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The Role of the Cooperative Transfer Agent

Transfer agents are responsible for the preparation, processing and distributing of the necessary paperwork required in connection with the transfer of ownership of a cooperative (co-op). A cooperative transfer may be the result of a marriage, divorce, trust, estate, name change or most commonly, a sale.

A role of the transfer agent which carries much legal importance is the cancelling of the old stock certificate and proprietary lease and the issuance of new ones. The transfer agent may not transfer a stock certificate made by a corporation if a lender has filed a financing statement along with a cooperative addendum against the shares. To avoid potential liability, the transfer agent will require a lien search from a reputable title company be presented prior to closing to put all parties on notice of all liens affecting the shares which must be satisfied prior to or at closing.

In addition to the new stock certificate and new proprietary lease, at closing the transfer agent will also distribute Recognition (or Aztec) Agreements, a maintenance letter and a consent. A Recognition Agreement or Aztec is a contract signed between a buyer, co-op, and lender. Within this document the coop recognizes its relationship with the lender and promises to put the lender on notice if the buyer does not pay maintenance or any other coop fees when due. The Recognition Agreement states the terms of required notice to the lender if the buyer requests to refinance, sublease, obtain a second loan or sell. The co-op may not approve any of the above instances until the lender has been made aware and signed off on it. A maintenance letter is on the co-op or management agent’s letterhead confirming maintenance has been paid through the end of the month of the closing. A consent is a letter stating that the co-op board has consented to the transfer.

A transfer agent will require in-depth paperwork for review for transfers involving estates, trusts, corporations, an LLC or partnerships.

An estate transfer will require the review of an official death certificate, a court-certified will, Federal Release of Estate Tax Lien, New York State Release of Estate Tax Lien, New York Estate Tax Waiver (if the decedent died prior to February 1, 2001), Affidavit of Debts and Domicile, Letters Testamentary or Administration dated within 60-90 days of closing, as well as any other necessary documents.    

A trust transfer will require the review of an attorney-certified copy of the trust instrument and any amendments, a current Certificate of Letters of Trusteeship evidencing who currently serves as trustees, an affidavit from the trustees confirming the present existence of the trust, the current trustees & their authority to transfer the stock certificate and proprietary lease and an attorney opinion letter, if necessary. The above documents should be presented to the transfer agent for review well in advance of closing to prevent last-minute closing issues.

A transfer involving a corporation, LLC or partnership will require the review of proof of formation and existence, proof of the authority to transfer the stock certificate and an attorney opinion letter, as well as any other necessary documents.

Title insurance is not a requirement for coop transfers, however, a transfer agent may require title insurance in any of the above transfers if title is open to legal question. Transfer agents will also require title insurance if a seller has lost the original stock certificate and/or proprietary lease. If a seller’s lender has lost the stock certificate and/or proprietary lease most transfer agents will accept an affidavit from seller’s lender stating such.

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