City Council Overrides Veto Of Timings Legislation
We have been following the progress of the Reasons, Timings, and Financial Reports Bills in recent newsletters. Of the three, only the Timings Bill made it out of the NYC City Council – but in one of his final acts before leaving office, Mayor Adams vetoed the bill.
As expected, however, the City Council overrode the veto, and so the Timings Bill (which will henceforth be known as “Local Law 58 of 2026”) will become effective on or about July 28, 2026. The legislation was significantly revised since we first reported on the proposal, making it less onerous and more workable for boards, but there are still firm deadlines and other requirements that need to be incorporated into the process by which boards evaluate transfer applications. Among other things:
- Although the legislation nominally applies only to “sales,” a “sale” is defined as not just an arms-length third-party purchase and sale transaction but as any “sale, assignment, transfer, exchange, gift, [or] devise” that requires the consent or other action by the co-op. This may complicate many transactions (like, say, exchanges, gifts, bequests and transfers to trusts or other entities) which don’t fit squarely in an “application → board review → decision” paradigm.
- The legislation requires that co-ops maintain “application and transfer requirements for any sale.” These requirements generally already exist for regular purchases and sales, but this new legislative probably acts as a mandate for boards to adopt formal policies for other transfers, such as trust and other entity transfers, to the extent such policies have not been adopted already.
- Co-ops must provide a written acknowledgement of receipt of application materials within fifteen days, and in that acknowledgement must state whether it considers the application to be complete, and if not complete, “each item required to make such application complete along with a citation to the application for each such items.” This means there needs to be an immediate analysis performed by management of incoming applications to identify any deficiencies.
- Once the application is complete, or if the co-op fails to provide timely acknowledgement of receipt, a 45-day decision period is triggered. By the end of the 45-day period, the co-op must notify the purchaser/transferee (or purchaser’s/transferee’s agent) by e-mail whether the transfer has been “(i) granted unconditionally, (ii) granted subject to stated conditions, or (iii) denied.”
- There are a few helpful outs here. The parties can agree in writing to extend the 45-day decision period. Even if the purchaser/transferee does not agree, the co-op can grant itself a 14-day extension by notice to the purchaser prior to the expiration of the period. In addition, any time periods are tolled, on notice, for the duration of any summer recess period (meaning any period in July and August during which the board does not ordinarily hold meetings).
- Note also that during the 45-day decision period, the co-op can ask for additional materials or clarifications. Although those requests do not themselves extend the 45-day period, if a purchaser/transferee has not provided the additional materials or clarifications by the end of the period, they risk being rejected simply on the basis of having provided incomplete information unless they agree to an extension.
- Whereas originally the penalty for failing to meet the timing deadlines would have resulted in an application being “deemed approved,” now the risk is that HPD will assess a civil penalty of $1,000 for a first violation, $1,500 for a second violation, and $2,000 for a third or subsequent violation.
Appellate Court Provides Additional Guidance For Condo Boards Involved In Garage Repair Projects
Local Law 126 requires that buildings across the City undertake parking garage repair projects, some of which can be quite expensive. For commercial and mixed-use condominiums, where a commercial unit owner owns the garage space and either operates it themselves or rents it out to a third party, allocating responsibility to pay for those repairs can become complicated and contentious.
In our February 2025 newsletter, we wrote about Board of Managers of the 900 Park Avenue Condominium v. Park Park Assoc., LLC., Sup. Ct. N.Y. Co. Index No. 655999/2021, in which the court found that there were issues of fact as to whether the garage unit owner of a condo had “failed to regularly maintain or repair the Garage Unit resulting in the severe degradation of the property,” or whether the garage repairs were a common expense that should be paid for by the association as a whole.
