Danielle Greco, Klein Greco & Associates
If a shareholder in a co-op dies, the document that’s going to guide how the shares are transferred is the proprietary lease. The majority of leases say that no board consent is required to transfer the shares to a spouse. But these days, how do you define a spouse? Other leases say the shares can be transferred with the board’s consent to a financially responsible member of the family. But again, how do you define “member of the family”? Or “financially responsible”?
The standards may not be as strict as when you’re vetting a purchase application, but the board does have to determine that this incoming shareholder is going to be able to pay the maintenance. Once that’s done, the board will work with a transfer agent — either the attorney or someone at the management company. There are certain documents we need to see, including the death certificate, a copy of the will, a New York State tax waiver and letters of administration so we know who we’re dealing with.
If the deceased wishes to transfer the shares to a trust or LLC, the board is going to want to see even more documents and get even more information. Who’s behind the trust or the LLC? Can the trustee pay the maintenance? Who’s going to be living in the apartment? This is a time when boards should not be afraid to spend money on legal advice. You want to make sure you get it right so you’re not spending more money later when you find out the shares were transferred to someone who’s not financially responsible. Make sure you do it right.