Maintaining authority over sales by estates has become a difficult challenge for co-op boards of
directors. It is essential for co-ops to be reasonably assured that future maintenance payments will be made and that they will be able to control occupancy. Yet the case law has not been particularly helpful.
A recent court decision in Cavanagh v. 133-22nd Street Jackson Heights, Inc., held that an executor of an estate could sell a co-op apartment without board approval if there is no specific language in the proprietary lease requiring the executor to seek approval. In this case, the court decided in favor of permitting a sale without board approval for a variety of reasons. These included the principle that the law does not favor restrictions on the assignment of a lease, as well as the policy in favor of an executor's duty to settle an estate with due diligence. Therefore, the executor of an estate would not be bound by the general restrictions on assignment in a proprietary lease that does not make a specific reference to executors. Yet, this issue only represents the tip of the iceberg in dealing with a co-op's concerns.
Protecting the Co-op's Rights
One might think that all that needs to be done to protect the co-op in light of the Cavanaugh decision would be to add a reference to executors in the section of the proprietary lease dealing with board approval. It appears, however, that this kind of provision might not be upheld by the courts. The policy that discourages restrictions on the assignment of leases may frustrate the board's prerogative to approve new purchasers, even if the proprietary lease refers specifically to estates or other transfers in addition to the usual voluntary assignments.