They are subjects no one ever really wants to discuss: death and divorce. But when it comes to safeguarding an asset as valuable as a family co-op or condo, those discussions become imperative, however uncomfortable they may be. Should the worst occur, it is always better to have an actionable plan in place than to have to scramble after the fact – something that only adds to the stress and pain of loss.
Stories of feuds erupting over properties and assets litter just about every family tree. With the right planning and advice from the experts though, those icy phone calls between sons, daughters, and mothers (as well as attorneys) can be sharply curtailed – or even avoided entirely.
Understanding the Basics
When addressing issues of death and property, co-ops and condos are different assets, and thus must be handled differently. “Condos are real estate, so if the title is in the decedent’s name, an executor must be appointed by the New York Surrogate Court,” says attorney Gerald J. Dunworth of the firm Gibney, Anthony & Flaherty, LLP, in Manhattan. “Co-ops usually allow transfers to spouses, but not always to children or other family members without the new owner being approved by the co-op board.”
Mindy H. Stern, a partner at the Manhattan-based law firm of Schwartz Sladkus Reich Greenberg Atlas LLP, adds that there are sometimes exceptions to those co-op transfer rules. “The extent of those exceptions varies,” she says. “For example, some allow transfers without prior board approval to a deceased shareholder’s spouse. Some also include parents, adult children, or adult siblings in the ‘no consent required’ exception. Others state that the board will not unreasonably withhold its consent to a transfer to a ‘financially responsible member’ of the deceased shareholder’s family, and specify who is ‘family.’ But this still requires the family member who wishes to inherit the unit to be vetted and approved like any other prospective owner.”
If the designated heir does not get approved by the board, then “The apartment must be sold,” says Dunworth. “Controlling who will live in the building is the central purpose of forming a building as a co-op.”