Q & A: Selling Common Space In a Co-op Building
By Jay Romano
Q: If a co-op board agrees to sell co-op common space to a shareholder, what is the most effective way of structuring that transaction? Does the co-op have to amend the offering plan and assign shares?
A: Adam Leitman Bailey, a Manhattan real estate lawyer, says the co-op should first hire an appraiser to determine the value of the additional space and shares. The co-op and the shareholder should also consider the allocation of taxes and fees when negotiating the purchase price. If such a sale is being made to a pre-existing shareholder, no notification or action by the attorney general is necessary.
“The co-op must make sure that it has enough authorized but unissued shares available for the transaction,” Mr. Bailey said. “If not, it will need to amend its certificate of incorporation to allow for the new shares.” A contract of sale must be entered into describing the space to be added, number of added shares, and price to be paid by the buyer.