Stroock Wins Unanimous Decision for Middle-Class Residents of Trump Village 3, Inc.
Stroock & Stroock & Lavan LLP, a national law firm with offices in New York, Los Angeles, Miami and Washington, DC, announced that in a unanimous decision for client Trump Village 3, the New York Court of Appeals held that Trump Village 3's privatization from a Mitchell-Lama Co-op to a private corporation governed by the Business Corporation Law that allows resident shareholders to sell their apartments on the open market, was not a taxable event under New York City's Real Property Transfer Tax.
In the case, Trump Village Section 3, Inc. v. The City of New York, et al. the City had claimed that the tax, which as of 2010, amounted to $21 million including penalties and interest, was due when the cooperative left the Mitchell-Lama program in 2007.
Trump Village 3 had already been a client of Stroock' s Tax Certiorari department, represented by Joseph Giminaro, when it was confronted by a tax bill for $21 million in August, 2010. Stroock' s litigation team, led by partner Daniel A. Ross and associate David Cheifetz, decided that the best route to challenge the tax was to go directly to court (over the City's objections), rather than appealing the tax through administrative channels.
According to Ross, the lead attorney on the appeal and counsel to the cooperative, the decision will have far-reaching significance to the 90 remaining Mitchell-Lama cooperatives in New York City (which contain 70,000 units), which may be considering privatization. Until the ruling, any cooperative considering privatization was faced with the threat of the imposition of a very substantial tax. The Court of Appeals, however, soundly rejected the City's position and held that the tax by its plain language did not apply to the method used by Trump Village 3 to privatize, and other Mitchell-Lama cooperatives, which had been on the fence with respect to privatization, may soon follow suit, and begin or complete the privatization process.
"This is a huge win for the more than 1600 middle-class residents of Trump Village 3, which for the last four years have been living with the threat of having to fund over $21 million in taxes," said Ross. "The decision will allow other Mitchell-Lama co-ops considering privatization to make future plans with much greater certainty as to their potential tax liabilities."
Representing a significant number of high profile properties in New York City, Stroock provides its clients with a full spectrum of services, including litigation, in the appeal of real estate tax assessments and other related real estate tax matters.
Stroock & Stroock & Lavan LLP is a law firm providing transactional and litigation guidance to leading multinational corporations, investment banks and private equity firms in the U.S. and abroad. Stroock's emphasis on client service and innovation has made it one of the nation's leading law firms for 138 years. Stroock's practice areas include capital markets/securities, commercial finance, mergers, acquisitions and joint ventures, private equity, private funds, commodities and derivatives, employment law and benefits, energy and project finance, entertainment, environmental law, financial restructuring, financial services litigation, government relations, insurance, intellectual property, investment management, litigation, national security/CFIUS, personal client services, real estate, structured finance and tax. For more information, please visit Stroock's website at www.stroock.com.
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