Share this Article
Q. How do I (and others who are in agreement) convince our shareholder neighbors to institute a flip tax on the sale of apartments? Our building is a 90-unit, 75-year-old UWS building with an inadequate reserve fund. The board is opposed to a flip tax although our maintenance keeps rising and we have assessments every year.
A. If the board is unwilling to take up the flip tax baton you can turn directly to your neighbors, whose “super-majority” approval (usually around 2/3 to ¾ of their vote, depending on what your bylaws say) is required anyhow to adopt a flip tax or transfer fee, explains property manager Dan Wurtzel.
“Initially, it needs to be determined if the overwhelming sentiment in the building is in favor of a flip tax,” says Wurtzel.
If there is enough support, explains Wurtzel, you can either attempt to vote in a new pro-flip-tax board at the next annual meeting, or you can formally petition the existing board to call a so-called special meeting of shareholders to discuss a flip tax resolution. (Check your bylaws for instructions on how to compel the board to call a special meeting.)
The trickiest part may be mobilizing support among your neighbors.
“I find the most persuasive arguments are those which inform the unit owners how much money the proposed flip tax would have earned over the preceding 2-3 years,” and then calculate how much less residents would have been assessed if a flip tax had been in place, says real estate attorney Jeffrey Reich. “Putting it in such terms changes the focus of what a flip tax would cost a unit owner to what a flip tax could save a unit owner."
It's not easy, says real estate broker Deanna Kory.
“I have been asked three or four times to speak in front of an annual or special meeting of shareholders on this very subject,” she says, noting that one such meeting also included presentations from a real estate attorney and the building accountant, and that an appraiser might be a good idea too. “Usually people want to know if it will affect sales prices and also if it will hurt their bottom line. In most cases, it will help their prices and bottom line as assessments are not always the way to go.”
In addition, she says, other boards have asked their managing agents to poll similarly sized and staffed buildings to help assess the pros and cons of instituting a flip tax, and then share this information with residents.
Trouble at home? Get your NYC apartment-dweller questions answered by an expert! Send us your questions.