Most pre-war buildings in Manhattan as well as many buildings in Queens and Brooklyn consist of cooperative apartments. When you own a cooperative apartment, you do not actually own real property. There is no deed, like in a house or a condominium. Instead, your form of ownership consists of a stock certificate that represents the number of shares allocated to your unit by the cooperative corporation, i.e. the building. The cooperative corporation has a Board of officers and members. These people make a lot of decisions, both while you reside in the cooperative apartment and in the event that you wish to buy or sell it. When shareholders want to sell their cooperative apartments, purchasers are required to complete an application for Board approval, which a Board can approve or deny. The Law Firm and Mediation Practice of Alla Roytberg, P.C. helps clients navigate the many additional steps involved in the sale or purchase of a cooperative apartment.
Our Real Estate Practice
- Building and negotiation of Contract terms
- Preparation for and navigation of Board review
- Review of bank commitments
- Liaising with cooperative boards and cooperative corporation attorneys
- Preparation of closing documents
- Representation at closings
Stock Certificates and Proprietary Leases
When you buy a cooperative apartment and you finance the purchase with a bank loan, your bank will hold on to the original stock certificate for your apartment and the original proprietary lease (another document that confirms ownership and the rights of the owner to use common elements of the building) until either the loan is paid off, or you sell the apartment. If the owner sells the apartment, a representative of the bank comes to the closing, receives the balance of the loan, and returns the original stock certificate and proprietary lease. The stock certificate for the owner then gets cancelled by a representative of the Co-op Board and a new stock certificate is issued in the name of the new owner.
Cooperative Apartment Issues for Divorcing Couples
If spouses separate and they own a cooperative apartment, they may own it in the name of one or both of them. If they decide to transfer ownership to whoever will retain the apartment, they must involve the Cooperative Corporation’s Board and, if they still owe a mortgage, their bank.
For example, let’s say that Bill and Mary own a co-op and both their stock certificate and the mortgage are in joint names. If they decide that Mary will get the apartment in a divorce, they have to think through the transfer process fully, and it will include both mortgage/loan issues (common to all homes) and transfer of ownership through the Board.
Can Mary refinance the loan to remove Bill’s name from it?
Will her income and credit qualify her to complete a refinance?
Will she need to borrow extra money if their settlement discusses her “buyout” of his interest?
Even after she succeeds with the refinance, will the Board approve the transfer?
Will the Board have a concern about Mary’s ability to pay maintenance and mortgage on her own?
There are many ways to address these potential issues in the parties’ settlement agreements and ensure that, regardless of the possible scenario, there is a way out. It is very important to include all required provisions and contingencies to ensure that there are no loopholes that would require unnecessary litigation in the future.
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