What the board actually has to build

For a condominium, very little: the city bills unit owners directly, and the association's exposure is the ordinary one of a unit that falls behind.

For a cooperative, the board has a collection problem it has never had before, because a co-op shareholder does not own real property and there is no separate tax bill to send them. The tax attaches at the corporation and is passed through. Trade guidance to boards has been to prepare a unit-by-unit schedule identifying apartments above the $1 million DOF threshold and to contact non-resident shareholders directly.

Three practical pieces follow from that:

You need to know who is not a primary resident, and you probably do not. Co-op boards hold sublet records and, if they run the transfer and resale process properly, occupancy information. What they generally do not hold is a maintained, current primary-residence determination for every shareholder. That has to be built.

The exemptions are wider than “the owner lives there.” Primary residence includes occupancy by the owner, by immediate family — spouse, child, sibling, parent, grandparent, grandchild — or by “a lessee under a bona fide arm's length lease of at least one year.” A shareholder who sublets on a genuine one-year lease is in a different position from one who keeps an empty apartment. Also exempt: properties without a required certificate of occupancy, and new condominium or cooperative units under a General Business Law § 352-e offering plan not yet sold by the sponsor.

You need a policy for refusal. A shareholder who declines to pay a pass-through surcharge puts the board in a position with no comfortable exit — absorb it across all shareholders, or pursue it as an arrears under the proprietary lease. Attorney Stuart Saft of Holland & Knight put it to Habitat Magazine this way: “If a shareholder refuses to pay the PAT Tax, the board must decide between two unappetizing options...”³ Our collections and liens page covers the enforcement route.

The rollout is being litigated, and the tax is not

This distinction matters and is widely blurred. On Friday August 7, 2026 three homeowners — Simon Hedley, Rachel O'Brien and Carmine Morano, represented by former Deputy Mayor Randy Mastro — filed an Article 78 proceeding in Richmond County Supreme Court against the City, Mayor Zohran Mamdani, the Department of Finance and Finance Commissioner Richard Lee. The petition challenges how the city is implementing the surcharge, not whether the surcharge is lawful.⁴

The sequence:

On August 10, 2026, Justice Wayne M. Ozzi signed a temporary restraining order directing the city to take down a 900,000-property “Supplemental Roll” from the Department of Finance website, halt action based on that list or on roughly 17,000 mailed notices, and refrain from enforcing an August 21 appeal deadline or its extension to September 18.

The city filed a notice of appeal within hours, which triggered a stay. On August 13, 2026, Associate Justice Philip Hom of the Appellate Division, Second Department stayed the TRO, allowing the rollout to continue, with a hearing set for August 31, 2026.

The petition's theory, as quoted in reporting, is that the city “arbitrarily and capriciously foisted onto New York City residents the burden of proving they are not subject to the Surcharge,” when state law requires the city to use “information available” — including State Department of Taxation and Finance return records — rather than publishing a list and making owners opt out. Mastro: “It is a shame that the City can't own up to its own mistakes and admit that it has badly botched the rollout.” A Mayor's office spokesperson: “We disagree with today's ruling, but we are confident in both the pied-à-terre surcharge and the City's ability to implement it fairly and effectively.” The city later said the “vast majority” of residences on the Supplemental Roll would not be subject to the tax.

We have not been able to establish what happened at or after the August 31, 2026 hearing, and we are not going to guess. Every source available to us stops at August 13. A board relying on the current posture should confirm it before acting, and should assume the deadlines may have moved.

The dates a board needs

Department of Finance notices went out no later than August 30, with thirty days from notice to challenge. A September 18 shareholder filing deadline has been reported. Given the litigation, treat all of these as live rather than settled.

The one date that is not in dispute is the retroactivity: the surcharge applies from January 1, 2026, notwithstanding that it took effect July 1. A co-op board budgeting for fiscal 2027 is budgeting for a pass-through that has already accrued for most of a year. That interacts directly with the budget approval cycle and, in a co-op, with whatever maintenance increase the board was already planning.

One sourcing note in the interest of precision: the signing date is given as May 26, 2026 by Holland & Knight, which is the best-sourced account we found; other reporting places the Legislature's approval on May 27 and the signature on May 28. We could not reconcile the discrepancy.