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L & Tea Time with Michelle: Episode 6

Topic: Landlord's Corporate Status
Guest: David Goldoff, Next Generation Managers

MMI: Welcome to Landlords TV, a production of LandlordsNY. This is L & Tea time with Michelle, the show where you get to have a cup of tea with me, Michelle Maratto Itkowitz and we talk about an area that I have being practicing law in in New York City for over 20 years, and that is landlord and tenant real estate issues. So, today I am honored to have as my guest LandlordsNY member, David Goldoff, who is the principal of Camelot Realty.

D: Yes.

MMI: So, let me do your bio here. So, you, your earliest memories are being a gopher for your father and his brother as they are developing buildings, you are running in and out of the construction trailer on actual development sites in New York City. This is where you got your foundation in real estate education.

D: Yes.

MMI: But you kind of wanted to pull away and be, you know, nurture your creative side. So, the dot-com craze, advertising, you went to NYU, you ended up managing real estate, and when you got out the family business said, "Please, please David manage for us". And that eventually becomes Camelot. Good?

D: Yes.

MMI: Ok. So, tell us about growing up in New York City real estate, and what I thought was interesting in our conversation earlier was the difference between what you learned doing, and what you learned in school.

D: Sure. Thanks for having me. Thank you, and nice meeting you finally. I started working for my family in about 1999, working first in the advertising field, and I think the best experience that I had was every day was different versus being in a class room setting. And for me being in an advertising world you get to place resources and see something start from the very beginning to the very end. I was a producer, so unfortunately, during the dot-com time companies came and went quickly. I was out of the job, I needed to pay my rent, I lived in a building that my family owned, and I said well I'll do anything to stay in the apartment, don’t kick me out. They said, “Why don’t you take your creative skills and fix up this apartment that is coming up to be vacant.”

MMI: Was it rent-stabilized?

D: It was rent stabilized, at that time I knew nothing about this stuff. I’ve really not ever gotten into real estate before. So, this was new, but I’d like to take on challenges, and I thought it to be really creative and fun to try to take on learning about what they do, finally, now that I had the time. So, given the budget, I told them to trust me. They did. I think I shocked them when they saw what I actually spent on fixing up the apartment, dealing with DHCR, dealing with leases, the process of deregulating the apartment. I made a lot of mistakes, I probably could have spent less, but the end result was a brand–new apartment that rented for probably about five times of what they were making, and in the end I think they were, you know, somewhat pleased with the results.

MMI: Because they had a different management style then.

D: They did.

MMI: They had more the old-timer-”I am not going to put thirty thousand dollars into an apartment to deregulate it” kind of attitude.

D: That’s right. Keep things fluent, keep thing status quo. And no new ideas is okay until someone came up and said, “Maybe you should look at it differently.” And I looked at it like, you know, this is a time where I think the age of technology was really fresh and new, and I was coming out of that industry, and I felt that I could apply what I have learned there, especially in an industry where I felt, from my perspective, sort of stagnant and only one way of thinking.

MMI: That is so true. The new generation, I just see it, it's a totally different way of approaching things. And I, as we spoke about what you do, you actually really are very unique in the sense that through your management you really don’t do one type of management. You’ve had your hands on everything-rent-stabilized buildings, luxury buildings – I actually am going to look at my card for this one - co-ops, condos, development, financing, international owners, you do work on a lot of co-op conversions, you’ve done receiverships, pension funds. That's really, that's really all over the place, that's lot of experience, and you are pulling a lot of ideas from a lot of different places. And I think that kind of gets you a unique perspective.

D: Yeah, it does. It’s a lot of work but basically the challenge is what I find attractive as a game to me. Not that the business is a game for there we are doing what we are asked to do, hopefully it is positive and makes results, but it is a challenge. So, I had a lot of great opportunities thrown my way. Usually, there were ideas that needed help to get to the finish line, and some of the approaches that we use help get there for people, and a lot of the challenges are based on experiences and finding things that maybe can shortcut doing it the older way, or more traditional ways. Technology is a part of it, also looking at things a little bit differently than we might usually, and…

MMI: Do you have another example of how your father and you uncle would have handled things versus how you do? That is not just technology.

