Mitchell-Lama Drama – Part 3 – But wait, we have some Amendments!

Written By: Scott M. Smiler

04/12/22
Scott S. Smiler in front of New York City Coops

On March 18, 2022, days before most of the new Mitchell-Lama rules would go into effect, Governor Hochul signed into law Chapter 167 of the New York Laws of 2022 (Senate Bill S7830/Assembly Bill A8840), which amended some of the new rules.  The purpose of this blog is to update you on recent amendments; please see my prior two blogs summarizing the original legislation (Mitchell-Lama Drama Part 1 and Part 2).

Proxy Voting:

Section 13-c of the Private Housing Finance Law now expands the prohibition on using proxies in connection with voting for By-Law amendments.  However, the law still does not prohibit voting by proxy in its entirety.  For example, voting to amend the cooperative’s occupancy agreement or for submitting a proxy solely for purposes of counting towards quorum is still permitted.

Absentee Ballots:

Originally, a shareholder using an absentee ballot in lieu of voting in person, was to sign his/her absentee ballot, place the signed absentee ballot in an envelope, and then place that envelope in an outer envelope to be mailed to a neutral third party not running for a position on the board of directors.

Now, the same two envelope system is in place, but the absentee ballot itself is not to be signed.  Rather, the outer envelope is to be signed by the shareholder and the envelope can now either be mailed or delivered to a neutral third party not running for a position on the board of directors.

Dwelling Units for Purposes of a Vote:

The entire concept of defining the term “dwelling units” for votes dependent upon a certain percentage of dwelling units, has been deleted.

Public Meetings:

The number of public meetings which the Board of Directors must hold annually has been reduced from 6 to 4.

Voting at Board Meetings:

Originally, the Board of Directors was to file with HPD a record of all votes made in connection with a Board resolution, including a record of each director’s vote.  However, HPD has been removed from the process.  A paper copy of all resolutions is to be made available to a shareholder upon request (i.e. available in the management office), and an electronic copy must be posted on a website maintained by the Board of Directors that is accessible by all shareholders (i.e. BuildingLink).

Resolutions made in executive session can remain confidential.

Privatization: 

The amendments added many new procedural requirements for Corporations seeking to privatize which are too technical to detail in this blog.  However, if your Corporation would like to explore the possibility of leaving the Mitchell-Lama program, you should pay special attention to these new requirements.  I am happy to guide you through the process.

Non-Primary Residence:

The Board of Directors is now required to promulgate regulations to require each shareholder to use their dwelling unit as the shareholder’s primary residence in order to maintain the right to occupy the unit.  A failure to occupy the unit as a primary residence will subject the shareholder to eviction.

about the authors

Scott M. Smiler

Partner

For the past two decades, Scott's practice has focused primarily on transactional real estate matters — Cooperative and Condominium Board Representation; Buying and Selling of Properties; Commercial Leasing and Neighbor Access Agreements.

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