Condominium

The Step-by-Step Process of Terminating a Condominium

[ad_1]

Question: I represent a sole proprietor of a four unit commercial condominium in Brooklyn, NY My client is under contract to sell the property but must terminate the condominium as a condition of sale. Can you explain to me how to terminate a condominium in New York?

Answer: Fortunately, a memo from the New York Attorney General’s Office (NYAG) on Condominium Termination can help you get started. Since the memo only covers NYAG filing requirements, we’ll first discuss when condo terminations typically occur, and then the steps to complete them in New York.

Condominium terminations are rare and usually occur when selling an entire building, as opposed to a number of individual units in a building. During my time at NYAG, we’ve only seen a handful of condominium terminations, mostly in cases where a developer was looking to acquire an entire building for redevelopment. Other cases included cases where a condominium was formed to receive tax incentives or for estate planning purposes that ultimately did not come to fruition.

Termination of a condominium requires compliance with New York Real Property Law § 339-d et seq. (the Condo Act) as well as documents filed with the NYAG and the New York City Department of Finance (DOF).

Comply with the Condominium Act

The Condominium Act provides for instances where owners of condominium units may wish to terminate the condominium. Article 339-t sets out the requirements as follows:

If the withdrawal of ownership of this article is authorized by at least eighty percent in number and common interest of the shares, or at least by a greater percentage, either in number or in common interest, or both in number and in common interest, as may be specified in the bylaws, then the property shall be actionable for partition by any unit owner or lien claimant as if held in common, in which case the proceeds net of sale shall be divided among all Unit Owners pro rata to their respective common interests, provided, however, that no payment shall be made to any Unit Owner until he has first been paid out of his share of this net proceeds all liens on his unit. This withdrawal of the property from this article does not preclude its subsequent submission to the provisions of this article in accordance with the terms of this article.

Depending on your situation, since there is only one owner, you could terminate without holding a meeting and a vote of the unit owners. However, in a scenario with more than one owner, you would need to obtain the required consent set out in the condominium bylaws, which would be an 80% vote of the owners of the unit and common interests or any other amount higher. set out in the statutes.

NYAG Filings for Condominium Termination

NYAG filings aren’t always the easiest of agency filings. However, in this case, terminating a condominium with the NYAG is simple. In 2015, the NYAG issued a policy memo titled “Letters of No Objection to Termination of Declaration of Co-Ownership”, setting out the requirements for requesting the “Letter of No Objection”, which is a document required by the DOF to terminate a condominium. As stated in the 2015 memorandum, the party wishing to terminate co-ownership must provide an affidavit containing the following information:

• How the co-ownership was formed, including all effective dates

• A brief history of condominium unit ownership

• When and how the applicant acquired ownership of the units

• An affirmative representation that the depositor owns 100% of the common interest

• The underlying reason for the decision to terminate

• Disclosure of relevant litigation (noting that if the condominium is bankrupt, consent from the bankruptcy court must be provided as part of the application)

• For condominiums under the jurisdiction of the Charities Bureau of the New York Attorney General’s Office, proof of signature from the Bureau and the Supreme Court (to the extent required)

• An affirmative statement from the registrant requesting the NYAG to issue a statement of no objection to the termination of co-ownership

Although not applicable to your situation, the memo also requires that proof of compliance with the Condominium Act (c.) be provided, which would be in the form of an affidavit requesting the “letter of no- objection” signed by all unit owners voting to terminate.

The request for a “Letter of No Objection” is submitted electronically to the NYAG along with a notice of appearance and an electronic payment receipt for $225.00, representing the filing fee.

New York City agency filings for termination

Once the NYAG issues the “Letter of No Objection,” the condo can file the required documents with the DOF to terminate the condo. The DOF provides a step-by-step guide to the termination process which is available online.

The steps are as follows:

Step 1: Complete the RP602-C application online at www.nyc.gov/condoefile.

• Ensure all property taxes are paid and be prepared to show proof of payment as part of the application

• Be prepared to show payment and/or resolution of any Environmental Control Board judgments or debts

Step 2: Pay for new tax land

• You must provide a new sketch for the property to receive a tax lot (note this will be the previous tax lot before the subdivision in most cases)

• Provide proof of payment of the filing fee paid with RP602-C

Step 3: File your provisional lots with the New York City Department of Buildings (Date of Birth).

• File a Subdivision Improvement (SI) application with the DOB (be prepared to show proof of the applicable original subdivision that created the current condominium tax lots)

Step 4: Prepare a condominium termination document to register against the property with the DOF.

• Prepare a room A description of the property

• Prepare an Appendix B that describes previous condominium units

• Provide a copy of the NYAG “Letter of No Objection” with your file

Step 5: Go back to DOF to get your new tax lot for the property.

• All documents must be submitted to the DOF in person, including:

– RP602-C with approved drawing

– DOF proof of payment receipt

– Deed for existing tax batches

– Copy of the SI application filed with the DOB

– Owner’s affidavit attesting that there was no sale

– NYAG No Objection Letter

– Copy of the termination of the co-ownership registered with DOF

Upon receipt of a complete file, the DOF “Tax Card Unit” will review the entire file, issue objections, and once approved, the condominium tax lot numbers will be removed from the tax card and the property will revert to its condition prior to the conversion to co-ownership.

The entire process can take six to eight weeks, depending on the agency’s backlog and the completeness of the various filings and applications that must be made with the NYAG, DOB, and DOF. But overall, for a property like the one you describe, it’s a very straightforward process. Just be sure to allow enough time to complete the process if, as in this case, terminating a condominium is a condition of closing.

Erica F Buckley is the former Bureau Chief of the Office of Real Estate Finance and is the Practice Group Leader of Nixon Peabody’s Co-op and Condominium Team. This column is for informational purposes only and does not replace agency advice.

[ad_2]
Source link