Is this loan secured by something - if so, what? Or is it unsecured?

Another point of information is that many condo bylaws require that for projects that are greater in value than "X", the Unit Owners need to approve that project (and expense).

Can a board of directors operate legally with only 5 members and make decisions that the rest of the members don't approve?

If it's been over 30 years and your sponsor still owns half of the units, you need to read your offering plan and contact you board's attorney pronto. I believe sponsors are required to sell some high percentage (75%?) of the units after five years. You also need to hire an independent managing agent company, because right now you have a big conflict of interest.

Fixing this is not something you should attempt by yourself. I know paying an attorney is not the most pleasant use of operating funds, but if you try to do it yourself or follow any advice other than an attorney's, you'll get what you paid for.

Good luck!

Its even worse, while the sponsor still owns 50% of the apts, they own closer to 60% of the vote - as they own the larger apts.

Working to educate and inform shareholders who have not tried to refi or sell their units. As our prop lease states they get 2 seats until they own 10% or less of the apts, their voting power continues to give them influence over 80% of the board.

BTW - our board president doesn't own any shares (allowed under the original prop lease) and another board member is a realestate sales person who also rents the sponsors apartments.. Yes - Conflict of interest - No their is not a lot of will to take these folks on.

That's unfortunate, so very sorry to hear about this financing dilemma.
Following up on Steven's comment, if you need someone to review your offering plan, please don't hesitate to ask. Happy to help.

Having written Declarations and Offering Plans for Developers, this will not take very long. If I can offer some insight/clarity on the situation that's a win-win.

Depending on what's uncovered/realized, you'll obv need to consult an attorney, but happy to help do the leg work and highlight the key terms/action items.

Warm regards,

Gregg M. Kennelly
http://clarity.fm/greggkennelly
manhattanmanagement@gmail.com

I guess even Chase and Wells Fargo have their % limits on ownership, my coop is about 65% sold and buyers have gotten mortgages within the past 2 years from one or the other.
It's important to read through your proprietary lease - are their any requirements regarding sales by the sponsor, either in a % of units or within any timeframe? Who is in control of the board? Sometimes, the sponsor must relinquish control after X years. You say that 50% of the units are sold, is that based on number of shares or the number of units? The # of shares may count towards these percentages more than unit counts. Maintenance fees, voting, assessments are all based on shares. Has the sponsor issued annual amendments to the prospectus? The sponsor is required by state law to do so, IF he's marketing units (which apparently he's not). As a unit owner, you're generally entitled to read the minutes from board meetings and annual meetings and you should also be receiving annual audited financial statements. Contact the property manager to allow you to review the minutes (they do not necessarily have to provide you with copies, you may have to read them at their office). If what is happening or not happening is in conflict with the proprietary lease, or the board or property manager refuses access to the minutes, you can contact the NYS Attorney General's Office for assistance.
There are also private mortgage lenders that do not work within FannieMae/FreddieMac federal mortgage restrictions. Perhaps you could offer to buy down the interest rate or reduce the price slightly to a buyer to compensate for a slightly higher interest rate from a private mortgage broker.

Thank you. We are going to go down the private lender route.
The AG's office could definitely take this on, however, need to involve more shareholders, as this will be a big lift on a long road.

More to come if I'm still in this co-op by the fall.

There are several issues other than sponsor presence that drive a lenders decision to lend, or not to lend. I manage a building in a similar (or worse) high ownership / no resale situation where we have no issues with financing with any of the major banks. Key questions that drive a final decision is how strong is the coop reserve? does the sponsor have shared pledged against a loan or collateralized? If so, then has the sponsor defaulted against any payments or loans in the past? Are amendments up to date? .... several more...
While lending guidelines to coops have gotten more strict in the last 5 years, I would enlist the assistance of your manager to answer all the lenders concerns adequately... even as the sponsor/manager, he should have interest in ensuring you are fanciable since it directly effects the value of the shares and ultimately, his rent.

We have a co-op with a swimming pool which several sharholders would like to convert for other uses. Would a maintenance reduction be applicable in this case

This seems to me like a reasonable process in order to manage insufficient lockers for all residents, giving priority to shareholders (owners of units) versus renters.

From a legal perspective, unless your rental agreement identifies that a locker is in included in your rent, then I don't believe there are any legal grounds for rent reduction nor do I think that it is a loss of service or discrimination. It is simply a refined process giving priority to an owner versus a renter.

If you are a renter, you could contact the shareholder who owns the unit that you rent and ask them to submit a request under their name.

