Last week I represented a couple in the sale of their coop - a sale that came 12 months after the first prospective buyer was presented to the board. This wasn't a case of a prestigious coop rejecting marginal applicants, nor was it a case of a mediocre apartment languishing in a declining market. Nope, my clients saw two highly qualified buyers rejected by the board because they ignored the golden rule of their building, only Russians need apply. The 100 unit building on Shore Terrace Road in Sheepshead Bay, Brooklyn is dominated by Russians and you better believe it's going to stay that way. Your buyers may be doctors, but they are unqualified to live here. And tell Clint Eastwood to give us back Firefox while you're at it
The first applicants rejected by the board, a successful Asian couple, were openly insulted at their interview, literally called liars by board members who did not believe their financial statements. Anyone can fake tax returns, believe us, we know. The second rejected applicant, a Ph.D, was tripped up because board members refused to accept proof of assets she owned abroad (she was from Italy). Facing the prospect of finding another buyer only to have him rejected a few months later, and stretched to their financial limits and worn down by the emotional strain of it all, my clients waived the red, white, and blue flag (of Russia) and conceded defeat. They hired a Russian broker recommended by a board member, a broker who happened to have just the right type of client in the market for just such a unit ...
I agreed to represent the sellers after their original lawyer quit. Quitting on your clients is kind of a big no no but I'm not sure that I blame him; he had already endured two rejected applicants and apparently the prospect of a third go round was more than he could take. He walked away without having gotten paid a penny for his troubles. This isn't the first time I've been involved in a situation where a coop seller finds himself prisoner to an arbitrary board. It's one of the deals you make with the devil when you buy a coop; living in a coop is usually fine, but selling can be a bitch. There are virtually no easy ways to deal with difficult boards. Boards don't have to reveal why they've rejected a buyer, and except for a sign in the interview room that says no ____________________ allowed (fill in the blank), it's just about impossible to challenge a board's actions. Absent the motivation that comes from a convincing threat to sue (breach of fiduciary duty, interference with contract), you have no choice but to find buyers your board will approve, no matter how unreasonable the requirement may be or how long it may take.
The first applicants rejected by the board, a successful Asian couple, were openly insulted at their interview, literally called liars by board members who did not believe their financial statements. Anyone can fake tax returns, believe us, we know. The second rejected applicant, a Ph.D, was tripped up because board members refused to accept proof of assets she owned abroad (she was from Italy). Facing the prospect of finding another buyer only to have him rejected a few months later, and stretched to their financial limits and worn down by the emotional strain of it all, my clients waived the red, white, and blue flag (of Russia) and conceded defeat. They hired a Russian broker recommended by a board member, a broker who happened to have just the right type of client in the market for just such a unit ...
I agreed to represent the sellers after their original lawyer quit. Quitting on your clients is kind of a big no no but I'm not sure that I blame him; he had already endured two rejected applicants and apparently the prospect of a third go round was more than he could take. He walked away without having gotten paid a penny for his troubles. This isn't the first time I've been involved in a situation where a coop seller finds himself prisoner to an arbitrary board. It's one of the deals you make with the devil when you buy a coop; living in a coop is usually fine, but selling can be a bitch. There are virtually no easy ways to deal with difficult boards. Boards don't have to reveal why they've rejected a buyer, and except for a sign in the interview room that says no ____________________ allowed (fill in the blank), it's just about impossible to challenge a board's actions. Absent the motivation that comes from a convincing threat to sue (breach of fiduciary duty, interference with contract), you have no choice but to find buyers your board will approve, no matter how unreasonable the requirement may be or how long it may take.