Legal Question in Real Estate Law in New York

Conflict of Interest in a Coop

There are two apartments within our building out of 28 apartments -- one is rent-controlled and the other is rent-stabilized. At our coop board meeting, the management company representative explained that we could offer the apartment owners next to these apartments to assume the maintenance. There was an understanding that there was a possibility that those in the rent controlled and rent stabilized apartments may not leave for a long time but if they did, by assuming the lease it would give them the option of taking voer the apartment. I never realized that this could be an option. My first question is how does that process work? The reason why we were discussing this was because we wanted to raise funds for our reserve and exploring all options.

The rep for the Management company also stated that he would also be willing to assume the maintenance for one or both the apartments. His purpose was that he had two young children and one day would like to provide housing for them when they reach a certain age to live on their own. If he was to assume the maintenance, is there any conflict of interest considering he is the representative of the management company? It just seemed a little odd.


Asked on 7/25/03, 10:14 am

1 Answer from Attorneys
Seth Kaufman Seth M. Kaufman

Re: Conflict of Interest in a Coop

I would need to review the coop documents to properly assess the situation. There is no conflict of interest - the coop manager does not make decisions about transfers of shares and admission to the coop, the board does. The coop board may be able to assign the shares for the two apartments to the adjacent owners, an outsider or the manager just the same. Of course, the manager and board must respect their fiduciary obligations, and certain transactions may warrant scrutiny. Please call me at 212-367-9167 if you wish to discuss this further.

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Answered on 7/26/03, 12:00 pm


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