Q&A: Is Seller Allowed at Prospective Buyer Interview?

Q We are a small co-op building of 28 units in Jackson Heights, Queens. We would like to know if during an interview of the prospective buyer a seller is allowed to be present, where he/she might intervene during the process favoring the prospective buyer and influencing shareholders, before and during the voting for approval of the buyer.

—Conscientious Board Member

A “As a general rule, most proprietary leases provide that it is the cooperative’s board of directors, or a committee formed by the board of directors, that is responsible for interviewing and then voting on the approval or rejection of a prospective purchaser,” says attorney Jeremy J. Deutsch, with the Manhattan-based law firm of Deutsch Tane Waterman & Wurtzel, PC. “This is not a process that usually involves a shareholder vote.

Without reviewing the writer’s proprietary lease, I must assume that this is the situation here. Generally, a seller has no right to be present at the interview, and the board is free to exclude the seller, from attending or participating in the interview and any subsequent vote. The only likely exception would occur where the seller is a member of the board of directors.”

“The seller who is also a board member (or an interview committee member) has a fiduciary duty to the cooperative and must, as the law requires, perform his or her duties ‘in good faith and with that degree of care which an ordinarily prudent person in a like position would use under similar circumstances.’This requires the board member to put the interests of the cooperative above his or her own interests as a selling shareholder. Moreover, the law requires that such a director/selling shareholder disclose any interest in the transaction and that the transaction must be approved, by a sufficient vote, without counting the vote of this interested director. Ideally, a selling director would recuse himself or herself in any consideration of or vote on the application.”

Related Articles

Variety of sweet macaroons. Fir branches on a gray background. Merry Christmas card. New year mood.

Multifamily Holiday Celebrations

Decking the Halls...and Lobbies

Report: Only 17.0% of NYC Homes Are Single-Family

Report: Only 17.0% of NYC Homes Are Single-Family

Big Apple's Share Lowest in U.S.

NY Metro Leads US in Building Most Multifamily Homes

NY Metro Leads US in Building Most Multifamily Homes

Multifamily Units Make Up Nearly 80% of New Housing