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Council of New York Cooperatives & Condominiums
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Published: Summer 1995

Position Paper on Housing Court

JOINT EFFORT TO SEEK
A SEPARATE PART IN NYC HOUSING COURT
FOR COOPERATIVES & CONDOMINIUMS

The Coordinating Council of Cooperatives, the Council of New York Cooperatives & Condominiums, the Federation of New York Housing Cooperatives and the Coalition of Housing Development Fund Corporations jointly seek a separate part in Housing Court to specialize in housing matters arising in cooperative and condominium buildings. Together, our four membership organizations represent the vast majority of the 6,000 cooperatives and condominiums in New York City. We are convinced that a separate part in the Housing Court for this resident-owned housing would be beneficial to the city and to the court system.

BENEFITS TO ALL OF THE HOUSING COURT
A separate part in Housing Court would, to a large degree, reduce the congestion in the regular Housing Court by the removal of cooperative and condominium cases that are different from standard rental housing cases. It would expedite the hearing of the cases relating to cooperatives and condominiums, because they would be heard by judges knowledgeable in this area. This would result in better-honed and fairer decisions, which would build a better, more consistent and less confusing body of case law than we currently have. The doctrine of stare decisis and respect for precedent can only be properly applied by judges who are knowledgeable in this area of law.

HOUSING COURT CURRENTLY EXACERBATES PROBLEMS
With the era of massive sponsor defaults now behind us, today it is the inability of cooperative and condominium boards to expeditiously collect maintenance from shareholders and common charges from unit owners that constitutes the greatest threat to the continued viability of this form of housing. Unfortunately, the problem is exacerbated by a Housing Court system geared to the adversarial relationship that tends to exist between rental tenants and their landlords; the courts often fail to understand the relationship of co-owners in cooperatives and condominiums and the democratically-elected volunteer boards setting policy in these buildings.

DISSATISFACTION IS WIDESPREAD
Our request for a separate part where specific judges, versed in the nuances of cooperative and condominium documents and law, would hear these complex cases, arises from numerous complaints that we have received from our member cooperatives and condominiums throughout the city. Their comments confirm that the officers who presently hear these cases in Civil Court, are often:

    a) unfamiliar with co-op/condo self-governance, where democratically elected boards of directors or boards of managers act on behalf of all cooperators or condominium owners;

    b) unsympathetic to the fiduciary responsibility of boards to collect the maintenance and common charges necessary to operate the buildings for all of the residents and to avoid the necessity of increasing these charges to bridge shortfalls caused by delinquencies;

    c) not attuned to the fact that cooperative corporations and condominium associations are subject to more than just traditional landlord/tenant law, but also subject to various laws and regulations which are inapplicable to ordinary landlord-tenant relationships;

    d) not focused on the fact that there is no "landlord" from whom the "tenant" needs protection nor any ownership entity with deep pockets to offset shortfalls;

    e) unaffected by the fact that, in many instances, it is simply not within the province of the cooperative or condominium board to solve the problems (e.g., direct disputes between residents); and

    f) unconcerned that delinquencies prevent the timely payment of bills which impairs the creditworthiness of the cooperative or condominium.

The Housing Court is decidedly reluctant to impose legal costs on shareholders in cooperatives or unit owners in condominiums, even when the housing company prevails. This has the effect of adding to the financial burden on the remaining law-abiding owners by forcing them to pay the costs of enforcing the law. These costs can be considerable. Further, it rewards the offending shareholder, since, if that shareholder loses, the only price paid is that of having to live up to the cooperative or condominium's governing documents. This encourages anti-cooperative behavior.

DEFAULTS HAVE INCREASED CASELOAD IN HOUSING COURT
Although until recently it was unusual for attorneys representing cooperative and condominium boards to appear in Housing Court with any frequency, the change in the city's economic climate, as well as the growing volume of defaults on individual units by sponsors, shareholders and unit owners have, for the first time, caused cooperative and condominium boards to become actively involved in Housing Court proceedings.

We believe that tenant-shareholders and condominium unit owners, who are, in fact, their own landlords, are in different situations - economically and philosophically - from that of rent-stabilized and rent-controlled tenants dealing mostly with non-resident landlords.

HOUSING COURT OFTEN USED AS A TACTIC
We contend that, in many instances, cooperative and condominium owners and their non-rent stabilized and non-rent controlled subtenants are using the Housing Court to avoid paying the maintenance in their cooperatives or the common charges in their condominiums. Unlike the case of a rent-stabilized tenant living in a rental building, this does not reduce income to a landlord who operates the building for a profit. Rather, it increases the burden on the co-owners of the non-paying shareholder or unit owner who resides in the building. Multiple non-paying owners can make it difficult or impossible for the remaining owners to operate their building.

THE COST OF THIS MODIFICATION IS NEGLIGIBLE
A separate part in Housing Court could be implemented without increasing the number of judges or the space currently devoted to Housing Court. The modest administrative cost of establishing this program and screening incoming cases so as to direct those involving cooperatives and condominiums to the new part will be quickly offset by the time and money saved in expedited resolution of cases. Judges versed in the relationships between the board and residents in these resident-owned and governed buildings will be able to hand down decisions that interpret the law consistently and clearly. This should also lead to an additional benefit in the form of fewer appeals, which would even further reduce the burden on the courts.

 
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