Q: A month earlier than I bought my Higher Manhattan co-op, I found that I must pay a flip tax of two p.c of the sale value on the closing. It’s a big quantity! When my spouse and I purchased the condo 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 appropriate 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 battle it?
A: Flip taxes — also called a switch charges — assist co-op buildings elevate cash for repairs and capital enhancements, they usually have to be described in your governing paperwork. If the phrases of the flip taxes in your constructing modified in some unspecified time in the future, it’s best to have acquired written discover of a shareholder vote to make that change.
That’s as a result of amendments relating to the flip tax normally can’t be made unilaterally by a co-op board.
“Until the language of the proprietary lease offers the board the discretion to boost the flip tax on occasion, which is atypical, the flip tax can solely be elevated by way 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.
If you happen to 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 normally included in a bit of the lease that accommodates guidelines governing how shares could be bought. If the tax isn’t expressly permitted within the lease, the board can not forestall you from promoting your shares when you don’t pay it, Mr. Greenspun stated.
Co-op shareholders who’ve confronted improperly carried out flip taxes have been profitable in court docket. “You could have grounds to problem its validity in court docket after closing,” stated Ruta Behrend, a accomplice 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 can also help you recoup the authorized charges you incur in case you are profitable in difficult the flip tax in court docket, Ms. Behrend stated.
For weekly e mail updates on residential actual property information, join right here.
