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As of March 31, 2021, cannabis is legal for medical and recreational use in New York. Adults 21 and over are permitted to possess up to 3 ounces of cannabis or .8 ounces of concentrated cannabis and generally to smoke anywhere cigarette smoking is permitted. Growing and sales are not legal quite yet, but will be once implementing regulations and an Office of Cannabis Management are set up, expected at the earliest sometime in 2022. The MRTA also includes social justice provisions including sealing and expunging certain past marijuana criminal convictions as well as restrictions on certain employment actions based solely on positive cannabis testing.

What about our smoking policy? The new law does not restrict a Board’s ability to restrict smoking marijuana in common areas, units, or apartments as part of a properly-adopted smoking policy. Bear in mind, though, that if your smoking policy bans all smoking including marijuana, reasonable accommodations may be required for residents who use marijuana for a medical purpose. For New York City buildings that have not yet adopted and published the written smoking policy required by Local Law 147, this change may present a good opportunity to do so.

What about employees? Employers may still maintain a drug and alcohol-free workplace. Nothing in the MRTA requires employers to permit use or possession of cannabis at work. Nor are employers required to tolerate employees being impaired or intoxicated at work. However, a cannabis-positive drug test alone will not be enough to support discipline in non-federally-regulated or safety-sensitive positions.

Except in those positions, New York employers now may not discipline employees for a cannabis-positive drug test alone or legal off-duty and off-site cannabis use that does not result in impairment at work. This is a substantial change in the law, and Boards and managing agents should review and update their employee testing and discipline policies to ensure that they are in compliance. While employers may still test for cannabis on documented reasonable suspicion of impairment at work, or following a near-miss or an accident at work, they may wish to consider removing cannabis testing from random and pre-employment screenings. In fact, New York City employers have been restricted since July 2020 from conducting pre-employment marijuana screening for non-safety-sensitive positions. We recommend reviewing and updating testing and discipline policies to ensure compliance. Improperly disciplining employees for off-duty and off-site marijuana use can now lead to a finding of employment discrimination and potential claims under Labor Law section 201-d, which creates a private right of action.

On June 10th, the State Senate and Assembly removed most cooperative corporations (with one significant exception noted later in this Alert) from the application of key sections of the so-called “Tenant Protection and Housing Stability Act” that had lumped private Co-ops in with for-profit rentals. The changes included the following:

1. (a) Co-ops Can Recover Legal Fees and Late Charges from Defaulting Shareholders in Summary Proceedings. If authorized under the Proprietary Lease or Occupancy Agreement, Co-ops can now seek “fees, charges, penalties and assessments other than rent” in a summary proceeding to evict a defaulting shareholder. Previously the TP Act required Co-ops to start a separate action to collect their legal fees, which was completely uneconomic and impractical for most buildings.

In addition, Cooperatives are now permitted to collect their legal fees if they obtain a default judgment against a shareholder. (The TP Act had barred that as well.)

(b) Co-ops Can Charge up to 8% Late Fee, If Authorized in Lease. Co-ops are permitted to impose a “late charge” of up to 8% of unpaid monthly maintenance charges, provided that the Proprietary Lease or Occupancy Agreement authorizes collection of late fees.

Co-ops whose Proprietary Leases don’t contain provisions authorizing collection of late charges, fines and other charges should amend their Proprietary Leases now to expressly allow collection of those fees in order to comply with the requirements of the new law. If you haven’t done so already, these changes provide the perfect excuse for a Board to propose it.

2. Escrow Deposits Permitted for “Owner-Occupied” Co-ops. The TP Act had barred landlords from collecting more than one month’s rent as a security deposit. Escrows of maintenance, frequently demanded by cooperative corporations as a condition of consenting to a purchase or refinancing, were deemed to be “security deposits,” requiring Co-ops to develop cumbersome workarounds. Co-ops will now be permitted to collect escrow deposits, provided that apartment will be occupied by the prospective tenant-shareholder.

Note that Co-op apartments to be subleased are not exempt from the one-month security deposit limitation. So ironically, a Co-op cannot collect a maintenance escrow from someone purchasing a rent-regulated or subleased apartment, where the escrow might be even more important to maintain. Co-ops may also need to take a position whether they can demand an escrow if a current tenant-shareholder occupant subsequently seeks to sublease their apartment.

3. Transfer Agents and Managing Agents May Charge Processing Fees to Applicants. Some managing agents had expressed concern whether the limitations in the TP Act on charging “fees” to applicants for a tenancy applied to co-op applications. The amendment now clarifies that transfer agents and managing agents can charge fees for “processing, review or acceptance” of a prospective tenant-shareholder’s application. (As far as we could tell, agents never stopped charging these fees regardless, but now they can breathe again.)

4. Co-ops Can Charge Actual Costs of Background and Credit Checks to Applicants. The TP Act had prohibited landlords from charging applicants more than $20.00 for background and credit checks. That is substantially below actual costs. Co-ops are now allowed to charge the actual cost of these checks.

5. Notice of “Rent Increases” Over 5% Need not be Sent to Shareholders. The TP Act required landlords to send written notices to tenants if they intended to increase rents by more than 5%. Technically, this meant that Co-ops could not increase maintenance unless they sent certified mail notices to all shareholders at least two weeks ahead of time. Private cooperative corporations are now exempted.

6. Notices to Shareholders Can Be Sent in Co-op’s Customary Manner. Cooperatives can now send notices to shareholders in any manner authorized under your Proprietary Lease. (The TP Act had required only certified mail.)

Exceptions to Exemptions: Co-ops Organized under the Private Housing Finance Law. The foregoing exemptions from the TP Act do not apply to cooperative corporations organized under Articles 2, 4, 5 and 11 of the PHFL. These include “limited-profit housing companies,” “limited dividend housing companies,” “redevelopment companies,” and “housing development fund companies” [HDFC’s.]

