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Hi, I'm on the board of our 60 unit building. The sponsor still holds 46% of shares in the building. This is causing a lot of issues as new buyers have tremendous problems getting a mortgage. Most major banks don't want to lend for fear of the high sponsorship rate. A Fannie Mae loan is not possible to be had.
Apart from that it is hurting the building in other ways: the high turnover rate of renters who are constantly moving in and out; no control over who gets accepted as a renter by the sponsor; no following of house rules by the tenants and of course, the resale possibility of the individual apartments.
We have started a law suit against the sponsor in order to get them to sell units but so far the only result has been that they offered to sell five apartments which doesn't really change much about the mortgage situation. Any ideas what we can do?
Thank you.
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Hi,
My co-op of 111 units got 15 sponsor units in bankruptcy proceeding. This provides a stream of capital funds to the co-op when we professionally renovate and sell the units when they become vacant (we have a strict re-rent policy). As a result, we are over 95% shareowner owned.
If the co-op corporation could obtain the sponsor units, you could do the same (I am thinking outright purchase of their stake). I am not sure how your governing documents are written but financial pressure might be applied on the sponsor by way of maintenance increases and assessments on all units. Let them sell the five units first so you have more voting leverage.
Good luck!
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