What's happening
This bill creates an Office of the Cooperative and Condominium Ombudsman to resolve disputes and oversee governance, funded by a new annual residential unit fee.
Why it matters
Creates a dedicated government office to address the unique challenges and disputes in cooperative and condominium living, aiming to reduce costly litigation and uncertainty for owners, boards, and residents.
Mandates the Ombudsman’s office to provide education, outreach, and accessible resources for owners, boards, and professionals, potentially improving understanding of rights, responsibilities, and governance practices.
Empowers the office to mediate disputes, oversee fair elections, and refer serious matters to law enforcement, which could strengthen accountability and transparency in building management.
Funds the office through a modest annual fee on each residential unit, directly linking the costs of oversight to those who benefit from improved governance and dispute resolution.
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Who cares
Headline styles
Create Condo Dispute Office
Plain English, a few words. Used as the page title.
Sponsors
History
- Referred to finance
- Referred to finance
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Create Condo Ombudsman Office
In Assembly Committee · Housing · Sponsor Harvey Epstein
Full text
5 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
2604
2019-2020 Regular Sessions
IN SENATE
January 28, 2019
Introduced by Sens. KRUEGER, HOYLMAN, MAYER, MONTGOMERY -- read twice and ordered printed, and when printed to be committed to the Committee on Finance
AN ACT to amend the executive law, in relation to creating the office of the cooperative and condominium ombudsman; to amend the tax law, in relation to authorizing the residential unit fee; and to amend the state finance law, in relation to establishing the office of the cooperative and condominium ombudsman fund
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. The executive law is amended by adding a new article 49-C to read as follows:
ARTICLE 49-C
OFFICE OF THE COOPERATIVE AND CONDOMINIUM OMBUDSMAN Section 996. Short title.
996-a. Legislative declaration.
996-b. Definitions.
996-c. Office of the cooperative and condominium ombudsman.
996-d. Functions, powers and duties of the office.
996-e. Principal office and satellite offices.
996-f. Assistance of other state agencies.
996-g. Reports to the governor, attorney general and the legis-
lature.
996-h. Contract authority.
996-i. Separability.
§ 996. Short title. This article shall be known and may be cited as the "cooperative and condominium ombudsman act".
§ 996-a. Legislative declaration. The legislature finds and determines as follows:
Cooperative and condominium housing constitutes a significant portion of New York state's residential housing stock. It is and has been the
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD02535-01-9
S. 2604 2
public policy of this state to encourage such forms of home ownership. A wide variety of laws have been enacted to provide fairness in the conversion of rental properties to cooperative and condominium ownership and in the regulation and taxation of cooperatives and condominiums. State and local laws and regulations are also designed to ensure that the residents of such housing are provided with safe and habitable accommodations.
Inevitably, disputes have arisen among cooperative and condominium sponsors and developers, cooperative shareholders and condominium unit owners, prospective shareholders and unit owners, boards of directors and boards of managers. Such disputes often result in lengthy and costly litigation and uncertainty as to the rights of the parties pending the outcome of litigation. Such litigation diverts resources that could be better utilized to provide affordable and well-maintained buildings and grounds for the common good of the owners.
This article is necessary to provide a neutral, informative and accessible resource available to all parties involved in residential cooperative and condominium ownership and governance. The ombudsman appointed pursuant to this article will conduct outreach programs to educate unit owners and board members as to their legal rights and responsibilities. The ombudsman will encourage alternative dispute resolution when disputes do arise. The ombudsman will be available to provide dispute resolution services on consent of the parties. The ombudsman will also provide monitoring and supervision of cooperative and condominium elections.
§ 996-b. Definitions. 1. "Cooperative" means a corporation organized and operating pursuant to the general business law or the cooperative corporations law for the primary purpose of providing residential housing to its shareholders.
2. "Condominium" means a homeowners association or any association organized and operating pursuant to article nine-B of the real property law for the primary purpose of providing residential housing to its unit owners.
3. "Office" means the office of the cooperative and condominium ombudsman created by this article.
4. "Ombudsman" means the chief administrative officer of the office of the cooperative and condominium ombudsman.
5. "State agency" means any department, board, bureau, commission, division, office, council or agency of the state, or a public benefit corporation or authority authorized by the laws of the state.
6. "Local agency" means any department, board, bureau, commission, division, office, council, officer or agency of a city, town or village.
§ 996-c. Office of the cooperative and condominium ombudsman. 1. The office of the cooperative and condominium ombudsman is hereby created within the department of law to have and exercise the functions, powers and duties provided by the provisions of this article and any other provision of law. The attorney general shall be responsible for oversight of the office.
