I live in a 15-unit co-op in Queens. A single tenant owner lives in one of the apartments. She has requested, while still living here, to remove her name from the stock certificate, and replace it with her daughter’s name. Is this legal? Also, is adding another name along with her name on the stock certificate legal? This added person will most likely not reside in the apartment.
“There is no legal issue per se with removing the name of the current shareholder from the stock certificate and replacing it with her daughter’s name,” says attorney Andrew B. Freedland of the Manhattan-based law firm Rosen & Livingston. “Of course, such a change will require that the proprietary lease appurtenant to the unit in question also be assigned to the daughter. Board approval of a transfer to a shareholder’s family members is governed by the cooperative’s proprietary lease with the shareholder and generally requires the approval of the cooperative’s board of directors (excluding a transfer to a shareholder’s spouse, which generally does not require approval of the board of directors.) However, the letter writer should check her own proprietary lease. The situation would be the same, if the shareholder wanted to add her daughter’s name to the stock certificate and proprietary lease. Once presented with this issue the board of the cooperative, at its option, may interview the prospective transferee and review the person’s financials. The co-op may then approve or deny the application of the shareholder’s daughter to become the sole shareholder or a tenant-in-common/joint tenant with right of survivorship with the current shareholder.
“If both the shareholder and the shareholder’s daughter are named as tenants-in-common or joint tenants with right of survivorship on the stock certificate and proprietary lease they would both have the right to occupy the apartment appurtenant to the stock certificate and proprietary lease. Therefore, the fact that the daughter of the shareholder does not live in the unit in question does not raise particular concern. However, if the stock certificate and lease are transferred outright to the shareholder’s daughter, the current shareholder would no longer have the right to live in the apartment as she would no longer be a named lessee. Therefore, the cooperative would have to approve a sublease, from the daughter to her mother in order for the mother to remain in sole occupancy of the apartment. This raises an important issue for the cooperative, as many cooperatives do not allow subleases or only allow them for limited durations of time. If the cooperative in question has a liberal sublease policy, then outright ownership of the unit by the daughter and occupancy by the mother should not be an issue, but such a situation should be documented through a sublease agreement between the daughter and mother. The current shareholder should understand that once the stock and lease are assigned to the daughter, she no longer retains any ownership and only has those legal rights she gains by virtue of the sublease.”