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I am an original existing shareholder, along with my father who passed away. We are both on the lease and stock certificate, we became a co-op in 2000, the board is now requesting my tax returns to be "income" eligible, in order to transfer his portion of the shares to me. Is this legal? I am not a new purchaser, why do I need re-qualify again? Is there a statute or regulation I can cite on this?
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First, I am not an attorney, so from a legal perspective this post is worth what you're paying for it.
Married couples can hold property as Joint Tenants (With Right of Survivorship). This may also be called Tenants by the Entirety; there are subtle differences. Joint Tenants or Tenants by the Entirety means that each person owns 100% of the property and there is no "passing" of any deed, title, stock shares, etc because each is a full 100% owner. I don't believe Joint Tenants or Tenants by the Entirety can arbitrarily dispose of their shares because those shares are also fully owned by their spouse, but I am not sure about this.
You and your father are probably listed as Tenants in Common. This means you each own 50% of shares of your co-op. You each have full control of the disposition of your half of the shares. He is not required to name you as their new owner. He could, if he wanted to, give them to your sibling(s), a relative, a friend, or a complete stranger.
When your father died, I assume you inherited his half of your co-op shares. Check his will. His shares have to legally change hands from his estate to you, which triggers a "new purchase" event in the eyes of the board. This is why they are going through the "new purchase" procedures.
The income check should just be pro forma and there should not be any board opposition. Check your proprietary lease. It should have a paragraph which states that the board cannot place any undue burden in approving the transfer of shares between Tenants in Common.
In your situation I would strongly recommend you consult with an attorney (because I ain't one) to make sure you are actually entitled to your father's shares and that the transfer goes smoothly. I found this article which briefly describes property ownership. There are many more like it on the internet.
http://homeguides.sfgate.com/definition-joint-tenants-tenants-common-1429.html
Good luck!
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