2. The head of the office shall be the cooperative and condominium ombudsman who shall be appointed by the attorney general. The ombudsman shall hold office until the end of the term of the attorney general by whom he or she was appointed and until his or her successor is appointed and has qualified. The ombudsman may be removed by the attorney general for cause, after being given an opportunity to be heard. A vacancy shall be filled in the same manner as the original appointment.
S. 2604 3
3. The ombudsman shall receive an annual salary to be fixed by the attorney general within the amount made available therefor by an appropriation and shall be allowed his or her actual and necessary expenses in the performance of his or her duties. The ombudsman's salary shall be no less than the salaries of certain state officers holding the positions indicated in paragraph (a) of subdivision one of section one hundred sixty-nine of this chapter.
4. The ombudsman shall be an attorney with extensive experience in real estate, cooperative and condominium law and in conflict and alternative dispute resolution.
5. The ombudsman shall direct the work of the office and shall be the chief executive officer of the office. The ombudsman may appoint such officers and employees as he or she may deem necessary, prescribe their powers and duties, fix their compensation and provide for the reimbursement of their expenses, all within amounts made available therefor by appropriation. Such officers and employees shall include attorneys and other professionals with extensive experience in real estate, cooperative and condominium law and in conflict and alternative dispute resolution.
6. The ombudsman and officers and employees of the office shall adhere to a code of ethics in order to inspire public confidence and trust in the fairness and impartiality of the office. The ombudsman shall prescribe such code of ethics. Such code shall require that the ombudsman and officers and employees of the office respect and comply with the law; that they not use or attempt to use their positions to secure privileges or exemptions for themselves or others; that they not solicit, accept or agree to accept any gifts or gratuities from persons having or likely to have any official transaction with the office; that they not request or accept any payment in addition to their regular compensation for assistance given as part of their official duties; and that they shall not perform any function in a manner that improperly favors any person or party.
7. The ombudsman and officers and employees of the office shall not serve as officers or employees of a political party or a club or organization related to a political party, receive remuneration for activities on behalf of any candidate for public office or party position or engage in soliciting votes or other activities on behalf of a candidate for public office or party position.
8. The secretary to the governor shall assure that all state agencies provide the ombudsman with assistance in advancing the purposes of the office and to assure that the activities of the office are fully coordinated with the activities of state agencies providing related services.
§ 996-d. Functions, powers and duties of the office. The office shall have the following functions, powers and duties:
1. To educate and inform shareholders of cooperatives and unit owners of condominiums, their boards of directors and boards of managers, property managers, professionals working with and for such boards and other interested parties of their legal rights and responsibilities under the federal, state and local laws and regulations applicable to cooperative and condominium housing in the state of New York and under the cooperative and condominium documents governing the respective properties.
2. To coordinate and assist in the preparation and publication of educational and reference materials about residential cooperatives and condominiums, to make such resources known and available to the widest possible audience.
S. 2604 4
3. To organize and conduct meetings, workshops, conferences, public hearings and forums and to utilize all forms of communications media to disseminate accurate and timely information of interest to persons residing in, owning and managing cooperative and condominium housing.
4. To provide meetings, mediation, arbitration and other forms of alternative dispute resolution services to cooperative and condominium sponsors and developers, cooperative shareholders, condominium owners, their boards of directors and managers, prospective shareholders and unit owners and other parties so as to avoid costly and lengthy litigation and reduce expenses for those involved in disputes.
5. To subpoena and enforce the attendance of witnesses, administer oaths or affirmations and examine witnesses under oath and require the production of any books and papers deemed relevant or material to the resolution of any dispute pending before the office.
6. To engage with the housing courts, other trial courts, state and local agencies and with alternative dispute resolution programs maintained by the office of court administration in order to provide specialized expertise in the resolution of cooperative and condominium disputes as an alternative to litigation.
7. To offer procedures, monitors and vote counting services to assure fair elections for members of cooperative boards of directors and condominium boards of managers. Fifteen percent of the total voting interests in a cooperative or condominium or shareholders or owners of six residential units, whichever is greater, may petition the office to attend and conduct an election of directors or managers. All costs associated with the election monitoring process shall be paid by the cooperative or condominium.
8. To refer any complaint received to the appropriate law enforcement agency for prosecution, if deemed appropriate by the office.
9. To perform any other functions that are necessary or appropriate to fulfill the duties and responsibilities of the office.
