Update On The Reasons, Timings & Financial Reports Bills
We begin with an update on the Reasons, Timings, and Financial Reports Bills that we devoted the entirety of our December 2025 newsletter to examining. Before going into details, the bottom line is that as of this writing none of these bills have been enacted into law. However, that could change for one or all of the proposals in the coming weeks and months.
When we published our previous newsletter, the City Council hearing on December 2 promised to be a climactic event in the industry’s efforts to prevent the three bills being passed, at least in the form(s) presented. By the time of the December 2 hearing, over 500 pages of testimony had been submitted by members of the public, which testimony was overwhelmingly opposed to the three proposals. The hearing itself lasted the entire day and nearly sixty people testified, again overwhelmingly in opposition to the proposals. Two of our attorneys attended the hearing in person, and David Fitzhenry was among those who gave testimony.
Following the hearing, and as the result of internal discussions and negotiations that are beyond the scope of this newsletter, the Reasons and Financial Reports Bills were not advanced, and the Timings Bill was significantly revised before being passed by the City Council and sent to Mayor Adams for signature.
The revised Timings Bill seemed to have cured most if not all of the procedural concerns that had been raised at the City Council hearing. Most significantly, the previous language that provided that a board would be “deemed to [have] consent[ed]” to a purchase application upon failing to meet the 45-day determination period was stricken, and instead, the New York City Department of Housing Preservation and Development (HPD) was empowered to issue an escalating series of civil penalties against noncomplying co-ops (“$1,000 for a first violation, $1,500 for a second violation, and $2,000 for a third or subsequent violation”).
We would go into more depth, but somewhat surprisingly, in one of his final acts as Mayor, Eric Adams vetoed the Timings Bill (along with 18 other pieces of legislation, some of which will be discussed below), meaning that as of now, there is no law to review.
The City Council can override a mayoral veto with a two-thirds supermajority vote within thirty days of its next meeting, scheduled to be in early January, but it remains to be seen whether the Timings Bill veto will be overridden. It is also unclear whether the Reasons or Financial Reports Bills will be revived by the new Council, or in what form. We also remind the reader that whatever happens at the City Council, there are also equivalent proposals pending at the State legislature. Stayed tuned.
Other Real Estate-Related Bills Vetoed By Mayor Adams
Of the 19 vetoes issued on New Years’ Eve, many had been anticipated. Of particular relevance to the real estate industry, Mayor Adams vetoed the Community Opportunity to Purchase Act (COPA), which would have granted qualifying community-based organizations a right of first refusal or right of first offer, depending on circumstances, to purchase covered residential buildings ahead of private buyers. The bill would have created a brand new regulatory framework governing the sales process, and likely innumerable questions (and litigations) as to what constitutes a “qualified” organization or “covered” building, when the right to purchase would accrue, and so on.
Mayor Adams also vetoed Intro 1391, which, among other things, would have directed the Department of Consumer and Worker Protection to establish and enforce new minimum wage, benefit, and training standards for all security guards in New York City. This new legislation would have taken a significant step beyond what is required by the State’s prevailing wage legislation for building service employees enacted in 2021, but for now, we await the City Council’s response.
New York City Existing Building Code
Despite only being delivered to him on December 18, 2025, Mayor Adams did not veto Intro 1321-2025, which formally established a new, long-awaited Existing Building Code (EBC), which legislation was the result of extensive work with regulators and stakeholders to adapt the model 2021 International Existing Building Code for use in New York City. While the technical details of a 269-page brand new building code are beyond the scope of our work here, it is worth reviewing what the Department of Buildings itself has characterized as the major changes introduced by the EBC in a press release heralding its passage:
- Officially repeal the 1968 Building Code and replace it with a modern framework tailored to existing buildings.
- Streamline regulations related to changing occupancy.
- Include clear and consistent tenant and occupant protection plan requirements.
- Replace project cost thresholds with work area size to determine applicability of certain Code provisions.
- Simplify the path for buildings to comply with the NYS Multiple Dwelling Law.
- Create a Limited Home Improvement Permit for defined scopes of work in 1- and 2-family dwellings.
- Introduce limited alteration application (LAA) permits for additional types of work, including window replacements and re-roofing.
- Improve fire safety requirements for existing egress stairways when alterations are made.
