REBNY does good! flip tax problem resolved
my dues at work (yay team!)
Regular Manhattan Loft Guy readers know that I have a somewhat … (shall we say) … conflicted perspective on our trade association, REBNY. Basically, I feel that residential agents (and especially consumers) are the poor relations for a powerful group that seems most interested in the plight of the Macklowes, Malkins and Trumps of the world. Some of my whining is of the use your power for good, not for evil variety, and is linked below.
But give REBNY due credit (today, at least), because it mobilized to change a regulatory rule that would have made coop transactions in Manhattan more difficult, a rule that apparently makes perfect sense in the real estate world in "America", but that would have bad unintended consequences here.
The nugget of the issue about flip taxes is set out in my August 28, save our flip tax! are coop flip taxes in danger from Fannie Mae?, which has more of the story:
Apart from being a shady way for developers to reap revenue from a home long after they have sold it, one problem with these covenants out there in America is that they may not be fully disclosed; another is that they make comp analysis more difficult. It is not heard to see that these are legitimate issues in America.
Nor is it hard to see that these issues have nothing to do with coop flip taxes. A builder who wants an income stream from future sales is (by then) a remote party with no legitimate interest in the future transactions; a coop that uses a flip tax to generate operating revenue or to increase a capital fund when its own shares are transferred is a direct party in interest to the sale. In addition, flip tax information is routinely shared in coop marketing (at least among REBNY firms), so the non-disclosure issue should be a non-issue here.
The happy result is set out in a REBNY press release from yesterday. I don’t know that REBNY deserves the credit they claim, but I am willing to assume that they do.
Nice work, team!
the coin has two sides
For two instances in which I beat up on my trade association, see
- September 1, 2010, new real estate agency law disclosures coming to Manhattan in 2011
- November 3, 2010, the square footage dilemma: REBNY "leads" by protecting brokers, not buyers
© Sandy Mattingly 2011