Most co-op owners have never given much thought to the manner in which they took title of their apartments. But by overlooking this important aspect of such a significant purchase, some shareholders may have put themselves at considerable financial risk. The method by which a married couple takes title to their real estate holdings can have major reper-cussions in the event of the death, bankruptcy or default of a spouse, or in the case of a divorce.
This past spring the 218th session of the New York State Legislature passed a little noticed amendment to the New York Estate Power and Trust Law which has a significant impact on cooperative apartment ownership in the State of New York. This amendment permits married couples to own their cooperative apartments as tenants by the entirety, a legal way of taking title that has been extended to include co-ops for the first time as of January 1, 1996.
Married couples who currently own co-ops may wish to consult their lawyers about converting their form of ownership to this new alternative to better suit their individual needs. And those married couples considering buying a co-op should familiarize themselves with the different methods of taking title so that they can choose the one that will best protect their assets.
Tenancy By the Entirety
Tenancy by the entirety was first codified in New York in 1896. However, since a cooperative apartment purchase is technically a securities transaction and not a real estate purchase, this beneficial form of ownership has not been available to married couples purchasing cooperatives until this new legislation went into effect on the first of this year. At last, husbands and wives living in cooperative apartments have been put on an equal plane with married couples owning private homes, condominiums or land.
Under this form of ownership married couples who take title to a cooperative apartment and either specify title to be by the entirety, or fail to make any selection as to title, will be deemed to own their apartment by the entirety. Under this form of ownership, the two spouses are viewed as a single person, and it is in this joint persona that title is vested. Each spouse, therefore, owns an undivided 100 percent interest that cannot be sold or diminished by the other. Upon the death of one spouse, the survivor is fully titled with the shares and Proprietary Lease and is deemed by the law to have always been the sole owner.