Co-opCondoBoard
FYI
APARTMENT TRANSFERS.
Heir Apparent
By FRANK LOVECE
OU OWN A NICE LITTLE CO-OP APARTMENT, You Want to
Y pass it along to your next of kin when ... you know
But, as they say, death be not proud — and neither
should boards be when it comes to the delicate matter of
whether to allow an heir to inhabit.
In most cases, that doesn’t become an issue. Virtually
every proprietary lease provides that if a spouse dies, the
survivor takes over. But what happens if the widowed mom
or pop die, and junior’s got his own home and family and
doesn’t want to pay monthly maintenance on an apartment
he doesn’t live in? And what if he doesn’t want to take on
the headaches of being an absentee landlord (that is, if the
board even consents to sublets)?
Mostly what happens, according to attorney Alfred M.
Taffae, a partner at Racht & Taffae, is that the apartment
gets sold like any other co-op apartment, with the under-
lying shares being transferred to an approved buyer. But
there are less cut-and-dried cases. Sometimes, Taffae notes,
“people seek to keep an apartment in the family and an heir
decides to move in. And because of that, there’s a lack of
knowledge among boards and shareholders about the cor-
poration’s rights.”
He cites the case of a woman taking over her late son’s
apartment and then installing two nieces and one of the
niece's daughters into the unit without transferring. the
shares or even letting the board know. “Often, boards tryCesarano & Khan, PC
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46 HABITAT JUNE 2008
to be accommodating to the bereaved
party, and that can sometimes come
back to hurt you when successors take
advantage of your kindness.”
Be sensitive to an heir — but not too
sensitive. You have a responsibility to
see that an heir ~ even one who had
already lived there prior to the share-
holder's death — passes financial mus-
ter. If you allow the heir to stay with-
out approval, you are setting a bad
precedent that can also have conse-
quences for the building: the number
of non-owner-occupied apartments
increases ~ which is bad for any refi-
nancing attempts — and you also
less control over the co-op.
But approving the new owners is
not as simple as it is with a normal
transfer. “It’s not like an outside sale,
where a board can withhold consent
without stating a reason except for
discrimination issues,” warns Taffae.
“In the case of an heir, the standard
is that the co-op can't unreasonably
withhold consent to a financially re-
sponsible member of the sharchold-
er’s family.”
In practical terms, this means go-
ing over the heir's financials — job
and income data, assets and liabili-
ties, maybe even a letter of financial
reference — to ensure that he or she
can pay the monthly charges. “Tech-
nically, they're not allowed to live in
the apartment until all the estate is-
sues are resolved.” Taffae says, “but if
someone’s been living there with the
shareholder, you're not going to kick
them out. If they haven't been living
there, you don’t want them to move
in until a representative of the estate
is established.” That means either an
executor, generally named in a will,
or a court-appointed administrator
Note that the board has the right to
a copy of the death certificate as
well as “letters testamentary” saying
the executor has power to act on be-
half of the estate (or, in the case of an
administrator, “letters of administra-
tion”),
The final word: a co-op has a right
to require that shares be transferred
expediently from the estate, either to
an heir or to a new owner. If someone
is dragging his feet on making such a
transfer, you should first send him a
polite letier explaining that this must
be done. You might also add that itis
a matter of policy (and if the require-
ment isn’t in your proprietary lease
then you should change it). If all else
fails, turn to your lawyer. 4.