Herrick’s Condominium and Cooperative Group has learned that among a package of bills affecting rental housing agreed upon by the New York State legislature, it will be necessary for 51% of a rental building’s tenants to agree to purchase their apartment in order for a sponsor to convert any building to condominium or cooperative ownership. To date, it was sufficient that a total of 15% of units be subject to contracts with either a tenant in occupancy or an outside purchaser for a successful conversion.
This is a critical change from recent practice. A building’s tenants, even with an exclusive right to purchase their apartments for a period of time under applicable law, have generally not purchased at even the below-market prices offered by sponsors. As a result, developers have traditionally relied on a significant number of outside purchasers to meet the 15% threshold for conversion.
As was the case in the late-1970s, when a similar requirement was in place for several years, we expect that tenant groups and their lawyers will look to organize tenants in an effort to discourage many conversions.
The bill includes additional requirements that hamper conversions while other new policies will make ownership of rental housing less attractive as investments.
Please contact Phil Tucker or Douglas Heller for more information.