Thanks for your reply BUT It has been precedent in our building that we have a normal first come waiting list since the inception of the storage lockers. It is certainly fundamentally discriminatory to treat a category of residents differently - in this case. It is also against community spirit. No - I think your opinion is wrong. To add another screw, co-op House Rules do not apply to regulated renters.

House Rules would apply to renters as well, otherwise, and as JG indicates, there would be discrimination against owners by allowing renters a free for all and expecting owners to abide by house rules. That certainly would not support a "community spirit".

There was a rule versus "precedent" (an accepted pattern). That rule has been changed, which your governing board is allowed to do.

Regulated renters are governed for some items and to protect you from such items as repairs, rent increases, safety, security, habitability etc. But they do not exempt you from house rules.

Original regulated/controlled tenants in a coop are NOT subject to coop house rules. They are only subject to what is in their lease. This is a fact Google it.

I agree with Ned. We also have storage lockers and give the resident owners on the waiting list first access when one becomes available.
In my coop, house rules apply to ALL residents. Renters are actually subletting from the coop sponsor. House rules should apply to the sponsor as well as anyone subletting from the sponsor. Otherwise, THAT would be discriminatory. You're saying that house rules including those regarding quiet enjoyment, odors, carpets, recycling, etc. do not apply to renters in your coop?

We have always treated all residents equally until now.
You cannot skip over minorities for non minorities so how is this a legit rule?
It creates two tiers of people.
FYI rentals (regulated and controlled) have their own lease. Coop rules so not apply . Google it.

In our Co-op Storage Lockers are for Unit Holders not sublets. Storage Lockers must be under the Unit Holders name. Sublets are not permanent residents. If the Unit Holder decides to have the sublet use his or hers locker that is the option of the Unit Holder. Just an opinion.

The locker waiting list should be comprised of shareholders only. The shareholders that have installed tenants in their units can then create a sublet agreement between themselves and their tenants for a locker when one becomes available. The management of the building should maintain a list of rented lockers and the lease end dates so that empty lockers can be offered to those on the waiting list as soon as possible.

Your Board should contact its attorney.

Don't even think about it. This anyway sounds very odd. Who do you really want to spy on here?

Nope. Cannot do audio. Especially in a public area.

Under NYS and federal law you are not permitted to listen or record audio conversations without one party consent. Simply, unless there is one person physically present who consents to the surveillance you may not listen in or record any conversations. The person who installs it and listens will face both civil and criminal sanctions. Any other questions, please feel free to email me directly. Tim

I would think that failure to pay rent is grounds to terminate and evict the sub-tenant.
Is the unit owned by the Coop itself, or by the Sponsor? If it's owned by the Sponsor (or other entity) I'd think that the Sponsor is in breach of the Proprietary Lease.

The coop owns the units, we no longer have sponsors. Twice before since I have been involved with the Board have renters not paid and we have not been able to collect, even with a judgement. I want us to give the tenant notice, that she needs to find a new home as she clearly can't afford this rent. I don't know why we keep ending up in this predicament and it affects the daily operating expenses.

Here is a fact sheet from the New York Department of Labour.
You cannot ask marital status for the very purpose you listed; bias, e.g. there could be "aggressive marital issues with custody".

https://labor.ny.gov/careerservices/PDFs/p117.pdf

Since that is considered a potentially discriminating question. There is always ways around these and other ways to ask...
"we are offering a 1 bedroom apartment, is that suitable to your needs and future plans?" usually from there, they will open up with the details...

You would have to examine your condominium’s declaration, by-laws and rules and regulations to see if there is a clause specific to large events being held in units. If nothing is stipulated, I think a board would be overstepping their boundaries by requiring board approval. However, the board pursuant to its general authority to manage the condominium and its common areas, may want to acknowledge, via letter, that they are aware of such a gathering being planned and remind the owner of their responsibility for their guests (e.g. noise by-laws, building damage, garbage removal, elevator use etc.).

The prevailing factor with respect to the amount of guests permitted would be the C of O (Certificate of Occupany) for the unit, the elevator and the common party room, if your building has one. The C of O would stipulate the maximum amount of people allowed in any of the areas. While Ned's advisement to review your By-laws and House Rules is correct, a review of the C of O is necessary to ensure safety and Fire Department requirements are being complied with, and if the board determines such was not the case, and the number of guests exceeded the maximum allowable occupancy, the board must then notify the unit owner of the violation and be clear the condition cannot be repeated during their next event.