My Co-op Is Losing Revenue in the Pandemic. Do I Have to Pay?

Q: I live in a Manhattan co-op. Our building plans to levy an assessment on shareholders because it is no longer receiving rent from commercial tenants due to Covid-19. We’ve already been paying an assessment for two years for other reasons. That fee was supposed to end soon, now it might increase. Do I have a legal right to fight this?

A: Co-op shareholders pay fees like maintenance or special assessments to cover the costs of running, maintaining and upgrading the property — it’s part of the regular course of operating a building. As a shareholder, it’s your responsibility to help pay for these costs.

Your governing documents lay out the board’s power to impose these fees. So you probably don’t have grounds to fight a special assessment meant to offset the loss of income from a commercial tenant. “I haven’t seen a proprietary lease that doesn’t give the co-op the authority to give an assessment,” said Dennis H. Greenstein, a real estate lawyer and a partner in the Manhattan office of the law firm Seyfarth Shaw. Shareholders can, however, run for seats on the board when they are dissatisfied with the leadership or want a direct say in how the building is managed.

Usually, co-ops use maintenance fees to cover general operating costs and use special assessments to pay for specific one-time expenses, like a new boiler. Your board may look at the lost rental income in its commercial spaces as a short-term cost — eventually it will find new tenants. The board has two choices: raise your monthly maintenance fees permanently, or levy a one-time assessment, spread out over a period of months. It probably decided that the second option was preferable because it’s not permanent.

“Once you raise the maintenance, it very rarely gets lowered,” Mr. Greenstein said.

Under normal circumstances, having a retail tenant is a boon for a co-op. Your building has likely lost considerable revenue without its commercial renters — revenue that, over the years, helped keep your maintenance fees down. The assessment is certainly a hit for residents at a time when many people are under financial strain. But if you look at this charge as a temporary bridge to keep the co-op afloat until a new tenant can lease the commercial space, it may be easier to accept the situation for what it is.

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