The CO-OP Board refused to approve sale of the coop
The CO-OP Board refused to approve sale of the coop on the ground that they think the price is low. At least one, possibly two Board Members are selling their units at the same time. The Board is not happy with the Sales Price since they believe that this could lower the price of their…
The CO-OP Board refused to approve sale of the coop on the ground that they think the price is low. At least one, possibly two Board Members are selling their units at the same time. The Board is not happy with the Sales Price since they believe that this could lower the price of their respective units and some currently on the market.
I understand that the Board is insulated against shareholders second-guessing its actions, but I believe in this real estate market and mortgage crisis the Board has to be very reasonable on sale prices.
What if my client goes foreclosure? What if they get forced to sell even for much less then the current reasonable offer? Who will be responsible?
Thanks!
But Emigre, what they consider “adverse” is subjective. It’s informed by their own personal needs and future plans to sell.
How is a good offer with solid financials after weeks on the market in a recession something that will have an “adverse impact on the market value”??
How about listing at an unattainable price and letting it sit and rot forever? Kind of has an adverse impact doesn’t it?
These coop boards are insane and it’s the worst idea ever to reject offers right now. THEY on the boards and other shareholders chose to buy in that building and there’s nothing that should shield them from whatever financial risk any of us take on when buying a place. Yes sometimes the market takes a hit and people can’t sell for as high as before. Be a f-ing grown adult and DEAL WITH IT.
Whiney control-freak babies with huge entitlement issues. I am so so so so so so glad we did not encounter these problems when selling our coop and I am so so so so glad we got out of coop ownership.
The more people hear about nightmares like this for people trying desperately to sell coop apartments during this recession, the less and less appealing coops will be for buyers in the future. It’s so shortsighted and idiotic.
1:51/3:51 — There’s no listing of specific Duties 1, 2, 3, etc, in the general corporate or even the co-op context. Its just all part of the general duty to do what you think is in the best interest of the corporation (the Duty of Care, in legal parlance). Perhaps a better way to think about what I said is to construe it as the board’s duty not to approve sales that would have an adverse impact on the market value of the other issued and outstanding shares of the corporation — which is in part guarding the financial health of the corporation.
OK. In your case it is very clear. If shareholders do not know the minimum price, then what? They stuck with anything that Board decides? If they are not aware of minimum price like in this case, what should they do if they get rejected?
I own a coop and a minimum price is set for all sales. Unfortunately, many people are unable to sell at the minimum set right now and stuck in a very undesirable position.
Emigre — 1:51 here. I am familiar with the BJR and was not questioning whether the decision (even one that is counter-intuitive) violated it. Rather,you were the one who wrote that the board had “a duty to maximize sales price per share.” I was just asking if you have any authority for the imposition of a purported duty that would very often be violated by boards that (in the exercise of their judgment) choose an offer that was lower than the highest price offered to the shareholder.
As a coop board member I have always opposed rejecting sales on the basis that the price is too low. This policy is counter-productive. It holds up a sale and results in an excess supply which further lowers property values. Coops should realize that it is better to have a new owner who got a good deal, than to have a backlog of owners unable to sell who are miserable about living in a place that they can’t escape from. The board members who are trying to sell will have a hard time getting their high price if there is a glut of apartments from their building on the market.
1:44- “This would make it seem the coop board is all-powerful and the rights of rest of the shareholders mean nothing. How terrifying is that?”
See 1:04 and 9:47.
1:44 – “Directly interested” refers to an interest in the actual apartment on sale, not simply an interest in sales prices in general in the building – which is what you describe. The latter “conflict” would conflict every single board member who does not see themselves as staying in the building for life, which is ridiculous. Your criticms of co-ops are unfortunately valid. Board’s ARE all-powerful. They can reject sales for any reason other than discrimination (i.e. race, sex, ethnicity, etc). If some idiot on a board decides that he knows the real estate market better than a willing buyer and seller, and concludes the sale price is too low, that willing buyer and seller are fucked. Its that simple.
1:51 – The board defines for itself what is in the best interest of the shareholders as a whole. Clearly, this board felt that the price was too low, and exercized its authority accordingly. Do not confuse the quality of a co-op’s decision with its power to render it. There is somethign called the “business judgement rule”. Look it up.
1:55 – Unless they’re tiny loosely-run operations, coop’s are not generally presented with two offers to choose from. That’s the seller’s job. The coop just approves/disapproves the sale after the seller presents one sales package.
Too many coop board members hide behind discrimination.
They assume if you sell the coop at a lesser price you are bringing in a less desirable person.
That alone makes it discriminatory behavior on the boards part
If you pay less money it doesn’t make you less of a person.
The market is soft and the boards behaviour is discriminatory plain and simple.
God loves everybody including the boards discriminating asses!