Condo fever continues to spread across New York real estate, replacing any available land with shiny towers. Now that the most obvious places for construction have been exhausted, developers are increasingly turning to smaller co-ops to buy out and rebuild.
In order to buy out a co-op building, buyers need a supermajority of the building shares, in most cases either 75 or 80 percent, which requires the cooperation of most, if not all, of the building’s residents.
Developers focus on the smaller co-ops, often buildings that house no more than five residents, since it is much easier to get three or four residents to agree to sell instead of 50 or more in the largest buildings. While it is easier to convince a smaller number of people to sell, by no means is it a simple feat. It can lead to infighting and lawsuits among residents and even the developer.
“The smaller the co-op the messier this is. The owners are targeted individually; they are bombarded with multiple offers a month trying to talk them into selling. The smaller co-ops are perfect targets since the larger ones are much larger undertakings,” says Alexander Kanen, managing partner at Manhattan-based Kanen Law Firm.
The grim reality for co-ops is that a buyout that meets the supermajority, but is not unanimous, means stubborn shareholders unwilling to go along with the plan can essentially get evicted from their homes.