Trulia Brook…, Other/Just Looking in Brooklyn, NY

If a co-op board agrees to sell co-op common space to a shareholder, what is the most effective way of structuring that transaction?

Asked by Trulia Brooklyn, Brooklyn, NY Thu Feb 7, 2013

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Tammy C. Benkwitt’s answer
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Why would they want to do this?

Most shareholders in the building have a loan. Often the building itself has an underlying mortgage. Those lenders are guaranteeing those loans based upon the shares of stock which are all tied to all the common property owned by the corporation. Are you with me so far?

So now the corporation makes a decision to no longer own a portion of the common property, thus devaluing the stock.

This is tricky business because those lenders may not agree to devaluing its property. There is probably language in the offering plan and by-laws that speaks to this matter.
2 votes Thank Flag Link Thu Feb 7, 2013
Thanks, Luke!
Flag Mon Feb 11, 2013
Excellent answer!!! You can work with me anytime!
Flag Thu Feb 7, 2013
This is something that you should be asking your attorney as whatever they are agreeing to sell you
must be added to your stock certificate. And keep in mind what Tammy mentioned this makes no
sense but who knows?
good luck
0 votes Thank Flag Link Fri Feb 8, 2013
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