Manhattan Co-op Board – Questions and Answer

We all know when you purchase a co-op; the board has the right to “approve” or “disapprove” of any potential tenant-owners. The Board of Directors, which is elected by all of the tenant-owners of the co-op, interviews all prospective owners. They have the responsibility of protecting the interests of their fellow tenant-owners by selecting well-qualified candidates. The quality of services and the security of the building are kept at high standards. However at the same time it is also cause sellers a lot of headache.  Below is the Question and Answer provides by Jay Romano and published on July 7, 2011 and hope that helps.

Adding Term Limits to Board Members

Q Can a co-op add term limits for board members to its bylaws? Without limits, and with boards having great control over proxy voting at elections, it is virtually impossible to elect new members.

A Tracey L. Daniels, a Manhattan lawyer who represents co-ops and condominiums, said that a co-op could amend its bylaws to include term limits if such an amendment is approved by the shareholders. Amendments to the bylaws must be approved by at least a majority of the shareholders. The co-op’s governing documents often require an even greater percentage, or supermajority, which is typically two-thirds to three-quarters of the votes cast.

A Co-op Board Rejects Buyers

Q I have a co-op in Queens that I have been trying to sell since 2007. I have presented the board with a total of four buyers, and all four have been rejected, and the board will not give a reason. I have lowered my selling price again and again. And my lawyer says the board has the right to do this. What can I do?

An Eric D. Sherman, a Manhattan real estate lawyer, says that co-op boards in New York generally are not required to provide reasons for rejecting a buyer. And, unless a rejection is based upon unlawful discrimination, their decisions will not be second-guessed by a court under the “business judgment rule.” He said that in trying to determine the reason for the board’s rejections, the writer should ask the real estate agents who prepared the board applications whether they are aware of any weaknesses in the applications. The writer might also ask the managing agent for suggestions concerning the qualifications of buyers. One thing that might be making the board skittish is that the writer has been lowering the sale price. “That alone could be the basis for rejection, as boards often seek to ensure that appraised values of other apartments in their buildings are not compromised by below-market sale prices,” Mr. Sherman said. The only other option for the writer is to sue the board. Such lawsuits are difficult to win, as courts tend to give deference to board decisions.

 

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