I'm obviously already grieving the loss of my mother, and I'm harried with other issues with settling her estate. I'm pretty much clueless about what steps to take to sell a low-income housing unit. I don't know with certainty the value of the shares, how to sell it, how to list it, etc. Can you please advise?
—Exasperated ShareholderA “Mitchell-Lama housing was created many years ago by the New York Legislature (and it’s name derives from the two sponsors of the law),” says attorney Andrew Brucker of Manhattan-based Schecter and Brucker, PC. “The law, found in the Private Housing Finance Law, creates for low and middle income New Yorkers what are known as “Limited Profit Housing Companies,” and that is the key to the question asked.
“People who purchased an apartment in such co-ops paid very low prices. The co-ops also paid much lower real estate taxes and much lower mortgage rates, which meant the maintenance paid by shareholders was lower than conventional co-ops.
“However, there was a trade-off. For such benefits, these co-ops agreed to allow a governmental agency to oversee its operations, and the shareholders also agreed that when they sell their apartments, they are limited in their profit (hence the name “limited profit housing company”). When a Mitchell-Lama shareholder leaves the co-op and “sells” his/her shares, they are only entitled to the amount they paid, plus any capital assessments, plus (depending on the policy of the particular cooperative) any mortgage amortization. The concept of “fair market value” and “appraisals” simply do not apply to such apartments.
“The New York City Mitchell-Lama rules are clear as to what happens when a shareholder passes away. The “lease and shares of stock for such decedent’s apartment shall be surrendered by the decedent’s estate or survivors for redemption.” The rules further state that “upon the death of a tenant/cooperator, the shares must be returned to the mutual housing company which will arrange for a sale pursuant to [these rules].” The rules also state that “the shareholder shall be responsible for carrying charges…for up to 90 days after surrendering possession of the apartment or until the housing company transfer the shares to the new owner, whichever occurs earlier.”