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If a shareholder is a Holder of Unsold Shares with Sponsor Rights but is not the Sponsor:
1. Can the Shareholder sell the apartment to a Purchaser who intends to live in the apartment without Board approval?
2. Can the Shareholder with Sponsor Rights transfer the Sponsor Rights to a Prospective Purchaser who does not intend to
live in the apartment but intends to lease the apartment as an investment unit?
Please advise.
Sponsor RightsOct 20, 2024
If a shareholder is a Holder of Unsold Shares with Sponsor Rights but is not the Sponsor:
1. Can the Shareholder sell the apartment to a Purchaser who intends to live in the apartment without Board approval?
Yes, the Holder of Unsold Shares w/ Sponsor Rights may sell to a purchaser who intends to live in the unit without Board Approval (its one of the perks) - but that transaction is beholden to the Martin Act as a securities transaction.
2. Can the Shareholder with Sponsor Rights transfer the Sponsor Rights to a Prospective Purchaser who does not intend to
live in the apartment but intends to lease the apartment as an investment unit?
No, it usually ends with them, but it depends on the terms of the original sale/transfer from the original sponsor and what entitlements the original sponsor retained after the original transaction. I also depends on if the original sponsor puts his sponsorship in trust and the type of trust.
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Contact an attorney, pronto. You are asking very complex legal questions which may have very precise and limited responses. Do you want to jeopardize any of your current and future prerogatives to as a few dollars?
Always remember that every bit of legal advice you receive in these forums is worth precisely what you paid for it.
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