The Appellate Division has now affirmed the lower court’s denial of summary judgment. In doing so, the court observed that there was no ambiguity as to the unit owner’s responsibility to maintain and repair the waterproof topper in the garage unit, because the declaration specifically stated that the vertical measurement of each unit runs from “the top of the concrete floor” to the “underside of the concrete ceiling.” Nevertheless, whether the unit owner actually failed in its duty to maintain and repair that waterproof membrane to the extent that the concrete slab was damaged is an issue of fact. Moreover, there were also leaks into the garage unit from the building which may have contributed to the degradation.
The lesson is that under most condo declarations, garage unit owners may face potential liability arising out of these Local Law 126 projects for failure to properly maintain their units, but actually determining an allocation of responsibility is likely going to be a fact-intensive exercise.
Court Denies Books And Records Demand Where Board Had Already Provided Shareholders With Substantial Information About A Potential Transaction
If board members are not familiar with the seminal Pomerance v. McGrath decision, they are surely aware of its central holding and legacy over the last ten years, which is to confirm that unit owners and shareholders have very broad common law information rights to inspect the books and records of their building, in addition to what may be strictly available under their governing documents and/or BCL 624, so long as they seek them in good faith and for a proper purpose.
For board members and managing agents that had grown used to operating in relative secrecy, the liberalization of information rights requests in recent years has been a difficult experience, because where it used to be that boards could be justified in denying books and records requests, they have increasingly been told that those denials are no longer tenable.
Perhaps more surprising is that boards that have been sincerely committed to operating in transparency have also grown increasingly frustrated with books and records demands. In an age of e-mail communications and unlimited data, there is inevitably always more available than has been shared, and the very act of complying with books and records demands can be debilitatingly time-consuming and expensive. It is said that in the hands of determined unit owners and shareholders, books and records demands can become less about openness with fellow owners than about obstruction of management prerogatives.
In Autumn River, LLC et al. v. 795 Fifth Avenue Corp., Index No. 659569/2025 (Sup. Ct. N.Y. Co. Nov. 30, 2025), the court drew the line and denied a group of shareholders’ books and records demands upon a finding that the board’s substantial efforts at transparency – in an admittedly sensitive context – more than satisfied the co-op’s common law books and records obligations.
In this case, the board of the Pierre Hotel, an exclusive Fifth Avenue co-op that had apparently run into financial difficulties, was contemplating a sale of its building to various outside investors. A coalition of owners who were opposed to the sale sought to gather information about the potential buyers, the negotiations, and the terms of any sale.
In an effort to accommodate those owners, the board had provided a “thorough and clear PowerPoint presentation to explain an option that the Board [was] considering,” the non-disclosure agreement and non-binding term sheet with the potential purchasers, plus the board had offered to provide three years of board meeting minutes and all of the draft term sheets to the shareholders.
This disclosure was not seen as adequate enough for the opposition coalition, who retained Quin Emanuel and filed a lawsuit demanding production of a discovery-style list of documents and information, including copies of all agreements (and all drafts thereof) with various suitors, “all communications” regarding a potential sale of the building, all meeting minutes (and all drafts thereof) of every board and committee meeting, all “assessments or reviews” of any proposals, “an accounting of all expenses incurred . . . in connection with any negotiation,” “documents sufficient to show the financial interest of any member of the Board of Directors in any third party involved in any contemplated transaction concerning the renovation or acquisition of the Pierre,” documents regarding “potential transactions or strategic options” considered by the board, all documents discussing shareholder solicitation to support a potential sale, and many other categories of documents and information. The complete list of demands runs to two full pages in the Petition.
The court dismissed the Petition. Citing Pomerance itself, the court found that the board had already provided the petitioners with “an appropriate quantum of information needed to vet their alleged concerns without interfering with the board’s ability to properly continue to consider all alternatives for all of the shareholders of the Corporation.” Moreover, to the extent that any negotiation results in an agreement to sell of the building, the petitioners are further protected by the fact that “any sale of the Pierre which would result in a termination of the proprietary leases would require appropriate disclosure and shareholder approval.” Accordingly, the court concluded that the Petition was “moot” in light of the “cost appropriate inspection” offered in response to petitioners’ demands.
