Stroock Special Bulletin
"Stroock Wins $21 Million Tax Case Against City of New York"
Stroock has obtained a favorable decision for Trump Village Section 3, Inc. ("Trump Village") in a tax action against the City of New York. Trump Village is a large, residential co-op in Coney Island, Brooklyn. In 2005, after 45 years in the Mitchell-Lama Program, the residents fully repaid their government-sponsored mortgage and, as allowed by law, reconstituted as a private co-op corporation. The reconstitution was effectuated by the amendment of the co-op's certificate of incorporation.
In 2010, the City notified Trump Village that the reconstitution was equivalent to a "conveyance" and imposed over $21 million in Real Property Transfer Taxes ("RPTT"), plus interest and penalties. Stroock filed an action against the City in Supreme Court, Kings County, seeking a declaratory judgment that the RPTT did not apply to the transaction at issue.
Despite a disappointing decision by the lower court, Trump Village finally received some good news when, on appeal, the Second Department fully agreed with the position advanced by Stroock, and held that Trump Village did not owe any of the $21 million previously imposed by the City.
The Second Department's opinion is attached to this Stroock Special Bulletin.