Page 5 - The NY Cooperator August 2020

COOPERATOR.COM THE COOPERATOR — AUGUST 2020 5 Our Investment. Your return. WWW.BARGOLD.COM Storage4U@bargold.com (718) 247-7000 In union there is strength. We are here and ready to help. To all the medical professionals and essential workers on the front lines, thank you. You are our heroes and we are forever grateful. And to our amazing customers, we appreciate you. Bargold Storage is here for you and your residents during these trying times. QUESTIONS & ANSWERS Legal Q A& Maintenance Increases in a Pandemic Q Given the freezes put on evictions and collections during the CO- VID-19 pandemic, is it legal for a board to give a maintenance increase right now? —Wondering A “While there is a cornucopia of governmental orders and directives involving the re- lationship between cooperatives and their shareholders, none of them would pro- hibit a cooperative board of directors from implementing a maintenance increase at this time,” says Dean M. Roberts, Esq., at- torney with the Manhattan offi ce of Norris McLaughlin, P.A., with additional offi ces in Bridgewater, New Jersey, and Allentown, Pennsylvania. “As a general rule, boards have wide discretion on their business deci- sions—as evidenced by the Business Judg- ment Rule, which severely limits judicial review of board decisions. Given that coop- eratives by their very nature cannot make a profi t, any increase would clearly be justifi ed to cover either increased expenses or, if the money is placed into the reserve funds, for expected capital improvements. Th e only possible limitation that comes to mind is if the cooperative has entered into a forbear- ance agreement with its primary lender and an increase might be subject to the lender’s review and approval; however, even if ap- proval was required, it is highly unlikely that a lender would have an objection to higher maintenance.” When a Mitchell-Lama Co-op Goes Private Q I currently live in a Mitchell-La- ma co-op I purchased for $15,000 27 years ago. Th e building is go- ing private. My question is: will I have to pay more money for my apartment to own it outright? —Worried about What Happens Next A “When a Mitchell-Lama ‘goes private,’” explains An- drew Brucker, attorney at the New York offi ce of law fi rm Armstrong Teasdale, “it reconstitutes as a free-market co-op. Since the shareholders own the shares already, there should be absolutely no reason for any shareholder to have to purchase their stock over again. “Is it possible that the plan to reconstitute includes some sort of assessment? It is pos- sible—but very, very unlikely. If there was the shareholders have reviewed the plan with any expenditure by the shareholders, the all of the details of the process is there a fi nal plan would probably not get approved by the vote to reconstitute.” shareholders. Th at is the reason I have never heard of a plan to reconstitute that includes any cash outlay by any shareholder. “Every owner of a Mitchell-Lama \\\[unit\\\] should remember that before the fi nal vote to reconstitute, there is an off ering plan pre- pared which outlines everything. Only aft er n Disclaimer: Th e answers provided in this Q&A column are of a general nature and cannot substitute for professional advice regarding your specifi c circumstances. Always seek the advice of competent legal counsel or other qualifi ed profes- sionals with any questions you may have regard- ing technical or legal issues. Write to The Cooperator and we’ll publish your question, along with a response from one of our attorney advisors. Send your questions to: darcey@coop- erator.com. Q&A