Q: A month earlier than I bought my Higher Manhattan co-op, I found that I must pay a flip tax of two % of the sale worth on the closing. It’s a big quantity! When my spouse and I purchased the residence in 2013, the vendor paid $20 per co-op share for the flip tax. I requested the co-op board for proof that they’ve the best to gather this tax. The board despatched me paperwork about how the co-op operates, which included nothing concerning the flip tax. Are they allowed by regulation to demand this tax? Can I combat it?
A: Flip taxes — often known as a switch charges — assist co-op buildings elevate cash for repairs and capital enhancements, and so they have to be described in your governing paperwork. If the phrases of the flip taxes in your constructing modified sooner or later, it’s best to have obtained written discover of a shareholder vote to make that change.
That’s as a result of amendments concerning the flip tax often can’t be made unilaterally by a co-op board.
“Except the language of the proprietary lease provides the board the discretion to boost the flip tax occasionally, which is atypical, the flip tax can solely be elevated by means of an modification of the proprietary lease, which usually requires the approval of tenant-shareholders proudly owning two-thirds of the co-op’s shares,” stated Scott S. Greenspun, principal with Braverman Greenspun, in Manhattan.
Should you can’t recall such a vote, look in your governing paperwork, together with your proprietary lease and your bylaws, for language authorizing the change. The phrases are often included in a bit of the lease that incorporates guidelines governing how shares will be bought. If the tax isn’t expressly permitted within the lease, the board can not stop you from promoting your shares in the event you don’t pay it, Mr. Greenspun stated.
Co-op shareholders who’ve confronted improperly applied flip taxes have been profitable in courtroom. “You will have grounds to problem its validity in courtroom after closing,” stated Ruta Behrend, a associate who practices actual property regulation at Tane, Waterman, & Wurtzel, P.C., in Manhattan.
You may search a refund of the flip tax if it wasn’t legitimately adopted. Your lease might also help you recoup the authorized charges you incur if you’re profitable in difficult the flip tax in courtroom, Ms. Behrend stated.
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