- Clarify and standardize automatic sprinkler system requirements.
- Provide for appropriate protection of openings on lot line air shafts.
- Advance accessibility upgrades in common areas of residential buildings when qualifying alterations are made.
- Introduce targeted structural condition assessments and architectural investigations of buildings planning larger alterations.
- Facilitate energy conservation upgrades when alterations are made.
According to the DOB, the EBC will go into effect in 2027.
Final Revisions To New Rules Governing Access To Adjoining Properties
We have previously discussed amendments to Section 881 of the Real Property Actions & Proceedings Law (RPAPL) governing access to neighboring properties, most recently in our September 2025 newsletter. After a long wait, Governor Hochul has signed the legislation, but not without making some changes to the final bill.
The reason practitioners had been looking forward to Section 881 reforms is because the prior rules equipped property owners needing access to neighboring properties in order to perform construction work with very little leverage or predictability, as the prior law simply provided that courts could grant temporary access on such terms “as justice requires.”
The new amendments flesh out the parameters of what court-ordered licenses should look like and also sets specific requirements for when court intervention can be sought – namely, when the adjoining property owner denies access in response to a notice requesting access (or fails to respond within sixty days to two of more written notices – a change made to the final version of the bill), which notices must include, among other things, any relevant documents needed for the adjoining property owner to evaluate the request (such as site safety plans, construction documents, and insurance documents) and the estimated duration of the planned work.
In addition to the new “multiple notice” requirement, the final bill completely omits what had been considered the major “stick” granted to licensees in the version passed by the legislature, namely the power of the court to “award reasonable attorneys’ fees to either party upon a finding that the other party acted in bad faith or engaged in willful misconduct in seeking, denying, or conditioning its approval of the rights of entry that are the subject of the proceeding.” The final bill does, however, preserve the licensee’s obligation to reimburse the licensor’s “reasonable fees” (without specifying whether those include attorneys’ fees or other professional fees) for the “review of relevant documents” (but not, say, for the enforcement of the terms of any license).
The final bill also now requires licensees to reimburse licensors for “loss of use and enjoyment of the adjoining premises including diminution in value.” This new provision may have been added in response to concerns raised by the new law authorizing permanent (not just temporary, as under the previous law) encroachments such as the installation of underpinning on the licensor’s property or the relocation of chimneys and vents, which permanent encroachments could be seen as an unconstitutional taking without reasonable compensation.
Governor Hochul’s approval memorandum also indicates that a chapter amendment will be passed revising the requirement that the licensor (and any of licensor’s tenants) be added as an “additional insured” to the licensee’s insurance to instead provide that the licensee will instead merely provide “the necessary documents to make a third-party claim on the license holder's insurance."
Retainage Limits Clarified
In our January 2024 legislative roundup, we wrote about New York’s Prompt Payment Act (General Business Law Section 756-c), which among other things limited the amount of retainage in construction contracts to a maximum of 5% of the contract sum. We explained at the time that this was a significant departure from past practice, at least in the co-op and condo industry, where 10% retainage for construction contracts was the norm. We also identified a potential loophole in the legislation, in that “separate provisions of the General Business Law reserve the right to contract around the default [5%] provisions set forth in the law. At this early stage, it is not clear whether Section 756-a actually prohibits an agreed-upon higher retainage percentage.”
The State has now closed that loophole by amending that “separate provision” (namely, GBL § 757) to eliminate the possibility of contracting around the 5% retainage limit. Section 757 now expressly states that any construction contract that exceeds 5% retainage is void. Suffice it to say, it is imperative that co-op and condo boards comply with this restriction, because a construction contract found to be void and unenforceable could have disastrous unintended consequences.
Mortgage Payoff Letter Reform
On December 12, 2025, Governor Hochul signed Assembly Bill A2739, which amends Sections 275 and 1921 of the Real Property Law to require mortgage lenders to apply and accept borrower payments made in reliance on lender-issued payoff letters, no matter the amount of the payment: “[T]he mortgagee must accept and may not return or destroy any payment received in reliance on a payoff statement and must promptly apply such payment to the unpaid principal, interest or any other amounts due under the mortgage.”
