Mitchell-Lama Conversion to Private Co-op Not Taxable Real Estate Transfer
LVT Number: #25910
Trump Village, a Brooklyn housing development since 1961, left the Mitchell-Lama program in 2007 to become a private cooperative building by paying the mortgage, dissolving, and then reforming as a private co-op corporation. In 2009, the city notified Trump Village that it owed more than $21 million in real property transfer taxes because of the restructuring. Trump Village sued the city and lost. The court reversed on appeal, finding that the 2007 privatization wasn't really a transfer of property and that, after amending its certificate of incorporation, Trump Village remained the same entity and didn't have to pay the transfer tax. The city then appealed to New York's highest court and lost. The Trump Village cooperative corporation's voluntary dissolution, reconstitution, and termination of its participation in the Mitchell-Lama affordable housing program wasn't a taxable transfer of real property.
Trump Village Section 3, Inc. v. City of New York: 2014 NY Slip Op 08788, 2014 WL 7150362 (Ct. App.; 12/17/14; Abdus-Salaam, J)