New York Amends Its Mitchell-Lama Law

January 10, 2022 Advisory

The Governor of New York has recently signed into law changes to the Private Housing Finance Law that will affect the governance of Mitchell-Lama cooperatives significantly. The following (which affect Mitchell-Lama cooperatives only) is a summary of those changes:

  1. All voting will now be conducted using secret ballots, which must be cast in person or by an absentee ballot (see below).
  2. An absentee ballot may be requested by a shareholder. The absentee ballot must be hand delivered or mailed only to the primary residence of the shareholder.
  3. The absentee ballot shall be sealed within two envelopes, which must contain the signature of the shareholder and mailed to a neutral third party.
  4. Proxy voting is now prohibited in any election or, during the reconstitution (“going private”) process, for the authorization of a feasibility study or preparation of an offering plan.
  5. In-person ballots must “produce a paper record which may be audited in the case of a contested election result.”
  6. Under the policies of some Mitchell-Lama cooperatives, candidates for election to the board of directors may not run if they are in arrears. The new law specifies that if such a requirement exists, it may not be applied unless at the time of nomination the person owes “bona fide” arrears totaling more than two months of the person’s maintenance.
  7. The board of directors must hold at least six meetings each year, open to all shareholders and residents. However, the board may hold closed executive sessions to discuss confidential personnel issues, legal advice or confidential matters affecting shareholders or residents, or contract negotiations.
  8. A record of every board vote on every resolution must be filed with the supervisory agency, including how each director voted. Such record will be a public record.
  9. Notice must be given to all shareholders (and made available to all) of every communication to and from the supervisory agency regarding regulations (or changes thereof), taxation, finances or reconstitution.
  10. Cooperatives must investigate any substantive allegation that a tenant is not using the unit as their primary residence.
  11. Cooperatives may not interfere with the right of shareholders to form or join any organization created to protect the rights of shareholders. The board shall not deny the use of a community room to such group, nor charge them a fee for such use.

In the event a Mitchell-Lama is considering “going private” (i.e., a reconstitution), there are new, additional rules that must be followed.

  1. As noted above, no proxy voting will be permitted at any stage of reconstitution.
  2. All shareholder voting at any stage of reconstitution now requires approval of at least 80% of all dwelling units (whether occupied or not).
  3. No funds from the operating budget may be used in connection with reconstitution.
  4. If a vote at any stage of reconstitution fails, the cooperative must wait five years before holding any other vote in regard to a possible reconstitution.
  5. Finally, no steps in regard to reconstitution may be taken during the COVID state of emergency declared by the Governor.

These changes raise a number of issues. For example, requiring “secret” ballots may be interpreted by some as ballots without signatures or any designation of the dwelling unit. Yet, without such information, an audit (also required) would be impossible. Further, must the cooperative wait for an actual request for an absentee ballot, or may it send out absentee ballots to all shareholders (as proxies were sent out in the past)?

All of the provisions of the new law become effective on March 23, 2022, other than the moratorium of reconstitutions during COVID (#5 above), which is effective immediately.

We will communicate further as these and other issues are reviewed and analyzed by the supervisory agencies and the legal community.

Contact Us
  • Worldwide
  • Boston, MA
  • Denver, CO
  • Dublin, Ireland
  • Edwardsville, IL
  • Jefferson City, MO
  • Kansas City, MO
  • Las Vegas, NV
  • London, England
  • Miami, FL
  • New York, NY
  • Philadelphia, PA
  • Princeton, NJ
  • Salt Lake City, UT
  • St. Louis, MO
  • Washington, D.C.
  • Wilmington, DE
Worldwide
abstract image of world map
Boston, MA
800 Boylston St.
30th Floor
Boston, MA 02199
Google Maps
Boston, Massachusetts
Denver, CO
4643 S. Ulster St.
Suite 800
Denver, CO 80237
Google Maps
Denver, Colorado
Dublin, Ireland
Fitzwilliam Hall, Fitzwilliam Place
Dublin 2, Ireland
Google Maps
Edwardsville, IL
115 N. Second St.
Edwardsville, IL 62025
Google Maps
Edwardsville, Illinois
Jefferson City, MO
101 E. High St.
First Floor
Jefferson City, MO 65101
Google Maps
Jefferson City, Missouri
Kansas City, MO
2345 Grand Blvd.
Suite 1500
Kansas City, MO 64108
Google Maps
Kansas City, Missouri
Las Vegas, NV
1980 Festival Plaza Drive, Suite 750
One Summerlin
Las Vegas, NV 89135
Google Maps
Las Vegas, Nevada
London, England
Royal College of Surgeons of England
38-43 Lincoln’s Inn Fields
London, WC2A 3PE
Google Maps
Miami, FL
355 Alhambra Circle
Suite 1250
Coral Gables, FL 33134
Google Maps
Photo of Miami, Florida
New York, NY
7 Times Square, 44th Floor
New York, NY 10036
Google Maps
New York City skyline
Philadelphia, PA
2005 Market Street
29th Floor, One Commerce Square
Philadelphia, PA 19103
Google Maps
Philadelphia, Pennsylvania
Princeton, NJ
100 Overlook Center
Second Floor
Princeton, NJ 08540
Google Maps
Princeton, New Jersey
Salt Lake City, UT
201 South Main Street
Suite 750
Salt Lake City, UT 84111
Google Maps
Salt Lake City, Utah
St. Louis, MO
7700 Forsyth Blvd.
Suite 1800
St. Louis, MO 63105
Google Maps
St. Louis, Missouri
Washington, D.C.
1050 Connecticut Avenue NW
Suite 500
Washington, DC 20036
Google Maps
Photo of Washington, D.C. with the Capitol in the foreground and Washington Monument in the background.
Wilmington, DE
1007 North Market Street
Wilmington, DE 19801
Google Maps
Wilmington, Delaware