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Council of New York Cooperatives & Condominiums
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Sponsor Issues

Published: Summer 2001

IMPORTANT NEW DECISION:
SPONSOR OBLIGATIONS


A decision reported in the New York Law Journal on August 10, 2001 supports CNYC's decade long effort to persuade sponsors to sell units as they become available. A unanimous panel of the Appellate Division, First Department ruled on August 9, 2001 that a sponsor that agrees to sell shares in a cooperative apartment building takes on an implied duty to complete the sales 'within a reasonable time'.

In 511 West 232nd Owners Corp v. Jennifer Realty Co., 4025, the minority resident shareholder owners of a cooperative apartment in the Bronx sued a realtor that had been engaged as a sponsor to sell shares in the building, seeking to compel the realtor to sell unsold shares of cooperative units that it had held for more than 10 years. Even though the state Legislature has not imposed a statutory obligation on sponsors to dispose of co-op shares within a defined time, the apartment offering plan can impose just such am obligation, said the Court.

Jennifer Realty's ownership of 60% of the shares of this cooperative (41 of 66 units) effectively tied the hands of the 25 purchasers, limiting their ability to control the cooperative or to sell their units, since few lenders will even consider making share loans in low sold buildings. CNYC's Task Force on Completing the Conversion has tried for many years to ensure that sponsors will continue to sell apartments as they become available until the cooperative or condominium is resident controlled and financially viable.

CNYC is optimistic this decision will spur further action towards the goal of 'completing the conversion.. At CNYC's 21st annual Housing Conference on Sunday, November 11th, there will be an update meeting of the Task Force on Completing the Conversion at 1:30 PM in Room 706 of the West Building. All those interested in participating are welcome, but must call CNYC at 212 496-7400 to confirm that they will attend.

 
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CNYC
250 West 57th Street, Suite 730
New York, NY 10107-0730
Tel: (212) 496-7400
Fax: (212) 580-7801
E-mail: info@cnyc.coop
 
   
 
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