There is no New York court decision of which I am aware that has yet directly decided whether a condo-imposed flip tax is an unreasonable restraint. And at least in theory, if a restraint is challenged as unreasonable by one particular unit-owner, then it should not matter that a supermajority of others has voted for and accepted the restraint. "Alienation" in this context means "a conveyance of property to another," whether by sale or other method.Ĭondos, unlike co-ops, have a legal prohibition on unreasonable restraints on alienation. A second law, RPL, Section 339-u, provides for "modification of or amendment to bylaws," which is usually done via a supermajority vote of unit-owners (i.e., 2/3 or 3/5, rather than a simple majority).
Thus, real-property law rather than personal-property law applies.Ī condo contemplating the adoption of a flip tax should first consider New York State Real Property, Law Section 339-v, which provides that a condo's "bylaws may…provide for…rovisions governing the alienation, conveyance, sale, leasing, purchase, ownership or occupancy of units…" On its face, this seems to allow imposition of a condo flip tax. Unlike co-ops, in which buyers are actually only purchasing shares in a corporation that owns the building, condo units are deemed by law to be real property. Can condos also impose these fees? Assuming the offering plan or other governing documents do not confer authority for the condo to do so, then the question arises as to whether the governing documents can be amended to impose a transfer fee.
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