Condo hotel: I do declare! Part 1, the rules
This post is equal parts silly and serious.
Well, it’s slightly silly
The silly part is Donald Trump’s condo hotel in
Reward for reading this blog post
Last Monday, I posted about Donald Trump’s portable hole — his use of the current zoning to build a 42-story tower, for restricted use as a ‘condo hotel,’ a zoning I thought sufficiently dysfunctional in practice that it was all but certain to be either flouted or modified:
It’s hard to blog when you’re tangled up in legalese
Mr. Trump is shrewdly betting that this will happen, and that buyers will be so able to see that it’s inevitable, they’ll ignore the restrictive covenant in their pricing evaluations.
“They’ll tell you not to live there full time, got it, bub?”
Mr. Trump is right.
“Hey, what’s up, Donald?”
Even though I believed it at the time, my conclusion nagged at me.
As soon as the condos are sold, Mr. Trump will have no further involvement, and will walk away from any obligations.
Mr. Trump is not the sort of fellow to expose himself to risk; he’s very deft at putting his face out front in the sales period while carefully avoiding being scalped himself:
“I won’t be the one getting scalped!”
(Indeed, though this is labeled the “Trump SoHo”, its developer is a special purpose entity that is an LLC partnering Bayrock and Sapir. Mr. Trump’s name appears only in the advertising, not in the legal documents.)
Additionally, even if ignoble motives abounded, I couldn’t believe that a City agency would allow itself to be bamboozled by a restrictive declaration that was mere froth and flimflam.
But that requirement [the move-out rule] will be “virtually impossible to enforce,” say activists opposed to the project.
Even more relevant, who will be in a position to enforce it, or want to enforce it?
“Will you be enforcing the rules? Bueller? Anyone?”
“The restrictive declaration [19 pages, in .pdf — Ed.] is a sham, a fig leaf designed to cover up the obscene decision of allowing this monstrosity where the law clearly prohibits it,” said Andrew Berman, executive director of the Greenwich Village Society for Historic Preservation.
When writing the post, I was interested in the portable hole aspect, but after I finished it, the temptation of examining the actual document proved too much to resist. Even if the agency (in this case, the New York City Department of Buildings, “DOB”) wanted to nod-and-wink approve a condominium — which, I want to emphasize, is pure supposition by the hotel’s opponents — it would simply have to have a facially plausible Restrictive Declaration document, if only in political and administrative self-defense.
As I wrote before:
Who’ll do the enforcing?
You violated the occupancy restrictions, you varmint!
A document that is not facially enforceable would indeed be a sham, so out of curiosity, I downloaded it, converted it into text, and read it carefully.
See my enforcement provisions?
To my surprise, I found a great deal of very specific teeth, imposing detailed contractual obligations on three parties: each Unit Owner, the Management Company, and the Condominium itself.
But no obligations on me, the developer!
As an exercise in close reading, let’s see who’s obligated to do what.
The Unit Owner. The Unit Owner’s obligations are extremely straightforward:
Section 2.02(a). No Unit may be occupied by its Unit Owner or by any other individual (i) for a continuous period of more than 29 days in any 36 day period, or (ii) for a total of more than 120 days in any calendar year.
You’ve stayed here 29 days!
That seems fairly conclusive; no single individual occupancy of more than four weeks’ individual duration, or four months per year. What happens the rest of the time? It is rented to others who are non-Unit Owners (basically anyone else).
2.02(b) At all times during which a Unit is not occupied by its Unit Owner, it shall be made available on a daily or weekly basis to non-Unit Owners pursuant to a rental program operated either (i) by or on behalf of the Management Company or (ii) through no more than five (5) (or such greater number as shall be mandated by applicable determination of the Securities and Exchange Commission) rental agents approved (which approval shall not be unreasonably withheld) by the Board, at occupancy rates comparable to those at similar hotels in New York City.
As one might expect of a hotel, the Unit Owner has no duty to inquire into the business of others who occupy the unit:
2.06(c) To the extent permitted by applicable law, the Unit Owner of a Unit in which an exceedence by a non-Unit Owner occurred shall not be responsible or liable to the City for any charges, costs or expenses arising out of or by reason of such exceedence.
It’s not my business who’s living in the Unit!
Should a Unit Owner find herself so enraptured with the Big Apple’s joys that she loses all track of time, she will be duly reminded:
2.07 (a) Any Unit Owner who is in occupancy of its Unit for more than twenty-seven (27) consecutive days will be given notice by the Management Company prior to the twenty-ninth (29th) consecutive day of occupancy confirming that such Unit Owner must vacate the Unit on said twenty-ninth (29th) day, and that penalties will apply if such Unit Owner occupies the Unit in excess of twenty-nine (29) consecutive days. In addition, any Unit Owner who occupies its Unit for more than one hundred fifteen (115) days in any calendar year will be given notice by the Management Company prior to the one hundred twentieth (120th) day of its occupancy in such calendar year confirming that such Unit Owner must vacate the Unit on said one hundred twentieth (120th) day and that penalties will apply if such Unit Owner occupies the Unit in excess of one hundred twenty (120) days in any calendar year.
And penalized, with a daily assessment double the Rack Rate:
(b) If there is an exceedence of an Occupancy Restriction by the Unit Owner: (i) such Unit Owner shall be given notice of such exceedence by the Management Company; (ii) such Unit Owner shall be charged by the Condominium on its statement of common charges rendered during the month immediately following the exceedence an amount equal to two times the Rack Rate for occupancy of the Unit for each day on which such exceedence occurs;
You pay double the rack rate, Austin Powers!
Unit Owners will be generally collectible, since the charges will be a lien against their units.
2.07(c) All sums due from a Unit Owner pursuant to this Section 2.07 shall be treated as an additional common charge and shall be payable upon demand therefor, and, if these sums are not paid when due, the Condominium shall have the right to collect them using any and all remedies available against a Unit Owner for the collection of unpaid common charges. The Condominium shall have a lien on the Unit as security for payment of all such sums and will have the right to instruct Management Company to deduct such sums from the proceeds of any rental of the Unit.
Lien on my Unit? That’s too much of a penalty!
Further, the City of
2.08. Any exceedence of an Occupancy Restriction by a Unit Owner or a non-Unit Owner shall be a violation of Section 27-217 of the New York City Administrative Code or its successor provision of law. The charge and collection of an amount equal to two times the Rack Rate for occupancy of the Unit for each day on which such exceedence occur as set forth in paragraph (b) of Section 2.07 (in the case of a non-Unit Owner) and paragraph (b) of Section 2.06 (in the case of a Unit Owner) shall be an admission of such violation for which the Condominium waives any right to a hearing; and one-half of such charge shall constitute a penalty therefor immediately payable to the City by check payable to the City of New York and sent, together with a letter setting forth the Rack Rate in effect on the date(s) on which there was an exceedence of an Occupancy Restriction for each Unit in which the exceedence occurred, to the attention of the General Counsel of DOB at its address set forth in Section 4.07 or as otherwise directed by DOB.
Sham? Doesn’t sound like a sham — so far it’s pretty toothy.
[Continued tomorrow in Part 2.]
