The Second Department stayed the pied-à-terre annulment. Co-op boards now collect under a mechanism a trial court found defective.

On or around October 6, 2026, the Appellate Division, Second Department, confirmed a stay of Justice Wayne Ozzi's September 29 order in O'Brien v. City of New York (Richmond County, Index No. 85217/2026), allowing New York City's pied-à-terre surcharge rollout to resume. The exemption filing window moved to October 13. That window closed four days ago. Co-op corporations named as collectors under Tax Law Article 30-C § 1353 are now in the collection phase the statute anticipated. The managing agent executing that collection needs no state license.

What the Second Department stay does, and does not, do.

A stay under CPLR § 5519(a)(1) suspends the trial court's order while the appeal proceeds. For co-op and condo owners, that means Justice Ozzi's finding that DOF issued invalid notices reversing the statutory burden of proof is not operative right now. The pied-à-terre rollout continues as if the September 29 order had not been entered.

The city's position is that CPLR 5519(a)(1) gave the rollout an automatic stay the moment the Mamdani administration filed its formal appeal on September 29. New York political subdivisions receive that stay as of right when they appeal an order directing them to take or refrain from a specific action. The Second Department confirmed that position and set the new exemption deadline at October 13.

What the stay does not do: it does not decide whether Justice Ozzi was correct. The Second Department has not yet ruled on the merits of the city's appeal. If the appellate court affirms the September 29 annulment, the DOF notices remain invalid, and any collection action taken during the stay period will be at risk of reversal. Co-op boards collecting now are collecting under a pending legal challenge, not a resolved one.

What the October 13 deadline means for non-filing shareholders.

Shareholders who filed a primary residence exemption claim before October 13 established their position under Tax Law § 1352(a). DOF has a record of their filing. They should retain confirmation documentation.

Shareholders who did not file by October 13: the statute treats any unit not affirmatively claimed as a primary residence as a pied-à-terre subject to the surcharge. No individual collection notice from DOF is a prerequisite for the liability to accrue. The surcharge attaches to the unit.

For co-op shareholders specifically, the exposure is not only personal. As the July 15, 2026 post on this site explained, Tax Law § 1353 bills the surcharge to the cooperative corporation as a single line on its Class 2 tax lot. If a shareholder does not pay their share to the board, the deficit becomes the corporation's; the board's unpaid tax then generates a lien on the entire building. One shareholder's inaction reaches every other owner in the building.

The co-op board's collection obligation under Tax Law § 1353.

The statute designates the cooperative corporation as the collecting entity. The board calculates each surcharge-eligible shareholder's amount, bills the shareholder, and remits the aggregate to DOF as part of the corporation's Class 2 tax payment. The managing agent executes this function in most NYC co-op buildings.

New York has no license requirement for managing agents. A managing agent who miscalculates a surcharge amount, fails to bill a surcharge-eligible shareholder, or fails to escalate a non-paying shareholder's account carries no professional liability for those errors. The board holds the statutory obligation, not the managing agent.

Many proprietary leases were not updated after the surcharge took effect on July 1, 2026. The June 29, 2026 post on this site walked through what the collection authorization requires and which proprietary lease provisions govern it. If a board has not confirmed that its proprietary lease authorizes the collection mechanism Tax Law § 1353 requires, the October 13 deadline is a reason to do so before any notice goes to a shareholder.

The identification problem the stay does not resolve.

Justice Ozzi's September 29 order made a specific finding about the DOF identification process: the city published a supplemental assessment roll of roughly 960,000 property records and mailed surcharge notices to approximately 17,000 property owners without first making the individualized primary-residence determinations that Tax Law § 1352(a) requires. The court found this reversed the statutory burden of proof. The city was supposed to determine each unit's status before mailing; instead it mailed first and required owners to rebut a presumption.

The Second Department's stay suspends that order. It does not repudiate the factual finding. The DOF identification database that Ozzi found was built without individualized determinations is the same database co-op boards are relying on to understand which shareholders owe the surcharge. DOF has not announced a corrective re-verification process that would address the underlying methodology.

The result: a co-op board collecting from a shareholder DOF identified as surcharge-eligible is acting on a dataset whose legal foundation is under live appellate review. If the Second Department affirms Ozzi's September 29 order on the merits, that shareholder was never validly identified. The collection was improper, the board owes the shareholder a refund, and the remittance to DOF needs to be unwound.

Three steps co-op boards should take now.

The stay is not a green light to collect and move on. It is a conditional authorization to proceed while the underlying question is still open. Boards that treat it as final resolution will have more to undo if the Second Department affirms the annulment.

1. Verify your building's DOF surcharge list against your proprietary records. Your managing agent should have DOF's list of which units in your building are treated as pied-à-terres and which filed exemption claims before October 13. Compare that list to your ownership roll. Any shareholder who is a full-time primary resident and appears on DOF's surcharge list without a filed exemption should contact counsel before the next tax payment cycle; the October 13 window is closed, but a shareholder who was not validly notified under the original DOF process may still have grounds to challenge.
2. Confirm your proprietary lease authorizes the collection before issuing notices. Tax Law § 1353 requires the co-op corporation to collect and remit the surcharge. Your proprietary lease needs to authorize the board to bill shareholders for this specific obligation. Review the applicable provision with building counsel. A collection notice sent without that authorization can be challenged by the shareholder, and a shareholder who is later found not to owe the surcharge has a cleaner reversal claim if the notice was unauthorized to begin with.
3. Document every collection decision in a board resolution. The managing agent executing the collection has no state license and no statutory accountability for calculation errors. Every step your managing agent takes — identifying surcharge-eligible shareholders, calculating per-unit amounts, escalating a non-paying shareholder — should be reviewed and approved by the board in a written resolution. If the Second Department ultimately affirms the annulment and collection actions need to be reversed, the board resolution is the record of what was authorized and why.

Bottom line.

The Second Department's stay allowed the pied-à-terre rollout to continue and the October 13 exemption window to close. Co-op corporations named as collectors under Tax Law § 1353 now face an active obligation. The managing agent executing that collection has no state license. The DOF identification dataset the board is relying on is the same dataset a trial court found was built without the individualized determinations the statute requires. The Second Department has not yet decided whether that finding was correct.

Three structural gaps existed on July 1, 2026, the day the surcharge took effect: no managing agent license requirement, no confirmed proprietary lease authorization, no mechanism to validate DOF's identification of pied-à-terre units. The Second Department's stay has not closed any of them. The appeal is pending. The collection clock is running.

Companion resources:
Pied-à-terre rollout annulled. The co-op share problem stays. (September 30, 2026)
One shareholder's unpaid pied-à-terre surcharge can lien your entire co-op. (July 15, 2026)
How co-op boards collect the pied-à-terre surcharge from shareholders. (June 29, 2026)
New York has no primary-residence registry. That is the pied-à-terre exemption problem. (August 6, 2026)

Primary sources: O'Brien v. City of New York, Richmond County Sup. Ct., Index No. 85217/2026 (Ozzi, J., Sept. 29, 2026); Appellate Division, Second Department, stay order (c. Oct. 6–9, 2026); NY Tax Law Art. 30-C §§ 1352–1353; CPLR § 5519(a)(1).