Senate Bill S9572

                                 
BILL NUMBER: S9572

SPONSOR: KAVANAGH
 
TITLE OF BILL:

An act to amend the business corporation law and the not-for-profit
corporation law, in relation to requiring at least one director on a
board of directors of a residential cooperative housing corporation be a
primary resident of such residential cooperative housing corporation;
and to amend the real property law, in relation to prohibiting the
charging of payments, fees or charges by cooperative housing corpo-
rations without thirty days' notice

 
PURPOSE:

This bill would require at least one member on a residential cooper-
ative's Board of Directors to be a primary resident living in the coop-
erative. The bill would also prohibit the charging of payments, fees, or
charges by cooperative housing corporations unless there is at least
thirty days' notice prior to implementation.

 
SUMMARY OF SPECIFIC PROVISIONS:
              

Section 1 amends Section 701 of the Business Corporation Law by requir-
ing that at least one member of a residential cooperative's Board of
Directors be a primary resident of such residential cooperative housing
corporation. A residential cooperative may require a higher number of
directors be primary residents on its Board of Directors. This section
applies to residential cooperatives incorporated pursuant to the Busi-
ness Corporation Law.

Section 2 amends Section 701 of the Not-for-Profit Corporation Law to
require the same for residential cooperatives incorporated pursuant to
the Not-for-Profit Corporation Law.

Section 3 amends Section 238-a of Real Property Law by adding subdivi-
sion 4, prohibiting cooperative housing corporations from charging a
payment, fee, or charge to a tenant that is a dwelling unit owner or
shareholder unless they are provided at least thirty days' notice in
writing.

Section 4 of the bill sets forth the effective date.

 
JUSTIFICATION:

A cooperative housing corporation (co-op) is a legal entity that owns
real estate where residents purchase shares to become shareholders rath-
er than owning their specific unit directly. Residential co-ops are
incorporated under either the Business Corporation Law or the Not-for-
profit Corporation Law. Section 701 of both laws respectively specifies
that a corporation shall be managed by its Board of Directors.

This bill would add the requirement that the Board of Directors of a
residential co-op must have at least one member who is a primary resi-
dent of the co-op. This would ensure that when a Board needs to make a
decision that impacts the day-to-day living of co-op residents, such as
addressing utility outages or making decisions about structural issues,
at least one member of the governing body would be able to assess the

problem and weigh potential solutions as a current resident of the
co-op.

This bill would not limit co-ops' ability to set stricter residency
requirements among their Boards of Directors in their certificates of
incorporation or by-laws.

Additionally, co-ops and management companies are not legally obligated
to disclose and describe any charges, fees, or payments imposed on
shareholders. For example, a shareholder who is assessed an "adminis-
tration fee" in addition to the monthly maintenance amount currently has
no way to find out what the fee is for and why it is being charged. By
requiring advance notice and a description of any fees that may be
imposed, this bill would ensure shareholders are given the opportunity
to understand why they are being charged before a fee is implemented.

 
LEGISLATIVE HISTORY:

This is a new bill.

 
FISCAL IMPLICATIONS:

None to the State.

 
EFFECTIVE DATE:
This act shall take effect immediately.