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Can a 100% shareholder owned cooperative building be sold, with proceeds of the sale distributed to the shareholders and the corporation dissolved?
I assume this has been done?
Typically, most bylaws require 80% of the shares outstanding, not the units, to agree to change the by-laws, thus changing the ownership or the dissolving the corporation in my view, falls in this category, e.g.: 80% of the shares.
If a co-op can convert to condo (e.g.: 80% of the shares voting affirmatively), which in effect dissolves the co-op corporation, one should be able to sell the property and distribute the proceeds.
In this case, as you are evicting those who did not vote affirmatively, one needs to check whether any NY State statues or laws inhibit the “eviction”.
Sorry for the late response -- I didn't spot this earlier.
The short answer is YES, the coop corporation can indeed be voluntarily dissolved and the building sold. It is very rare, but it might occur (for example) if a developer wants to buy your building, tear it down, and put up something else in its place.
For the dissolution procedure, you'll need to check your Proprietary Lease. In our lease -- which was based on the same template as many other NYC coops -- the relevant details are in Paragraph 31(g): Termination of Lease by Lessor / Termination of All Proprietary Leases:
"If at any time the Lessor shall determine, upon the affirmative vote of two-thirds of its then Directors at a meeting of such Directors duly called for that purpose, and the affirmative vote of the record holders of at least 75% in amount of its then issued shares at a shareholders' meeting duly called for that purpose, to terminate all proprietary leases..."
Michael raises an interesting issue about the legality of "evicting those who did not vote affirmatively," and I don't know whether a court has ever ruled on this point. However, the courts have resoundingly upheld Section (f) of the same paragraph, which allows coops to terminate a Proprietary Lease against a shareholder's wishes in the case of "objectionable conduct" by the shareholder.
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If large corporations merge and are sold, why can't a co-op be sold?
I'm sure that you will read your by-laws for dissolution of the corporation and the required minimum number of shares that will have to accept the sale of the property.
What is the reason? ...Repairs required for the property much larger than the value of the property?
Total destruction of the property?
Value of the property much larger than the market value of the individual units as a whole?
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