In New York City, a co-op (short for cooperative) is a type of apartment building where residents own shares in a corporation that owns the building, not the apartment or the land. These shares grant residents the right to occupy a specific apartment and pay a maintenance fee based on the number of shares allocated to their unit. Shares are allotted based on square footage and the location in the building; for example, higher floors may have more shares. All co-op buildings follow their own set of rules and guidelines, which are called By-Laws and House Rules.
All co-op members are required to pay monthly maintenance fees, which cover upkeep of the building, property taxes, and other expenses related to the building's maintenance.
A shareholder is an individual who owns shares in the corporation that owns the building, rather than owning the physical unit itself. Instead of a deed, you receive a stock certificate as proof of ownership. As a shareholder, you are entitled to use one of the building’s housing units and receive a proprietary lease for the specific apartment you have purchased the rights to. These shares grant the shareholder the right to occupy a specific unit within the building through the proprietary lease and the stock certificate.
Shareholders are required to pay maintenance fees, which cover common expenses like building upkeep, property taxes, and sometimes utilities. Shareholders must adhere to the building's rules and regulations outlined in the proprietary lease and bylaws. Shareholders must maintain a peaceful and respectful environment for their neighbors, including keeping noise levels down. Major renovations or alterations within a unit often require board approval.
The shareholder is responsible for the repair and maintenance of everything within the walls of your unit. That means that when it comes to painting, repairing damage to walls, the unit’s plumbing, and all appliances, the owner has to foot the bill. An exception to this rule is if there’s a pipe or line in an apartment that serves parts of the building beyond the individual unit; in that case, the Cooperative may be responsible for it, and the governing documents would make that clear.
Shareholders are liable for any damage they cause, whether within their unit or to other units. For example, if the apartment above doesn’t caulk its bathtub properly and the water leaks into the apartment below, that shareholder is responsible for the damage [he or she causes], not the co-op, because the co-op didn’t do anything wrong.
Shareholders are also responsible for electing board members and participating in co-op goverance which includes reviewing annual financial reports, voicing concerns, and participating in annual meetings.
Something to note is that the superintendent is not your landlord and doesn’t have to make repairs to your apartment for things that are your responsibility. At the PHA, those things may be fixed for an additional cost, which will be added to your maintenance bill for the following month.
A sponsor is the original owner or developer of the building who converted the building into a co-op. The sponsors still have partial ownership of the building through units they retained ownership of after converting the building, which also have shares. Sponsors vote like normal shareholders, but they may have special benefits, such as not needing Board approval when selling. The Offering Letter will tell clearly outline the benefits they have. Something to note, buyers of sponsor units may face higher closing costs, including transfer taxes, compared to resales.
A co-op board is the governing body elected by the shareholders of a co-op to manage the building’s operations and finances.
The board's responsibilities are as follows:
Fiduciary Duty: To act in the best financial and operational interest of all shareholders, maximizing property value. For example, collecting arrears, processing payments for building bills, financing (mortgages and capital projects), and managing the annual budget, such as setting maintenance increases and determining needed assessments.
Governance: Establish policies, oversee management, and ensure financial stability. They oversee property management, staff, service providers, bylaws, house rules, staff manuals, service provider agreements, and capital improvement contracts.
Decision-Making: Make strategic and operational decisions such as
often involving significant costs, passing expenses to shareholders.
Compliance: Ensure the co-op follows its bylaws, lease, and house rules.
Shareholder Relations: Screen new shareholders and sublets and communicate with members. Communicate with residents through memos and newsletters, create and work with committees(gardening), and plans resident social gatherings.
In a co-op a management company is a professional entity hired by the co-op board to manage the day-to-day building, including financial management, maintenance, and repairs.
Management companies function as agents for the board, providing expertise and support to ensure the building runs smoothly and efficiently. They collect maintenance fees, pay bills, and prepare financial statements. A management company alsos
manage the co-op’s budget,
oversee maintenance requests,
coordinate repairs,
ensure the building’s upkeep,
ensure the building complies with all relevant laws and regulations,
Function as a point of contact for concerns,
Facilitate communication between residents and the board,
Manage relationships with vendors, contractors, and service providers,
Manage administrative tasks such as record-keeping, insurance policies, and other paperwork.
Bring a level of professionalism and expertise to enhance residents' overall living experience.
Per the Attorney General, this is the best way to work with the board
There are a couple of things to keep in mind when approaching the board about noncompliance with the bylaws, proprietary lease, or law. First, remember that board members are usually your neighbors who may or may not be fully trained in what is required by the rules and law. A shareholder should tactfully point out a lack of compliance to the board, expressing the expectation that the matter will be corrected. Sometimes that is all that is needed to solve a problem. Second, know that the board must act as a body; individual members cannot speak or act on behalf of the whole.
Put It in Writing
If the board does not respond to an oral request, write a letter. Make it concise, factual, and not hostile. Keep copies of any letter or other paperwork you send and notes of telephone conversations (date, time, who called whom, and the gist of the conversation) in case the matter is not quickly resolved
Strength in Numbers
An attempt to influence the board is always more persuasive if it is presented by a significant number of shareholders. If your problem is one that will affect others, it is worth organizing the other shareholders. If you do, and the attempt to change the situation is not successful, the organized group can always seek to elect new directors at the next annual meeting.