Flip Tax Error

Tell them to eat shlt.

Flip taxes should be illegal after the initial inside purchasers flip. That's what the "flip tax" was intended for - inside purchasers getting ridiculous deals from the sponsor who was desperate to turn his rentals into coops. Then the" insiders" immediately selling their apartments for huge profits overnight. THAT's a flip.

Landlords... uhm... I mean "sponsors", quickly learned that they could have a perpetual revenue stream regardless of market conditions and the flip tax quietly became an excepted factor in the coop ponzi scheme.

Condo's don't have flip taxes.

Let them sue the lawyer, it was his mistake .... ha!
when pigs fly.

If you agree that there had been a miscalculation and that under the rules you actually owe $6000, what do you think you should do? On what basis would you argue that you don't have to pay the money? What is the ethical thing to do? Had the mistake been in the building's favor and your attorney figured this out after the closing, would you expect the building to refund to you what was rightfully yours?

There are legal answers and likely consequences of your failure to pay, but I don't think we have to get there.

Also, you should have gotten an estimate of your closing costs from your mortgage lender/real estate attorney/real estate agent, so this shouldn't be a surprise. If it is, it's possible you have some recourse to your lender under the new GFE rules -- ask your atty about that.

ali r.
DG Neary Realty

kylewest wrote:
"... What is the ethical thing to do?..."

Since when did ethics have anything to do with NY Real estate?
Did I miss a memo ?

The flip tax is extortion - plain and simple. It unfairly puts a burden on the seller and immediately reduces the value of the purchasers investment.

If a Coop needs to raise money. the "ethical" thing would be to calculate the operating expenses and put it into ALL shareholders maintenance fee.

Extorting money from sellers is not only unethical but it is an unpredictable revenue stream and a poor management model.
Not to mention the fact that flip taxes usually only benefit the sponsor. who not only does not pay flip taxes but usually absorbs that money to pay for his own expenses.

Kikithecat,
Chances are the flip tax was added or increased after you purchased. which means that it was imposed upon you rather than something that you agreed to.

best of luck to you.

The sponsor doesn't get anything from a flip tax, except, like all the other shareholders, not having to pay the extra maintenance if the flip tax wasn't there.

If you don't want to pay a flip tax, then don't buy in a building that has one. If one was added later, and you were outvoted, then tough.

andwin: the only underhanded thing going on here is that the seller is conniving ways to avoid legal obligations. Regardless of your personal opinion about flip taxes generally, they are legal. The seller bought in a coop originally either with a flip tax knowing of its requirements and his obligation upon selling or knowing that one could be imposed since this is a coop. Don't enter a contract and then bitch about its terms.