Co-ops & Condominiums

The city administrative code requires the sponsor to provide a reserve fund equal to 3% of the "total price," defined as "the sum of the cost of all units in the offering at the last price which was offered to tenants in occupancy prior to the effective date of the plan." The condominium brought this action contending that the sponsor had used the wrong value of "total price." Supreme Court denied sponsor's motion to dismiss, rejecting sponsor's argument that total price should be based on the tenant discount price contained in the Fifth Amendment to the offering plan.

Although the Appellate Division affirmed, it did so on different grounds. The Appellate Division held that sponsor had properly based total price on the discount price retroactively made available to tenants who had purchased before the amendment. The court noted that this construction of the ordinance encourages the sponsor to lower the insider price, which inures to the benefit of tenants in occupancy. But the Appellate Division also held, contrary to Supreme Court, that "total price" includes the price for commercial units.