Robert Braverman in Board Operations on October 31, 2013
A same-sex life partner would be permitted to reside with his or her partner in a cooperative apartment even where the proprietary lease does not list the partner as being part of the shareholder's family.
The terms "spouse" and "family" have been interpreted by longstanding case law to include gay domestic partners. In Braschi v. Stahl Associates (1989), the New York State Court of Appeals first articulated the concept that gay life partners are considered family members by New York State law and are thus entitled to succession rights in rent-stabilized apartments.
The New York State Division of Human Rights has consistently held that Braschi and its progeny apply to the transfer, assignment and bequests of shares in cooperative apartments. Moreover, for those same-sex couples who have yet to marry but have decided to register as domestic partners, the administrative code confers several benefits, two of which provide for their inclusion in the definition of the word "family" under the housing maintenance and building codes.
To the extent that the proprietary lease permits interfamilial transfers of shares, co-op boards will find that such provisions would apply equally to same-sex life partners. Accordingly, if the cooperative's past practice and its governing documents permit a shareholder to add a spouse to the stock and proprietary lease, then a life partner would have an equal right to be added.
"Restraint on Alienation"
As to whether the bylaw provision would be an unreasonable restraint on alienation, court rulings have been mixed. Some courts have treated shares of stock as personal property, and thus not subject to the rules restricting unreasonable restraint upon alienation; others have held that shares of a cooperative housing corporation should be treated as real property because they contain "mixed" characteristics of personal and real property.
Although we could find no case law on the specific issue of whether a restriction on the transfer of a portion of the shares of stock allocated to an apartment would be an unreasonable restraint on alienation, we believe that such a restraint would ultimately be found to be reasonable because severing the shares could be viewed as antithetical to "preserving the character" of the relationship between the corporation and its shareholders.
Robert Braverman is a partner at Braverman Greenspun.
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