This legislation is intended to end the practice of some loan servicers of returning or destroying payment checks for not exactly matching the amount specified in payoff letters (whether due to intervening processing fees, transcription errors, or otherwise), which practice can be, at the very least, disruptive and inefficient, and at worst, could cause mortgage borrowers to lose substantive rights if the problem is not identified and corrected in time.
NY LLC Transparency Act
In previous newsletters, we have discussed New York State’s LLC Transparency Act (the “LLCTA”), which had been intended to act as a local counterpart to the late, unlamented federal Corporate Transparency Act (the “CTA”), but which now stands on its own. As originally drafted, the LLCTA would have established a searchable public database of beneficial ownership information of limited liability companies, but that aspect was withdrawn during the legislative process. Then the implementation date was delayed until January 1, 2026, and once the CTA was effectively withdrawn last year, New York State legislators decided that the LLCTA’s disclosure requirements needed to be revised and decoupled from the CTA, and passed a corrective bill this summer. However, Governor Hochul vetoed the new legislation last month.
The upshot is that the LLCTA now only requires limited liability companies formed outside of the United States and registered to do business in New York to file reports. New York LLCs, and other domestic LLCs will not be required to file beneficial ownership reports.
New Gas Pipe Inspection Rules
Local Law 152 of 2016 was enacted in response to a series of fatal gas explosions, including an explosion in the East Village in 2015 that was attributed to illegal gas work, and established a comprehensive gas piping inspection program administered by the DOB. In the five years since these inspections started being required, policymakers have tweaked the program periodically, and Local Law 142 includes the next iteration of those revisions.
Once the new requirements come into effect next year, gas piping inspections will be required to be conducted by either a licensed master plumber or a “licensed journeyman plumber working under the direct supervision” of a licensed master plumber. Previously, the law required only that the inspections be conducted, if not by a licensed master plumber, then merely by “an individual” under the direct and continued supervision of a licensed master plumber. In addition, the new law amends the scope of inspections to include the point of connection with gas appliances. Further, Local Law 142 changes the definition of ordinary plumbing work to include the replacement of certain gas appliances, resolve certain ambiguities in the existing law, and attempt to align requirements to current plumbing practices.
New “Cooling Season” Rules
As we reported in last year’s legislative overview, New York City legislators have proposed establishing a “cooling season” that would correspond with the current “heating season,” the latter being the period from October to May in which residential landlords are required to maintain indoor temperatures of at least 68 degrees from 6 a.m. to 10 p.m. when it is colder than 55 degrees outside, and at least 62 degrees overnight, regardless of outdoor temperature.
On December 18, 2025, the City Council passed Intro 0994-2024, which, among other things, establishes a “cooling season” during the period from June 15 to September 15, in which residential landlords (including co-op and condo boards) would be required to maintain a maximum indoor temperature of 78°F when the outdoor air temperature is 82°F or higher, and owners without central cooling would have to install cooling systems within residential units.
Although this legislation expressly identifies co-ops (and condos) as being covered by the cooling requirements, it contains two notice provisions that may at least be complicated for co-ops. The legislation requires that beginning on March 1, 2028, “any lease or renewal lease offered to a tenant or prospective tenant” shall (i) specify the party responsible for paying the electricity costs of operating any cooling system” and (ii) include a statutory notice informing tenants, among other things, that “effective June 1, 2030, owners of covered dwelling units are required to provide certain tenants with cooling systems capable of providing adequate cooling to covered rooms,” and the consequences of that election. As we have frequently explained previously (and as further discussed below), a mandate to revise or add to lease language is simple enough for the owner of a rental building, but difficult if not impossible for co-ops to do, because their proprietary leases are standard forms that may only be amended by a supermajority vote of the tenant-shareholders. The usual way to deal with a notice requirement like this is to incorporate it into the building’s house rules, which are incorporated into the proprietary lease by reference, but it would be preferable if policymakers more clearly acknowledged this issue.
Large Scale Trash Containerization Program
The City Council passed Intro 1123-2024 authorizing a program to be administered by the Department of Sanitation (DSNY) whereby all buildings with 10 or more units (with no exception provided for co-ops or condos) will be required to begin putting all of their trash in large curbside containers by no later than June 1, 2032. As part of this legislation, DSNY is also authorized to charge buildings an annual fee of up to $55 per unit that use stationary, on-street containers, or SOSCs, which are large permanent installations rather than portable wheeled bins (although smaller bins may still be used by smaller buildings with 10-30 units).
