The wrong board members (self-serving) can destroy a co-op. But voting them out is not always feaseable. Plus it is often the control freaks who take the board positions. Once they get a stranglehold they do as they please without consideration of anyone but themselves. My board has a textbook narcissist who has a dual personality. Never again will I purchase a coop and be subjected the whim of gang of freaks! I hope the all rot in hell!

Check your proprietary lease and bylaws. Most contain provisions for a relatively low percentage (around 20%) of shareholders petitioning to have a special shareholder's meeting for a specific purpose. In this case it would be to lower the transfer (flip) tax.

Another possible avenue of approach is to thoroughly read your proprietary lease and bylaws. I believe one of the two documents must specifically authorize the imposition of a transfer tax before one can be levied on a share transfer. If you can't find anything in either document that looks like it authorizes a transfer tax, you may be in luck.

To be sure, though, I would hire an attorney who specializes in co-op and condo law to give you a final opinion. You may have to spend a few hundred dollars on the attorney, but 4% of $1,000,000 is $40,000. A worthwhile trade-off. Discuss with the attorney what your next steps might be.

Finally, canvass your fellow shareholders and see how many would also like to see the transfer tax lowered or eliminated. If there are enough, organize into an opposition party and put up a slate of candidates for the board. You have to be willing to do the work if you want to reap the benefits.

Good luck!

It's amazing how greedy people get when they decide to sell. This person knew full well coming into the co-op that there was a 4% flip tax. The fact that there's a healthy reserve fund means that the Board of Directors did a great job and I'm sure the maintenance increases were kept low because of this.

marym, I tend to differ with you in so many ways. The healthy reserve is because the Board of Directors took out over a million dollar loan. The board raise our maintenance every year for the past 6 years from 15% to 3%. marym let's not forget the Board of Directors has raised the Assessment that is over a month maintenance. Do these new people know what they got themselves into. I don't think so nor did I.

Hi MaryM - It sounds like the co-op you described is very lucky to have a lot of recent sales which produced a healthy amount of flip tax revenue. What does the co-op board do to keep maintenance low if there are *no* sales for a year or two or three? I would assume they need to approve an assessment, which, at the end of the day, sort of dampens their greatness.

There needs to be a balance between putting the burden of raising income on the backs of a select few (sellers) vs. spreading it out over all the shareholders. A 4% flip tax seems to me to be a heavy burden. In my opinion, a flip tax of 1.5% to 2% is much fairer. Any shortfall in the maintenance and reserve fund can be made up by imposing an assessment and spreading it out of 12 months.

Along the lines of the recent comments, how would the budget meet its revenue target with a lower flip tax? If the building had to take out a loan already, pressure from lower flip tax revenue could require the board to increase another revenue source, and the maintenance fee is the typical target.
Could PC#1 (the original poster) offer a suggestion for reducing the co-op’s expenses? If the building spends less money, it needs less money. If there’s an outstanding loan, however, the flip tax revenue may very well go toward paying back the loan.

Steve the loan is almost paid off and most likely the Board will get another loan shortly after.
The real estate agents have said our building has the highest flip tax. Steve we have excellent financials, way more then enough if we need a new roof. Our building is very well maintained and was highly sorted after until the monthly maintenance has been raised every year and the assessments have been increased to over our monthly maintenance. Nothing is being cut in the budget it's only going up. Thanks for your input Steve.

PC#1, what kind of loan does your building usually take out, a Line of Credit or something else? I'm interested in what form of loan you find most effective and what your costs are to originate the loan in terms of percentage of principal amount.

Thanks!

It's been my experience as a treasurer of 10 years that shareholders value consistency, especially when dealing with monthly maintenance and assessment payments. Besides the usual grousing every year from some shareholders when maintenance goes up, the vast majority of feedback we receive is that shareholders recognize expenses generally go up and rarely come down, so the board has to increase maintenance every year. As long as the shareholders perceive the increase is in line with inflation and extraordinary expenses are fully explained, they trust that they are getting good value for what they pay.

I would be very wary about balancing an annual budget that includes anticipated income from unit sales and the corresponding transfer fee (the PC way saying "flip tax"). Income from transfer fees is one of the most unreliable sources of revenue unless you're in a huge complex where there are historically a certain base number of annual sales.

As for reducing expenses, this can get tricky. The building across the street from ours tried to eliminate their part-time doorperson as a cost-cutting measure. They didn't have to raise their maintenance for a year or two, but the desirability of the building plummeted. Sales were much fewer and further between, and sales prices under-performed comparables in the area. A building can use cheaper materials and extend maintenance periods, but in the end the cost to remediate and repair will be greater.

Having to hire an attorney when the board is unreasonable is pathetic! It is supposed to be a home and and place of comfort. But when you have the wrong board members and apathetic shareholders it is your only recourse. Either that or move. Once you hire an attorney you are labeled the enemy and trouble maker. Of course I speak from my own experience. Hiring an attorney is $$$$. A few hundred for the consult, but if you need them to step in and litigate you could easily run up a bill of 50 thousand. In fact I got a "what are you going to do about it, hire an attorney?" from the MA here. He panders to board members and is definitely not on the level. He should be guiding them in the right direction, instead he aids and abets. But again the shareholders complain bitterly yet don't want the responsibility. The board is more into divide and conquer and the backbiting is rampant.
I will never again move into a coop and endure the pettiness and hostility of miserable people. There is no community here and the board members like it that way. For the past 3 months the intercom has not been working. So individuals call the MAs office to complain. These people all use the same playbook they will tell you no one else has complained. Then when you speak with your neighbors you find out how full of it they are.
Sickened by the whole experience, I want a home not a dysfunctional dictatorship.

MK- So sorry your unhappy with your living condition. Why don't you think about running for your board or talk to your fellow neighbors about what's going on in your coop/condo? I do wish you well in your move to your dream home. Best of Luck MK wishing you peace of mind.

I ran for the board or tried to. The people here are appethetic and they are in the habit of shooting the messenger. Believe me I have tried it all. I just don't understand how people can be so awful and get away with it. Shareholders have zero protection when it comes to board and management dregs. It sounds good in theory, but since I have tried it all I know how gossip and rumors can thwart any effort. I wish someone would be real and just admit that when it's bad it can be impossible. Devious people don't follow rules, you have no idea just as horrid this has been. My only option is to sell. But I just received notice that while moving furniture out I damaged the elevator and they want to charge me for it. Funny because I have not moved any furniture! It's like I always have to watch my back to protect myself from them. You have no idea how many awful things they have done and how harassed I have been by them. If you have the name of an attorney who can help me please forward this information. They are going to carry on this way and I have to endure it because I have zero protection. What ever protections do exist are not sufficient, I have been emotionally and financially scarred by this. It will take time to recover.
Throughly disgusted!
Yes getting out is the only way and it is a hurdle.