Co-op boards don’t like to come up empty-handed when pursuing residents who are behind in the monthly payments or otherwise need to be held accountable for their actions.
That’s a key reason that they demand so much information and an interview when someone applies to buy an apartment in their building.
That also is why so rarely will co-op boards entertain an application from a trust or a corporation. They want individuals whose necks are relatively easy to wring.
Trusts and corporations have no necks. They aren’t persons (unless, the Supreme Court ruled two years ago, they are corporations spending unlimited funds on political speech).
We all know how picky co-op boards can be about who gets to live in their buildings. When it comes to a trust or a corporation, there’s no knowing who actually will reside there.
Moreover, it is easier to sue an individual than a trust.
The Real Estate Board of New York (REBNY) notes that some co-op boards appreciate the desirability of ownership via a trust. According to residential counsel Neil B. Garfinkel, some may, therefore, allow such an arrangement provided the trust does the following:
- Executes an occupancy agreement defining who will live in the unit;
- Has a personal guarantee signed assuring compliance with the board’s rules and requirement to pay maintenance;
- Designates an individual to receive legal papers.
Naturally, there’s no point in traveling that route without asking whether the board would entertain trust or corporate ownership even before a purchase offer is submitted.
Boards do have a fiduciary duty to the residents of their building. They may not want to be friends with prospective residents, but they assuredly want them to be well within reach should the need arise to put pressure on them.
For boards, the easy road is the one they consequently choose to take.
Tomorrow: Loose talk
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Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022