§ 996-e. Principal office and satellite offices. The office shall maintain its principal office in the city of New York and shall have satellite offices in other locations within the state of New York where there are significant concentrations of cooperative or condominium housing.
§ 996-f. Assistance of other state agencies. To effectuate the purposes of this article, the ombudsman may request and shall be entitled to receive from any state agency, and the same are authorized to provide, such assistance, services, facilities, and data as will enable the office to carry out its functions, powers and duties, and such temporarily or permanently assigned personnel as the director of the budget may approve.
§ 996-g. Reports to the governor, attorney general and the legislature. The office shall make an annual report, to be received on or before January first, to the governor, attorney general and the legislature concerning the activities undertaken by the office, recommendations for legislative proposals, data concerning program activities and other pertinent information as may be required.
§ 996-h. Contract authority. The office is hereby empowered to enter into any agreement or contract with any state or local agency necessary or convenient to carry out the provisions of this article.
§ 996-i. Separability. If any clause, sentence, paragraph, section or part of this article shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder thereof, but shall be confined in its operation to
S. 2604 5
the clause, sentence, paragraph, section or part thereof directly involved in the controversy in which such judgment shall have been rendered.
§ 2. The tax law is amended by adding a new section 186-h to read as follows:
§ 186-h. Residential unit fee. A cooperative housing corporation or a homeowners association, as such terms are defined in section two hundred ten of this chapter, shall pay an annual fee of six dollars per year for each residential unit located in a building or buildings owned or operated by such corporation or association. Such fee shall be payable to the department. All revenue from the fee imposed pursuant to this section shall be paid by the department to the state comptroller to be deposited to and credited to the office of the cooperative and condominium ombudsman fund, established pursuant to section eighty-one-a of the state finance law.
§ 3. The state finance law is amended by adding a new section 81-a to read as follows:
§ 81-a. Office of the cooperative and condominium ombudsman fund. 1. There is hereby established in the custody of the state comptroller a special fund to be known as the "office of the cooperative and condominium ombudsman fund".
2. The office of the cooperative and condominium ombudsman fund shall consist of monies appropriated thereto, funds transferred from any other fund or sources, and monies deposited therein pursuant to section one hundred eighty-six-h of the tax law.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the executive law, in relation to creating the office of the cooperative and condominium ombudsman; to amend the tax law, in relation to authorizing the residential unit fee; and to amend the state finance law, in relation to establishing the office of the cooperative and condominium ombudsman fund
Purpose
The bill creates the Office of the Cooperative and Condominium Ombudsman within the Department of Law to serve as a neutral, informative, and accessible resource available to cooperative and condominium residents, prospective shareholders and unit owners, boards of directors and manag- ers, and other affected parties.
Summary of provisions
Section 1 of the bill would add a new article 49-C to the Executive Law to create the Office of the Cooperative and Condominium Ombudsman within the Department of Law. The Office would be headed by an Ombudsman who is appointed for a fixed term by the Attorney General. The Attorney Gener- al would be responsible for the oversight of the Office. The Ombudsman may be removed by the Attorney General for cause, after being given an opportunity to be heard. The Office would work to educate shareholders of cooperatives and owners of condominiums, their boards of directors and boards of managers, professionals working with and for such boards, property managers, and other interested parties about their legal rights and responsibilities under federal, state and local laws and regu- lations. Other responsibilities of the office would include: to prepare educational and reference materials, to organize and conduct meetings and public hearings, to provide mediation and other forms of alternative dispute resolution, to offer monitors and vote counting services to assure fair elections for board membership, and to provide advice to the Governor and Legislature regarding new and existing legislation which affects cooperative shareholders or condominium owners. The Ombudsman would have the power to subpoena and enforce the attendance of witnesses, administer oaths or affirmations and examine witnesses under oath, and require the production of any books and papers deemed relevant to any dispute rending before the office. The Secretary to the Governor is to ensure that all state agencies provide the Ombudsman with assist- ance in advancing the purposes of the Office, and to assure that the activities of the Office are fully coordinated with the activities of state agencies providing related services.
Read the full memo (1,415 words)
Section 2 of the bill would add new section 186-g to the Tax Law to create a new residential unit fee. Each cooperative corporation and condominium owners association would be required to pay an annual fee of six dollars per year for each residential unit located in a building or buildings owned or operated by such corporation or association. The fee would be paid to the Department of Taxation and Finance. All revenue collected by the Department of Taxation and Finance would be paid to the State comptroller to be deposited into the Office of the Cooperative and Condominium ombudsman Fund.