D: To put it lightly, they did things until they really had to do it. I try to look at things at different approach where we address things a little bit head on.

MMI: Proactive.

D: A little bit more proactive. I think they came from more of an ownership prospective where they really did not want to rock the boat unless they really had to, and use the purse strings unless they really had to. For me a little money spent was a lot more gained if it was applied right.

MMI: So, how do you deal with your clients? Do you try to meet them where they are at like if you are dealing with a family ownership where the older generation is still in control? Do you try to meet them in a different place, or your try to pull them along as you pulled your own family?

D: I think there is a little similarity to everything. I go and meet people, we do the email thing, we set up our calendars and we make sure we are all on the same place and where we are going. Usually, we are not late, but it is really everyone needs a little push and that's they are kind of looking for direction. They are looking for someone like me to give them insights that they feel confident that they are with somebody who is a professional. And I think that I’ve learned early on that if you can guide people, I am also learning to, so when I meet somebody I tend to…

MMI: We all are…

D: Listen, I am a little quieter, but I tend to listen and my actions are really my performance, what I do for people we try to come up with solutions that make sense that are efficient. We try to come up with ways that are budget mindful and we try to execute it, you know, that get results. So we listen, and then we kind of find out what they need and execute it. So far it’s done pretty good.

MMI: This is great stuff. Could you stick around while we go to the teaching segment?

D: Yes, I can.

MMI: Okay, we are on to the teaching segment.

Teaching Segment

MMI: Ok, so today we are going to talk about the effect of the landlord’s corporate status on a landlord and tenant case. So, if the landlord is a Corporation or the LLC because they often are, every corporation and LLC files with the Secretary of State and pays franchise tax. So, let’s say a corporation or an LLC goes for a while and they do not pay their corporate franchise tax. What happens is, eventually, you will get warned, and eventually the Secretary of State will involuntarily dissolve the corporation or the LLC, it will get eliminated. So this is tax law 203A. So, now what happens if that's the case? Well, a lot of things happen, but in a landlord and tenant context what happen is, in any litigation context actually, a corporation that has been dissolved can’t sue. They are not allowed to avail themselves of the New York State courts. Now, it's a little confusing because a corporation that has been dissolved is allowed to do some suing, but it is allowed to suing that will wrap up its affairs. It can conduct business to the extent it is wrapping things up, getting things done. But is has been held, specifically in a mortgage context that if moneys become due during the period when the corporation is dissolved, that’s really the corporation doing new business, so that new business if you want to sue on it, you can’t avail yourself of the court system if you are not in a good-standing. So, that is the problem and when I work for a landlord, or when I work for a tenant the first thing I do is I always check the status of all the parties with the Secretary of State. It is very easy, you just go on the Secretary of State’s website and type in a word or two in the corporation’s name and it will bring it up. So, now if you have this problem –how do we fix it? It is fixable. So, a landlord can merely put their case on hold for a little bit, file the paperwork, pay the back-franchise taxes, I assume there is going to be some extra fees, may be late charges and that can get done. So, why strategically, would a tenant ever do this to a landlord? Well, if you have a tenant who knows they are living and who is trying to string things out, draw things out, and if for the tenant the game is about buying as much time in a rent-free posture, then this could be a very nice trick in a tenant’s bag of tricks. And as I’ve said, this is not something I see everyday, but I have definitely seen it. So, it's important to stay on top making sure your franchise taxes are being paid and in that sense everything is good, and it will make for a good landlord and tenant case.

MMI: David, thank you so much for hanging around for my teaching portion. Would you be interested in coming back some time and giving us some more feedback?

D: I would love to. Thank you.

MMI: Thank you so much. So, you are watching Landlords TV a production of LandlordsNY, and this has been L & T time with Michelle.

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