Page 15 - NY Cooperator November 2019

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Restoring the City of New York for over 90 years • Facade Restoration • Roofing and Waterproofing • Terrace and Plaza Restoration • Balcony Restoration and Repair • Structural Stabilization • Steel Work • Ornamental Sheet Metal • Local Law 11 herit has to go through the same process reject a transfer? The very broad excep- as anyone applying to purchase a co-op tion cited by Simpson effectively states unit. If there is an exception, then ques- tions arise concerning who falls within assignment to some people, and that the that exception. The proprietary lease board’s approval shall not be ‘unreason- could refer to ‘immediate family’—which ably withheld’ from others. “This is one is an unfortunate phrase, because there is possible scenario,” explains Simpson. no clear definition—or it could describe “Another scenario when there is an ex- with particularity people who come with- in the exception. A better alternative to not be unreasonably withheld’ as to all ‘immediate family’ is for the proprietary transferees or heirs who come within the lease to describe with particularity the exception. This imposes an obligation on classes of people who fall within the ex- ception. These can include spouses, adult that the board would have to articulate a children, parents, or other specifically de- lineated classes of people.” Weisman advises that “any transfer on death should be reviewed by the co-op’s the board will approve the transfer if the counsel to make sure that the transferor heir’s financials are ‘satisfactory.’ That is in fact the duly appointed estate repre- sentative; in the case of a will, \[that’s\] an or actor or musician whose income is executor. In the case there is no will, that variable from year to year (or even month would be an adminis- trator. In the case of a will, counsel will con- firm that the transfer is in accordance with the provisions of the will, and that the tax- ing authorities have provided releases or discharges of liens. Assuming the board has the right to con- sent under the lease, the board should re- quest an application from the proposed transferee and con- duct an interview. While there is conflict- ing case law on whether the board has the the deceased shareholder’s will – but the right to turn down a named beneficiary heir did not have the financial where- in a will, as a practical matter, if the board withal to qualify. So, the heir chose to does that, then the named beneficiary sell the unit on his own. Will or no will, will receive the financial benefit when the there should be an estate opened for the executor sells the apartment.” Simpson says he’s currently involved with a case involving questions of who deceased – either the executor if there is a may inherit. “In this case,” he says, “the will, or the administrator if there isn’t one proprietary lease has the broadest inclu- sion I have seen. Board consent is not rogate’s Court,” Simpson explains further. required for transfer to ‘spouse, par- ents, adult siblings, adult children, adult sign the documents to transfer the shares stepchildren, guardians or trustees of a and proprietary lease. If there is a contest Trust for the benefit of Lessee’s children in Surrogate’s Court over the will, or over or stepchildren, or a trust created under who will be appointed administrator, that the Lessee’s Will for the benefit of Les- see’s spouse’ and board consent ‘shall not the unit. Or it may be that someone could be unreasonably withheld’ for transfer to get a temporary appointment for purpose Lessee’s ‘adult grandchildren, step-grand- children, or grandparents.’” As Simpson will contest is decided.” points out above, this inclusion is really broad. Far more common is to see the ex- ception limited just to spouses and adult the firm of Ganfer Shore Leeds and Zaud- children. The Board’s Rights If there is an exception, what is the a deceased shareholder as the successor limit on the board’s right to approve or that the board has no approval rights for ception is that the board’s approval ‘shall the board to act reasonably – meaning common-sense reason for turning down an heir who comes within the exception.” Sometimes the exception states that could mean that, say, a freelance writer, to month) could have a hard time inheriting a co- op unit in a pric- ey building. Whether the ‘heir’ is desig- nated by a will or not does not seem to matter one way or an- other. Simpson describes a situa- tion with a co-op on Manhattan’s Upper East Side in which the unit was specifically designated for the heir in deceased shareholder either way. “The personal representative of the – would have to be appointed by the Sur- “The personal representative would then can take years, and may delay transfer of of transferring the co-op unit while the A Real-Life Example In one well-known case outlined by erer on their website, a cooperative board was directed to recognize the two sons of “The lease will typically have a provision dealing with transfers on death.” — Phyllis Weisberg continued on page 16