A SoHo loft with the Joint Living-Work Quarters for Artists designation can be sold to anyone. The parties to the Arts Fund litigation have stipulated that JLWQA restrictions "limit only occupancy, and not sale." Unless the buyer and seller agree otherwise, the seller has no duty to convert the unit before closing and no duty to ask how the buyer plans to comply. A buyer who is not a certified artist and does not otherwise qualify to occupy the unit does have to deal with the designation before moving in. For that buyer, the unit has to be converted to residential use, Use Group 2, before they can lawfully live there. The Department of Buildings says either the seller can convert before the sale or the buyer can convert before occupancy.
So the law tells you who needs the conversion. It does not tell you who pays for it. That is decided in the contract. Two other facts make the decision expensive. The price of conversion resets on a fixed date every year, and the fee itself is under a constitutional challenge that the U.S. Supreme Court has not yet decided whether to take.
The rate is the one in effect on the day the money arrives
Section 143-13 of the Zoning Resolution sets the contribution at $100 per square foot of converted floor area as of December 15, 2021. The Chair of the City Planning Commission adjusts it every August 1 based on the change in the Consumer Price Index for the 12 months ending June 30. The rule then sets the timing. The amount owed is "based upon the rate which is in effect at the time the contribution is received."
The rate is not fixed when the contract is signed or when the deal closes. It is fixed on the day the City receives the payment. The payment, along with recorded instruments in a form the City accepts, has to come before DOB can accept a filing for the conversion permit or issue one.
The Department of City Planning lists the contribution rate at $115.76 per square foot. It also says the August 1 adjustment follows "the increase or decrease" in the CPI, so the rate can move in either direction. The page is undated. Councilmember Christopher Marte used the same $115.76 figure in an amicus brief he filed with the Supreme Court on May 18, 2026, where he estimated the average JLWQA owner's fee at about $250,000. Neither source says when that rate took effect. Because the rate is set on the day the payment is received, check it with the City before you budget. amNewYork reported in February 2026 that many lofts in the district are larger than 2,500 square feet and often sell for $1.5 million to $4 million or more. At $115.76, a 2,500-square-foot unit would cost about $289,400 before any construction.
Any one year's adjustment is small compared with the total. The fee as a whole is large compared with the room most buyers and sellers leave themselves in a negotiation.
The amnesty stays with the person, and the designation stays with the loft
The fee has become a sale issue, and not just an issue for current owners, because of how the earlier amnesties were written. A 1986 zoning amendment legalized JLWQA occupants who were not certified artists. In 2022 the State extended amnesty to permanent occupants whose residency began on or before December 15, 2021. The Court of Appeals pointed out that both amnesties covered residents and their family successors. They "did not run with the property." Anyone who takes occupancy after December 15, 2021 is still subject to the certified-artist requirement.
That means a long-time owner can live in a loft lawfully for decades, and a buyer of that same loft who does not qualify to occupy it still cannot move in until it is converted. The City told the court that by 2022, about 1,600 of the 1,636 JLWQA-designated units were occupied by households that did not meet the use restrictions. The court also noted that only four artists received JLWQA certification in the prior year. Nearly every one of those units carries the same issue into its next sale.
There are a few limits on scope. A conversion can be filed for a single unit and does not trigger a conversion of the whole building. Units already under Loft Law or IMD jurisdiction follow a separate process and are not part of this one. One of the first diligence questions on any SoHo loft is which of these categories the unit is actually in.
What the courts have done so far
The fee has been struck down once and reinstated once. In December 2024 the Appellate Division, First Department, declared it unconstitutional and blocked enforcement. On January 13, 2026, the New York Court of Appeals reversed that ruling 6–1. Judge Jenny Rivera wrote for the majority. Judge Michael Garcia dissented. The majority described the payment as an option. Owners may convert "at any future time" by paying a one-time, nonrefundable contribution.