Section 3 of the bill would add a new section 81 to the State Finance Law to establish a new Fund in the custody of the State comptroller to be known as the "Office of the cooperative and Condominium Ombudsman Fund. All monies in this fund would be kept separate and apart from other monies in the custody of the State comptroller. The Fund would be allocated and spent by the Department of Law solely for the staffing and administration of the Office of the cooperative and Condominium Ombuds- man.
Section 4 of the bill provides for the effective date.
Justification
The rights of condominium owners and cooperative shareholders are derived from a complex series of laws, regulations, and individual building by-laws and other corporate documents. Offerings of condomin- iums and cooperatives are regulated by the Attorney General under the General Business Law, a statute designed to protect potential buyers from fraud through detailed disclosure requirements. Once cooperative and condominium plans are declared effective, condominiums fall under the New York State Condominium Act and cooperatives fall under the state's Business Corporation Law - the same statute which regulates all the state's corporations. Although both of these statutes grant owners and shareholders some rights, their primary objective is to require that cooperatives and condominiums simply address certain issues in their operating documents: for cooperatives, the proprietary lease, house rules, certificate of incorporation and by- laws for condominiums; the unit deed or declaration, house rules and by-laws of the condominium association.
These multiple laws and regulations governing the rights of cooperative and condominium residents, shareholders, unit owners, association members, and boards of directors are frequently difficult to navigate and comprehend. This is particularly true in the case of cooperative buildings since they are governed by New York State Business Corporation Law which was not designed to regulate residential real estate. Cooper- ative shareholders are often unaware that they do not own real property, and are considered tenants of the corporation that owns the building where they live.
The boards of directors in cooperatives, and boards of managers in condominiums, have a great deal of discretion over most issues involved in the daily management and operation of their buildings. While many cooperative and condominium boards act in the best interest of their buildings, are financially prudent, and are responsive to the needs of shareholders and unit owners, significant problems arise for residents when this is not the case. Many difficulties also emerge when boards of directors and managers are unable or unwilling to remedy disputes between residents which often leads to the diminution of quality of life in the building and significant tension between neighbors. Disputes regarding transparency, finances, board elections, management decisions, rules and regulations, construction, and other issues between individual residents, as well as between residents and their boards, are all too common.
Because there is no government agency or other entity which oversees the operation of cooperatives and condominiums, shareholders and unit owners are left with only two options when serious problems develop: to organ- ize other residents to change the board of directors or managers, or to initiate legal action against the board or another shareholder or unit owner.
Understandably, neither of these options is easy or appealing for most residents. Changing the membership of the boards of directors or manag- ers often takes an extended period of time, and is difficult or even impossible in buildings where the original building sponsor or other party controls the majority of votes. As a result, problems in cooper- ative and condominium buildings all too frequently result in lengthy, expensive, and acrimonious litigation which harms all parties involved. Such litigation diverts resources which could be better utilized to provide well maintained buildings and grounds for the common good of the residents. Litigation between neighbors frequently detracts from the quality of life in buildings, harms the sense of community, and ulti- mately results in greater expenses for everyone since boards have to pass the costs of legal fees along to all residents. In cases where shareholders and unit owners do not have the economic resources needed to pursue litigation, problems frequently remain unresolved for years.
Several other states, such as Florida, Nevada, Texas, and New Jersey created condominium Ombudsman Offices to address similar challenges in their states. The Ombudsman Offices in these states provide general education to condominium owners, monitor board elections, and offer alternative dispute resolution processes that provide a fair and inex- pensive means for unit owners to resolve disputes between one another or with their condominium associations. Responses to the Condominium Ombudsmen Offices in these states have been overwhelmingly positive and led both Florida and New Jersey to expand the powers of their Offices. Additional states are in the process of considering legislation to create their own condominium Ombudsman Offices.
New York State has one of the largest, if not the largest, number of cooperatives and condominiums in the nation. New York is also unique in having both cooperative and condominium housing. In parts of the state, cooperative shareholders and condominium owners substantially outnumber owners of single and two-family homes. These residents would see signif- icant benefits from the creation of a New York state Cooperative and Condominium Ombudsman Office.
Fiscal implications
None. The Office of the Ombudsman will be fully funded by the creation of the six dollar residential unit fee.
Legislative history
2017-2018: S.5839/A.11109 2015-2016: S.2832/A.1855 2013-2014: S.3152/A.34 2011-2012: S.395/A.6941 2009-2010: S.7958
Effective date
This act shall take effect on the one hundred eightieth day after it becomes law.
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