Why a bill giving NYC co-op apartment owners more rights could upend real

The tall towers of Billionaire’s Row line the midtown skyline.

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A bill aimed at protecting co-op owners’ rights is making its way through the state law-making process and could be “unconstitutional,” a NYC real estate lawyer said on Sunday.

The proposed bill, (S2433/A2619), sponsored by state Sen. Liz Krueger and Assembly Member Linda Rosenthal in their respective chambers, aims to give more rights to people who own co-operative apartments—but not the land underneath.

There are dozens of co-op buildings in NYC that encapsulate thousands of units following this real estate concept, many of them based in Krueger’s and Rosenthal’s Manhattan districts. As part of this design, renters pay monthly maintenance fees to landowners who provide a ground lease. 

But Anita Laremont, partner at the law firm of Fried Frank and member of the Board of Governors of the Real Estate Board of New York, said the bill, which has already passed the state Senate, is unconstitutional. 

According to the real estate pro, the bill would require tenants to get leases pursuant to rent stabilization law and also give them the right of first refusal (or, first dibs on the sale) if the ground lease is terminated. 

“Those two things are inserting new structures into the relationship between the ground lessor and the cooperative,” Laremont said. “And that is what is unconstitutional. If you insert new relationships there that were not there when they agreed to become cooperatives, then you are doing something that is unconstitutional because you are changing that relationship.” 

This principle, Laremont said, is important because contracts are supposed to be solid. 

“When parties enter into a contract, they really have to know that they can rely upon it,” she said. 

Risks outside of contract law in NYS

Other sources close to the legal battle say risks can impact more than contract law. It is a slippery slope that if the state legislature can get into ground leases and cooperative dynamics, it can get into other kinds of everyday contracts that New Yorkers use. 

Rosenthal, chair of the Assembly’s housing committee, told amNewYork in a statement that attorneys have fought against the legislation, adding that it would prevent New Yorkers from paying exorbitant maintenance increases. 

“From the very start, big real estate, including one of Donald Trump’s very own attorneys, vehemently opposed and spread misinformation about my bill,” she said. “Landowners can rationalize homelessness however they want, but their facetious argument is not going to stop me from protecting New Yorkers from triple-digit maintenance increases. With more than 10,000 ground lease co-ops in New York, including over 4,000 in Queens alone, staving…