The Coalition for Fairness in SoHo and NoHo, represented by Pacific Legal Foundation attorney Christopher Kieser, took the case to Washington. The Supreme Court docket for No. 25-1187 shows these steps:
- April 13, 2026: Petition for certiorari filed.
- May 15 and 18, 2026: Amicus briefs filed by the Manhattan Institute, the Cato Institute, Advancing American Freedom, Ronnie Wolf and others, and Councilmember Marte.
- May 19, 2026: The City waived its right to respond.
- June 2, 2026: The Court asked for a response anyway.
- August 3, 2026: The City filed its brief in opposition after an extension.
- August 17, 2026: The petitioners filed their reply.
- August 19, 2026: The case was distributed for the September 28 conference.
- September 24, 2026: The docket entry reads "Rescheduled."
As of today, September 30, 2026, the Court has neither granted nor denied the petition. Even if the Court takes the case, amNewYork noted in February that a decision on the merits would be "well over a year away." Marte told the same outlet he was looking at Council legislation to eliminate the fee or reduce it to a "negligible" amount. We have not found an introduced bill in public Council records.
Two clocks running against each other
This is the decision in front of every JLWQA seller and buyer right now. The contribution is nonrefundable under the Zoning Resolution. If you pay now, you can start construction and move in, but you give up any benefit if the fee is later struck down or reduced. If you wait, you keep that chance, but the rate resets every August 1 and a buyer who does not qualify to occupy the unit cannot live there in the meantime.
Waiting only works for someone who does not need a conversion in order to occupy the loft. A buyer who needs the conversion to move in has to pay before living there. An owner who already lives there lawfully under the amnesty can wait as long as they stay. So the timing choice belongs to whichever party controls the conversion date, and in a sale that is decided in the contract.
Questions a JLWQA contract should answer
These are drafting points to raise with your attorney. They are not legal advice.
- Who files the conversion and pays the Arts Fund contribution, the seller before closing or the buyer before occupancy?
- If the buyer pays, does the price reflect a specific dollar figure, and which year's rate is that figure based on?
- If the payment could fall after an August 1 reset, who absorbs the change in the rate?
- If the fee is changed by a court ruling or Council action between signing and payment, does either side get the benefit?
- Has the unit been confirmed as JLWQA and not under Loft Law or IMD jurisdiction?
- Who pays for the architect's assessment, the DOB filings, and the certificate of occupancy amendment, and when?
The cost beyond the fee
The Arts Fund payment is only one part of the cost. DOB notes that converting to Use Group 2 may require accessibility work, including wider doors, accessible routes, and accessible kitchens and bathrooms. All required work has to be permitted before it starts. The agency recommends having an architect or engineer review the technical requirements. In a building that is otherwise valid and non-hazardous, amending the certificate of occupancy can take a few weeks, plus filing fees and professional fees.
For long-time owners the cost is personal. Zigi Ben-Haim has owned his SoHo loft since 1979. He bought it for about $40,000 and turned a run-down factory floor into a home, doing the walls, wiring, and flooring himself. He told amNewYork, "I have no idea how we'll deal with this." Margo Margolis, 78, said she did not know whether her son would be able to afford the fees on the loft he grew up in.
FAQ
Does the Arts Fund contribution have to be paid before a JLWQA loft can be sold? No. The parties stipulated that the restrictions limit occupancy, not sale, and sellers are not required to convert before a sale unless the contract says so.
Where does the money go? The Department of Cultural Affairs oversees the SoHo-NoHo Arts Fund. It awards grants competitively to artists, nonprofits, and cultural organizations, including some in other parts of Lower Manhattan.
What about passing a loft to family? The Court of Appeals opinion records that the succession rights for family members created in 1986 remain in effect. Whether a particular transfer requires conversion depends on the facts, and that question belongs with an attorney.
If you own or are considering a SoHo loft with a JLWQA designation, The Kantha Team can help you work out the conversion timing, the fee allocation, and the pricing before you sign a contract. Schedule a Consultation.