Rat Inspections & Enforcement
On December 4, 2025, the City Council passed Intro 1217-2025, which attempts to address the scourge of rat infestations in New York City real estate by requiring the New York City Department of Health and Mental Hygiene (DOH) to perform a building inspection in response to any 311 complaints relating to rats, mice, pests, or conditions which might attract them, within fourteen days of such complaint being made. Public comment on the proposed legislation resulted in one change to the bill, which is that if DOH attempts an inspection within the 14-day period and are unable to gain access, they have an additional 20 days to attempt a second inspection. Note also that DOH will then be required to make the results of any such inspection publicly available, including whether the property passed the inspection, and if not, the number of notices of violation or orders to abate issued.
FDNY Proposed Rules On UL Batteries
Following a spate of New York City legislation in 2023 to address the growing scourge of building fires caused by unsafe and uncertified e-batteries (including Local Law 39, which prohibits the sale of uncertified e-batteries in powered bicycles, powered mobility devices, and storage batteries), the FDNY has proposed new rules specifying requirements for the treatment and disposition of uncertified e-batteries in powered mobility devices. The new rules would effectively outlaw e-batteries that are not certified in accordance with industry standards (namely batteries certified by Underwriters Laboratories, aka “UL-certified” batteries).
The FDNY issued preliminary rules for comment earlier this year, and scheduled a public hearing for October 1, 2025. Comments on those regulations pointed out that due to a quirk in the administrative code, the new rules arguably would not apply to batteries in e-bicycles, which, if true, would represent a major unintended loophole that presumably will be corrected in the final rules. As of the date of writing, however, the new regulations have not been finalized, though every indication is that final rules will be issued in due course.
Radiator Inspections In Rental Buildings
Local Law 151 was enacted in November 2025 to require covered building owners to conduct biennial inspections of steam radiators located in apartments where a child under 6 resides, as well as in the common areas of such buildings. Radiators found to have any defects hazardous to life and safety must be removed from service within 24 hours of the inspection and repaired or replaced withing seven days thereafter. However, this is a law that specifically excludes co-ops and condos from its requirements. We have nevertheless included the new legislation here if only for its implicit recognition that radiators in co-op apartments and condo units should generally be considered the responsibility of the shareholder or condo unit owner, and not the co-op corporation or condominium, as the case may be.
Other Proposed Legislation Affecting Co-ops & Condos
In addition to all of the laws and rules discussed above, we have been monitoring a number of proposals that have not yet been (and may never be) enacted.
Co-op Carve-Out Bill. Senate Bill S1745/A1701, known as the co-op “Carve-Out” bill, is in committee in Albany. We have not previously discussed this legislative proposal in this newsletter, but it has been the topic of significant discussion and debate among the co-op bar over the last year. The basic premise of the legislation, that the contractual relationship between a co-op and its tenant-shareholders is fundamentally different from the “typical” landlord-tenant relationship, is close to being universally accepted by practitioners. It has also become somewhat common to see new legislation that fails to appropriately distinguish between co-ops and “typical” rental buildings (such as with respect to the “cooling season” notices discussed above), which can very often create unnecessary complications and unintended consequences for co-op boards.
The Carve-Out bill would address these problems by creating a default rule automatically “carving out” co-ops from any legislation governing landlords and tenants unless such legislation “specifically provides” that it is intended to apply to co-ops. The Carve-Out bill has broad support among the co-op bar, though questions have been raised as to whether the bill’s categorical approach would not itself create new complications or its own unintended consequences. In any event, the bill has not yet advanced.
Ground Lease Tenant Protection Legislation. In our March 2024 newsletter, we discussed the Carnegie House case, in which tenant-shareholders in a ground lease co-op apartment building on 57th Street found themselves facing maintenance increases of over 600%, unless they were prepared to buy out the lease for as much as $280 million. We further noted that legislation had been introduced in Albany which would protect ground lease tenants from these sorts of difficult choices going forward.
