In February 2015, Adam Leitman Bailey, P.C. filed a summons and complaint on behalf of the sponsor of a large condominium development in Queens County against the board of directors comprising of the residential/cooperative portion of the condominium (these hybrid real estate developments are commonly referred to as “condops” where one of the condominium’s “units” is a cooperative housing corporation which is further subdivided into multiple residential apartments).
The complaint sought, among other things, damages for certain tax abatements that the cooperative corporation received from the New York City Department of Finance but ultimately failed and refused to reimburse to the sponsor in accordance with well established New York City laws.
Under the Senior Citizens Rent Increase Exemption (“SCRIE”) Program and the Disability Rent Increase Exemption (“DRIE”) Program, certain non-purchasing tenants in cooperative housing corporations are entitled to have their rent frozen, and as a result, the City of New York provides the owner of the subject premises with a property tax credit equal to the tenants’ future rent increases.
Here, the sponsor was clearly entitled to tax abatements as a result of being the holder of unsold apartments in the cooperative corporation whose occupants had been receiving SCRIE and DRIE benefits for many years. The corporation’s board of directors, however, failed and refused to reimburse the sponsor any such tax abatements, electing instead to keep the tax credits for the corporation.
Within months of being retained, attorneys at Adam Leitman Bailey, P.C. vigorously demanded that the board of directors immediately reimburse the sponsor all tax credits improperly retained by the corporation that should have been conveyed to the sponsor in accordance with SCRIE and DRIE.
Although the litigation that ensued between the sponsor and the cooperative board required extensive discovery practice, numerous settlement discussions, and creative lawyering, Adam Leitman Bailey, P.C. reached a favorable settlement for the sponsor whereby the cooperative corporation reimbursed the sponsor for ONE HUNDRED PERCENT (100%) of the outstanding tax credits due to sponsor in connection with SCRIE and DRIE.
Additionally, at the sponsor’s election, the reimbursement of tax abatements to the sponsor was payable via credits to sponsor’s future maintenance obligations to the corporation in lieu of a single, lump sum reimbursement payment.
Adam Leitman Bailey, John M. Desiderio and Andrew C. Jorges handled this matter.