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Trust your management when they spot a potential problematic buyer.
AUTHORJeffrey M. Weber, Weber-Farhat Realty Management
PAGE #pp. 98-99
Managers have the experience to help boards avoid problematic shareholders before they buy into the building.
We manage an eight-unit co-op in Chelsea that admitted a new shareholder who is a litigator. I told the board that some co-ops don’t allow a lawyer. They said, “Yada yada.” This guy is now one hell of a pain. You do something, he says, “I’m suing the co-op.” When he first bought, the board said, “You cannot use the roof.” His apartment is on one floor, and he has a room on another floor with a door that lets out onto the roof. The roof is level with two other apartments; from the roof, you can look right into their windows. The neighbors complained bitterly. The board said they were going to close the door, and he said he was going to sue because other shareholders were using the roof, and the board was discriminating against him.
The co-op, after six months, is at the point where the board is going to vote this guy out and go to court. The board can cancel the proprietary lease because the super-majority doesn’t like him, because he’s a pain in the tuchus. This guy will end up having to sell.
Be extremely careful who you allow into your co-op. The primary consideration is not always financial. But what do you do with a problematic shareholder? Either marginalize him, or legally get rid of him. Those are your two options. The board could also say that from now on, we won’t allow any litigators into the building, which is unfair – I’m sure there is a nice litigator somewhere.