Although that legislation did not pass in the previous session, it has been reintroduced in the current session and has passed the Senate (but not yet the Assembly). Senate Bill S2433/A2619 would limit annual rent percentage increases to 3%, no matter what the terms of the existing ground leases provide, and would also override existing lease terms to grant residents a right to renew the leases when they expire, borrow money to pay for repairs and maintenance (notwithstanding any limitations in the ground lease), and grant the co-op a purchase option, in the form of a right of first refusal should the landowner seek to sell the land.
Tax Abatements for Energy Efficiency Capital Improvements. For the first time since Local Law 97 was passed in 2019, we are not aware of any significant legislation passed by the City or the State specifically dealing with climate change in the real estate sector. Senate Bill S4077/A2047 does at least attempt to address the challenges that co-ops and condos will face (along with building owners generally) paying for all of the retrofits that will be needed to comply with Local Law 97 and other decarbonization measures, by offering a property tax abatement up to the amount of the cost of qualified capital improvements pursuant to a program that would be created and administered by a new “Energy Efficiency Board” administered by the New York State Office of Real Property Services. This proposal is currently in committee.
Pied-à-terre Tax Bill. Senate Bill S4540/A1044 seeks to establish a graduated tax on “high-end” apartments not used as a primary residence. The exact amount of tax for these so-called pied-à-terre apartments would be determined by rulemaking, but for condo and co-op apartments, would be in the range of “at least ten percent and no more than thirteen and one-half percent of the excess assessed value above three hundred thousand dollars.” A version of this bill has been introduced at every State legislative session for as long as we have been doing these legislative roundups, but as of now remains in committee.
Additional Mortgage Foreclosure Notice Requirements. Senate Bill S3077 would amend the RPAPL to require a foreclosing lender to furnish “official proof of delivery” of any required predicate notices, or if delivery was refused by the borrower, “the original envelope with notation by the postal authorities that acceptance was refused,” and create an affirmative defense to any foreclosure proceeding that the lender is unable to provide such proof. This proposal, which would effectively amend most if not all contractual notice provisions (which generally only require proof of mailing, not proof of delivery), has not made it out of committee.
Civil Penalties for Including Unenforceable Provisions in Residential Leases. Assembly Bill A1737 seeks to establish civil liability for landlords that include in their residential leases a “provision that is prohibited under state or local law, rendering that provision void or unenforceable.”
This proposal provides an illustrative example of what the “carve-out” bill (discussed above) is intended to address. Leaving aside the question of whether this sort of law would be advisable for “typical” rental buildings, it would be totally impractical and unfair to enforce such a provision against co-ops, which cannot simply change their form of proprietary lease every time there is a change in law. Take, for example, the recent decision of the Appellate Division, First Department (first discussed in our June 2025 newsletter) holding that a form of attorneys’ fees provision found in many decades-old proprietary leases is now unenforceable as against public policy. Would each of those co-ops now face civil liability for those provisions being in their existing leases? Even if the co-ops try to amend the provision but are unable to secure supermajority approval from their tenants-shareholders? However, the text of A1737 does not refer to co-ops at all, much less exclude them from the bill’s scope or provide a mechanism by which co-ops could feasibly comply.
In this particular case at least, the issue is academic because the bill remains in committee, despite having been introduced at every session at least as far back as 2009.
Coop/Condo Ombudsman Program. Senate Bill S7745 would authorize the creation of a “cooperative and condominium ombudsperson program,” by which a State program would be established to identify and support “ombudspersons,” who would be appointed to act as a “neutral, informative and accessible resource available to all parties involved in residential cooperative and condominium ownership and governance,” and would “conduct outreach programs to educate unit owners and board members as to their legal rights and responsibilities,” “provide dispute resolution services on consent of the parties,” and also “provide monitoring and supervision of cooperative and condominium elections,” all of which services would effectively supplement, counter, or even replace the services typically provided by outside general counsel. This proposal remains in committee.
Co-op Board Member Training Program. In a similar vein, NYC City Council Intro 1275-2025, if enacted, would require HPD to establish a training program for co-op board members to educate them on “local, state, and federal housing laws relevant to the duties of a co-op board member.”
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We always close these editions of the newsletter by cautioning that new legislation, by definition, has not been tested in practice or in the courts, so there are inevitably unanswered (and unanswerable) questions about how the new legislation will work, and many details and nuances have been omitted from the general summaries provided above.
