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A co-op passed on to an heir did not specifically name that heir as the beneficiary.
AUTHOR Arthur I. Weinstein, Arthur I. Weinstein
Not naming heirs specifically can lead to a long legal dispute should other heirs come forward and lay a claim.
Arthur I. Weinstein
Arthur I. Weinstein, Principal
In 1978, Harry and Wanda purchased the stock and proprietary lease allocated to their apartment. In 1979, they had a daughter, Darlene. In 2005, Harry died, and in 2010 so did Wanda. In 2012, Darlene asked the co-op to transfer ownership to her. The managing agent checked the building’s proprietary lease and found that a child of a deceased shareholder had broad rights to have the apartment transferred to herself. The agent confirmed that the stock and lease had been owned by Harry and Wanda and prepared a new stock certificate and lease.
In the process, the agent almost caused an expensive lawsuit that the co-op probably would have lost.
Fortunately, the managing agent turned to me as the building’s attorney for legal review of the requested transfer. In the 1970s, co-op managing agents often neglected to place a legend on shares and proprietary leases to husbands and wives showing that ownership would be as “joint tenants with rights of survivorship.” This followed real estate law that married couples automatically owned real property as “tenants by the entirety,” which provides that upon the death of either spouse the property automatically passes to the survivor. Until January 1, 1996, this form of ownership was not applicable to owners of co-op apartments. Therefore, upon Harry’s death, his interest in the apartment passed on to his heirs, and upon Wanda’s death, her remaining half interest would have passed on to her heirs. Darlene may have been her parents’ only heir, but the co-op had no way of knowing that. Harry and Wanda may have had children from prior marriages or brothers and sisters or legatees named in their respective wills. Any of those heirs would have had a claim against the co-op if the apartment were transferred to Darlene. The job of determining who may have been beneficiaries of a decedent and who is authorized to lawfully transfer the co-op belongs to the surrogate’s court.
A co-op should transfer a decedent’s apartment not owned by “joint tenants with a right of survivorship” or by a married couple who acquired the apartment after January 1, 1996, only upon review of letters testamentary or letters of administration issued by the surrogate’s court.
Obtaining those documents may cause a delay and expense to Darlene, but the procedure is essential for the protection of the co-op.