Computation of the initial capital reserve fund for a condominium conversion and credits for qualifying capital replacements
This is a case which was subject to two major prior summary judgment decisions and an appeal, which left issues of fact remaining for trial. DL Partners developed a successful strategy to have the case submitted for trial on carefully negotiated stipulated facts. In a twenty-one page decision, the trial court determined that the cooperative conversion sponsor properly funded the reserve fund pursuant to Local Law 70 of 1982. The trial court completely rejected claims which had been aggressively pursued by the Cooperative Board that a sale to “insider” at the “outsider” price where the tenant had failed to purchase during the exclusive period and subsequently agreed to buy at the outside price forced the Sponsor to fund the reserve fund based upon “outsider” rather than the “insider” prices.: The Court also agreed with the analysis by DL Partners that the existence of miscellaneous minor building department violations on systems which were completely replaced did not bar Sponsor from receiving credits for the cost of system replacement, less a credit for the de minimus cost of curing the violations. The issues determined in this decision are significant for cooperative conversion sponsors and had not previously been directly addressed by any Court.
Board of Managers of 184 Thompson Street Condominium v 184 Thompson Street Owner LLC, Sup. Ct., February 27, 2020, New York County, Cohen, J., 103991/2011