Adam Leitman Bailey, P.C. Ensures Sale of Cooperative for Shareholder After Recalcitrant Board Rejects Multiple Buyers
It is every New York City cooperative apartment owner’s greatest fear: that the Cooperative Board will somehow interfere with the shareholders’ ability to sell their unit with no rhyme, reason, or explanation. In the case of Adam Leitman Bailey, P.C.’s client, the estate of a long-time Bronx cooperative shareholder, the simple attempt to sell the deceased’s apartment played out like a Hollywood potboiler, with the Cooperative Board rejecting buyer after buyer with no justification, in a veiled attempt to potentially force the estate to sell the apartment at a sweetheart rate to a building insider.
The shareholder had purchased her apartment decades ago and, after she passed, her estate (a charity), simply wanted to sell the apartment at a fair price to any of the dozens of buyers who were looking for a bargain, so that the Estate could stop paying maintenance and carrying charges for an empty apartment. The apartment had never been renovated and would require extensive work from any buyer – and the Estate was aware that they needed to price it accordingly to make a quick sale. Indeed, within days of posting the apartment the estate had multiple interested buyers who were all offering at or above asking price. The estate selected an all-cash buyer with excellent credit and references and presented its package to the Cooperative for an easy approval. But, the Cooperative Board had other ideas, and denied the sale, refusing to provide any explanation whatsoever.
The estate’s broker learned that the Board may be concerned that the apartment’s low price might impact sales of other units. So, on its next go round, the estate found a well-qualified, all cash, buyer willing to pay a premium to meet the Board’s perceived price point; but, the Board again rejected the sale without explanation and then also rejected the estate’s alternate buyer. By now, the estate had heard through the grapevine that the Board may have been holding up the sale because one the unit’s neighbors was interested in the apartment; but the neighbor had never made an offer. Frustrated with the mounting delays and inaction, the estate engaged Adam Leitman Bailey, P.C. to intercede with the Board and facilitate a sale, either through negotiation or litigation.
An Adam Leitman Bailey, P.C.’s litigation partner attorney immediately reached out to the Board’s counsel seeking clarity, and a review of the books and records, concerning the Board’s rejections of the estate’s three buyers and its expectations and qualifications for a buyer they might approve, as well as information about all recent sales of similar units for baseline comparison. At the same time that it was seeking this information, Adam Leitman Bailey, P.C. also assertively informed the Board that a fourth rejection would buy the Board an extremely nasty litigation including allegations of fiduciary malfeasance and claims for lost profits going back to the very first rejected sale.
Adam Leitman Bailey, P.C. then worked with the estate to find a final “test” buyer, whose entire offer process would be documented and scrutinized to set up an immediate lawsuit if the Board chose to again reject, while at the same time remaining crystal clear about the process and expectations with the Board’s counsel so the Board truly understood the risks of another rejection. An extremely well-qualified, all cash, buyer, who was also willing to meet the Board’s perceived price point, was identified; and Adam Leitman Bailey, P.C. remained in constant contact with the Board’s counsel throughout the process, both seeking guidance and reminding the Board that another rejection would result in an immediate action for immediate injunctive relief and damages.
Not unsurprisingly, the Board backed down and, after more than a year of silence and inaction, this new buyer was approved – and the apartment finally sold within a few weeks, limiting the estate’s legal fees to Adam Leitman Bailey, P.C.’s advice and counsel without the taxing cost a lawsuit would have required.
The estate was represented by Adam Leitman Bailey, P.C. Supreme Court Litigation Practice Group partner, Eric S. Askanase.