In our opinion, by excluding PHFL cooperatives from the exemptions, the legislature is hurting cooperatives comprised of those persons who can least afford to absorb the effects of a defaulting shareholder, particularly smaller HDFC’s. We think that this is the wrong choice if the legislature wishes to support affordable home ownership; to treat a 99-year lease as a “rental” as opposed to a “sale” ignores the clear substance of the transaction.

Notwithstanding, we congratulate the Legislature for passing these amendments. We have followed the bill through its numerous iterations in the Senate and Assembly, and appreciate how difficult it was for its sponsors to persuade a majority to agree. We look forward to cooperatives recovering the benefits of these restored rights.

Everyone finally has access to vaccines! Gyms, playrooms and pools are starting to reopen! Previously Associations worried about requiring COVID testing. Now they must consider whether to require COVID vaccinations as a condition of employment or renewed use of their facilities.

Employees. Under current OSHA and EEOC guidelines, Associations do have the right to require employees to be vaccinated as a condition of employment. When the issue arose during the influenza and polio epidemics, prior courts held that employers have a responsibility to provide a safe workplace, and therefore have the right to require employees to be vaccinated against communicable diseases. (As yet we know of no comparable decision relating to COVID.) However, since the vaccine has only been approved under “Emergency Use Authorization” rules, the employee must be advised that he or she has the option not to accept the vaccine, and informed of the consequences of refusal. Furthermore, in setting its rules the employer must take into account potential mitigating factors such as medical or religious objections (which need to be treated as “reasonable accommodation” requests). A union might also claim special rights under its Collective Bargaining Agreement.

Generally, the employer should consider whether the failure to be vaccinated poses a “direct threat” to the community. The EEOC states that in evaluating such threat, the employer should consider the duration of the risk; the nature and severity of the potential harm; the likelihood that the potential harm will occur; and the imminence of the potential harm. This may result in potential accommodations such as adjusting the employee’s schedule to minimize contact with the community, or incentivizing employees to get the vaccine (such as paying their wages for the time taken to get a shot) to avoid the issue entirely.

Owners. An Association appears to have the legal right to bar members who cannot show proof of vaccination from utilizing amenities. Like employers, associations have a duty to provide a safe environment for their members. A majority of buildings already have passed reasonable rules that require COVID testing, execution of waivers, wearing of masks and social distancing as a condition of public access. A Board could reasonably decide that an unvaccinated member could pose an unreasonable threat to the community as well. Asking for basic medical information in order to determine whether a member qualifies for an accommodation is permitted under the Fair Housing Act, so a request for vaccine information might be treated similarly under the current circumstances.

Nevertheless, taking such a position raises many countervailing issues. First, many children also have not yet been tested or vaccinated, so exceptions would need to be made for them (especially at pools). It is not even clear whether the vaccine affects transmission or only mitigates the symptoms, so requiring vaccination may not avert any threats. Second, exceptions will need to be made for medical or religious accommodations. Based on disparities between populations currently being vaccinated, someone might even claim that the requirement has a discriminatory impact in violation of Human Rights laws. Third, the rule may need to be limited in duration. Should an Association have the right to obtain vaccine information after the formal state of emergency terminates? (Could a Board demand proof of receiving a flu vaccine?) No one knows how seriously COVID will be treated by authorities in the future. Finally, enforcement could be difficult, especially at unattended facilities. It is not reasonable to throw that burden onto volunteers.

In sum, any Board seeking to draw a reasonable line between protecting the rights of the community and its individual members during the COVID emergency must continually reexamine the criteria on which its decision is based. We expect that administrative and judicial rules will shift repeatedly as facilities reopen and employees go back to work.

Human rights laws and fair housing laws have been in effect for decades, providing equal access and opportunity for people with disabilities to use and enjoy housing, amenities and services. Yet Co-op and Condo Boards and Management may want to brace themselves for the potential onslaught of requests for reasonable modifications and accommodations from people with disabilities once mandatory notices are sent to tenants under the new Human Rights Laws.

The new Human Rights Laws (enacted as NYS Executive Law §§ 296.2-b and 296.18-a) require that every “owner, lessee, sub-lessee, assignee, or managing agent….disclose to all tenants and prospective tenants…their right to request reasonable modifications and accommodations if they have a ‘disability’” (as defined in the statute). A sample notice provided by the Division of Human Rights complies with the new provisions and is available by clicking HERE. Among other things, the Sample Notice specifies that people with disabilities may seek permission (i) to change the interior of the apartment, at the occupant’s cost (e.g., install grab bars in a bathroom), (ii) to change the housing provider’s rules, policies, practices or services (e.g., allow a service/assistance animal as an exception to a “no pets” policy), or (iii) to make changes to the common areas of buildings and grounds (i.e., install lobby ramps, automate doors, modify parking).

The written notice must be provided to all prospective tenants within thirty (30) days of the beginning of their tenancy, or by April 1, 2021 for current tenants. The notice must be “conspicuously posted” on every vacant apartment available for rent as well. (However, the Human Rights Commission has not yet established exactly what that means.)

Co-op and Condo boards that own apartments should send the notice directly to their tenants. Individual unit owners and proprietary lessees are required to send the notice to their tenants as well, and to make prospective tenants or subtenants aware of their rights. Though not expressly mandated by law, prudent boards and management seeking to ensure compliance may wish to include with a (co-op) purchase, or a co-op or condo rental or sublet application package an additional requirement that each prospective shareholder, tenant or subtenant sign a written confirmation that they received the required disclosure.

The relatively modest inconvenience imposed by these new disclosure requirements is likely to lead to additional demands on Boards and owners requiring a significant investment in infrastructure as requests for accommodations begin to flow.