects that may have not been answered in the newsletters or review certain points for clarity.

Did you get notice for an annual meeting which did not take place? When was the last time that the meeting was held?

Many Boards may change the date of the annual meeting to a later date. Is this the case?\

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Here are three articles right here on this site that may help

http://www.habitatmag.com/Publication-Content/2010-December/Featured-Articles/How-Co-ops-Condos-Can-Handle-Press

http://www.habitatmag.com/Publication-Content/2011-March/Featured-Articles/Saving-The-Sheffield

http://www.habitatmag.com/Earlier-Issues/2007-September/Featured-Articles-from-Our-Print-Magazine/Shoddy-Dangerous-New-Construction-Brand-New-Boards-Fight-Back

While I'm not a lawyer, whom I would suggest you confer with, I'm not sure it matters if it's a common area or not, but rather if it falls under the purview of the condo's upkeep responsibility, like fixing and replastering an owner's wall that has suffered water damage because of a burst pipe inside the wall.

This seems no different to me than water getting into a top-floor owner's home because of a leaky roof. The fact that building-wide A/C boxes are there, as they often are on roofs, adds to the comparison.

In addition, water leaking into ground-floor apartments threaten the foundation of the building, which is a building-wide concern, and a building-wide benefit. Forcing the private owners to fix this problem would almost certainly entail a lawsuit that would be expensive for all involved -- indeed, may cost the condo association more than the fix.

Whether the building as a whole has many expenses is not a factor in determining who is responsible for the fix.

If it's the building's property, they are the co-op's responsibility. Especially if they pose a problem for the foundation.

I heard some buildings require 1 year live-in before permission to sublet.

No sublets during the first 2 years of ownership. Then maximum of 4 years subletting, in 1-year increments. Fee is one month's rent for each of the first 2 years, 50% more for third year, double for the fourth. Schedule will reset if the shareholder moves back in for 2 years or more. The monthly rent used is the open market rent for comparable apartments in the neighborhood.

Ours is not the strictest around. In fact, it's fairly liberal.

Our aim is to promote owner-occupancy and reduce the resident turnover that comes with rented apartments. The time limit seems to work. In the last couple of years, we've had 3 apartments be sold to buyer-occupants after 4 years of subletting; in only 1 case did the owner move back in after 4 years of subletting. We impose fees as a deterrent to absentee owners' treating their apartments as income-producing properties. This doesn't always work, but in other cases it may.

Ours is 3 yrs over 10 in 1 yr increments but must live there for 3 yrs first.

No sublet for first two years; then allowed three years out of any five year period with one-year terms approved by board. 15% fee for first, 20% for second and 25% for third year.

While co-ops can have their own governing rules. I personally would not buy into one that imposes sublet fees. Also, I feel such a rule may devalue the property (the co-op) in the real estate market.

In a weak market such as the current one, I believe that sublets are necessary. There should be a minimum period of prior ownership, maximum limits on permitted terms and a fee to bolster the coffers of the community. It would probably be a good idea to limit the number of sublets allowed based on a percentage of units in the building. This would prevent a huge number of non owner occupied units. Problems will arise if a strong policy is not put in place that has an understanding by the residents of "no exceptions". Finally, put the policy in place for a limited time, say 3 to 5 years so that it can be re examined in light of the market in the future. Good luck
Dianne Stromfeld

min 3 year ownership before allowed to sublet, +15% surcharge on maintenance, BUT the financial criteria is as strict as a purchase, they just 'check off' a different box. Our flexibility is that the Lessee's financial obligation is to the Lessor, who is obligated to the corporation. They don't have a direct financial obligation/link to the corporation. Sign off on all rules, pets etc. 1-2 year leases, no storage bins in basement, restricted to owner's only. IF they bail or screw up in any way the Shareholder pays. We are not their partners in the risk or reward.

3 years of ownership before you can sublet. One month's maintenance each year that you do sublet (or renew w/ current renter).

Are you familiar with Building link?

MRM

You can also contact MyBuilding.org is pretty easy to use.

Good Luck

We use Building link we find it very useful and helpful. I am able to inventory ie packages and keys, I can also control all work orders and assign then accordingly. My board and residents really do Building link like it a lot. Also some of my staff members are not so computer savvy and even they find it easy to use. you can get in touch with them at Buildinglink.com

Lot depends on where it is.... what's in the nabe, what's the 'buzz' of the place, when the other units sold...

Hi, just curious, why would you want to buy into a coop that is only 50% sold?

If you're even slightly motivated, I highly recommend introducing yourself to your new neighbors and discuss with them getting a board in place. My purchase in a very compromised building turned the sponsor-shareholder ratio to just over the 50-50 mark which by law allows you to have a "real" board. It's been extremely challenging to get any movement. Be prepared for the sponsor (aka powers that be) to be very reluctant to relinquish control.

Wow! Thank You to all of you for your responses. The co-op I am considering is still in the running but I saw another apt. in a more established co-op that I also like. Both are in the same neighborhood in Queens.
Since my first post, I've been reading through your topics and responses and have learned a great deal...it will assist me in making the right choice for me.
Again thanks to all of you!

Beware with bldgs that are less than 50% sold. Review the board minutes and confirm that the Sponsor and/or outside investors are not controlling the board. If they are I would not consider this to be a sound investment.

Another way to get a sense of whats going on in the bldg is to sit in the lobby and ask people who come in and out. Vet the information carefully.

Good Luck..

