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!

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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.

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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

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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.

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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.

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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.

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