Published: Summer 2001
IMPORTANT NEW DECISION:
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.