Don't be surprised if there AREN'T any board minutes to review. Hence, you may not be able to confirm anything. And yes, the Sponsor very well could be controlling the board, because s/he may BE, in essence, the board. While it's a pain in the ass, that's basically the natural progression in buildings like this... which is why as soon as the ratio flips to shareholder majority, it will be up to you and the intelligent people you meet to start investigating, and then beginning the evolution. Read your By-Laws (which may be unfortunately vague) to see how & when the voting in of a new board is expected to happen and hold the sponsor's feet to the fire. There are on-line sources to guide you, as well as the NYS AG's office.

If you decide to take a chance and purchase in this building (or anywhere you purchase), make sure you have your own excellent real estate agent (do not share the sponsor's) and your own real estate attorney. Get all agreements in writing. If it's a gut-renovated unit, look it over very carefully and request any fixes agreed to in writing. Do not rely on their good will, or in how nice they are. That all goes out the window when money is involved. If they promise you anything, get it in writing. Good luck.

We have to force our NYC Goverment to force this bill which is almost 10 years pending:
http://assembly.state.ny.us/leg/?bn=S00604&term=2011

Hey Anonymous,

Just becasue the Sponsor owns slightly less than 50% OR is required to relinquish control of the Board means absolutely nothing..

If a single shareholder controls, lets say 45% of the shares, the influence that large voting block of shares has is substantial. The Sponsor can easily control (indirectly) who wins and who doesn't. This is where the Attorney Generals requlations are quite weak.

I agree with another post who stated why would you buy in a bldg that is less than 50% sold..

Well it doesn't mean 'absolutely' nothing, because the law changes at that crucial 50-50 juncture. I was making the assumption (which may be incorrect), that this is a building which is changing over, and that no one shareholder owns that many apartments (e.g. 45% of the shares), OTHER THAN THE SPONSOR. And yes, the sponsor can be the devil incarnate.

The purchaser seems to be at the beginning of a search to buy an apt., learning things as they proceed. Asking them WHY doesn't answer the question they're asking, or provide any valuable information. While it's not an irrelevant question, I don't think it helps them unless you also provide the answer as to why you think it's not a good idea. So, perhaps you can take the time to tell them why you think it's a bad idea. Sometimes people will buy in a building like that due to price, or lack of board approval, etc.

I have lived in buildings that were less than 50% sold and ones that were 70%+ sold. There is a significant difference in terms of how the Coop is run. With Sponsor/Investors owning 50% of the shares/units the bldg is more transient. This results in a failure to feel like you live in a community or the ability to contribute to your investment.

The goals of each party are different; Sponsors/Investor have the ability to bypass the board review process and therefore can rent to any applicant which is generally determined by the rent. The resident shareholders have to deal with any problems as they live with these tenants. And what happens when you complain? In most cases nothing as the Sponsor has such a significant control on the board (with the block of shares they control) that they indirectly control the board.

Look you are not buying a pair of pants here. You are investing $10's of thousands of dollars. Why buy trouble??

It sounds like that complex is in transition between being sponsor controlled to being shareholder controlled. This is a great opportunity to start the co-op off right. Learn as much as you can - this site is a great primer. Encourage the sponsor to continue to sell units (not re-rent them). Don't let the sponsor blindly control the Board. Don't just sell to anyone - make sure they fiscally qualify. Save up for future repairs (repeat - save up for future repairs). The future is in your hands - run with it :)

To answer your question, the fact that the sponsor still owns more than 50% is not a risk by itself.
By "relatively new", do you mean recently converted or recently built ?

You should do your homework as a potential buyer and research the property's info a little. Have your lawyer request a copy of the proprietary lease, bylaws and financial statement of the coop.

If the building is in New York City, the city's website will give you a lot of information about it, like current and past violations, water charges, real estate taxes, have they paid all their dues on a timely manner.

It will help you get a broad picture about how the coop and the management are running the building.

300 g/hour at night?? wow.

You can contact Ashoksan Water Services at 718-499-4008 Maybe they can determine what your problem is.

We haven't found anything obvious but we are looking. I would think 300 gal per hour would be quite obvious. Other ideas... broken meter, roof tank overflow, other??

Two issues here to address, faulty meter/or water is leaking. I would address both simultaneous. Have someone check the water meter while at the same time instuct the staff to check the building from top to bottom. If there are no visable signs of water like you mentioned it sounds like a fixture is open.Well trained staff would know to pay attention to such as they do their daily chores. I have had similar situations in the past mostly due to running toilets. Thankfull other vigilant unit owners or staff reported the problem. Hope this helps.

MRM

Thanks for feedback so far. Last nights usage (38 apartments).

11 pm: 90CF (673 gallons)
12 am: 60CF (449 gallons)
1 am: 70CF (524 gallons)
2 am: 50CF (374 gallons)
3 am: 60 CF (449 gallons)
4 am: 40 CF (299.2 gallons)
5 am: 40 CF (299.2 gallons)

Check your boiler as well.
The water tank feeding it for steam might have an issue.

Just a thought.

A single running toilet can waste 2 gal/minute (120 gal/hr, 2880 gal/day). If you have only a few running toilets, that could account for your usage.

We instituted an energy audit for our building a couple of years ago which looked at running toilets and dripping faucets in every apartment (along with making sure radiators were installed properly, windows and doors were tight), with the super fixing anything that wasn't working properly for free (up to $25/apt for supplies). Worked great, and caught several problems.

Shareholders and tenants were very cooperative, since it helped us keep maintenance costs down.

VP11104 was correct in his advice. I would communicate your concerns to either the management company or the company that services your heating plant.

I would also recommend you contact the company Bright Powers. Google them for contact info...they are local with an office in NYC. I have no vested connection to them, yet we have consulted with them on many issues ranging from Benchmarking to engineering studies. I've pointed you to them, they will point you in the right direction.