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in our prop lease (coop) it states, "as long as the sponsor owns any shares, the apt corp. may not impose on shareholders any assessment whatsoever except by vote of 100% of issued shares unless the reserve fund is under $15k or irrevocably committed to other improvements."
1) OK so does this mean that assessments to "meet operational expenses" that are imposed without such a vote of shareholders are illegal? our board has been imposing assessments for years for various purposes - without such a vote.
2) we have always had about 250k inthe reserve fund.
re: "issued shares" - I believe that a sponsor has no say in the matter (yay or nay) . it merely seems to be a rul that , as long as he has shares, there may be no assessment over 15k.
2) can you define what is meant by "issued share"?
Last night I checked my proprietary lease and ours is more generous. It limits the sponsors position to only 28%.
In other words, if the sponsor in the builidng has equal or more than 28% of the shares, our board needs to request authorization of individual shareholders (issued shares)v. sponsor (unassinged shares). Luckily, we passed this number and the board is now free to assess without consulting first the sponsor for its blessings.
This measure protects the sponsor from high cash demands by the co-op that it did not plan for during a given fiscal year. So, a board needs to first count with the sponsor's blessings because the sponsor may block the assessment by voting against it and by speaking out at the special meeting. As you probably know well, if there is a vote on an assessment, there are individual shareholders that will oppose it and you will end up borrowing from your reserves to patch your operating budget.
As I said previously, if your sponsor has gone along with the assessment without invoking its powers, it has given its blessings. However, if you prepare to raise a large reserve through assessment, make sure you explain it to the sponsor the reasons so that it sees your point. Since you are usually communicating with a management representative of the sponsor, then give sufficient time for such a plan so that the management representative may convey it to the owner.
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you will see that it says all shares. approval of ALL shares.
No need to re-read, but here I go again!
If you are technical about it, it was not illegal that you did not try to obtain a vote from your shareholders. It only meant that you should first count with the sponsor to make sure that it is in posiiton to provide your support or not. If not, then, you need to look for the support of the rest of the shareholders.
In your case, the sposnor is in control even if it owns one apartment or one share to sour your proposed assessment. If you wish to assess, you need its blessings. This is why, äs long as it owns a share, an assessement requires the vote of the shareholders." However, if you remove the shareholder, i.e., it does not say a hoot or it has sold or its assets, the assessment is valid.
You may argue that this is not what the language suggest. True... if you have not encountered oppositions, then it means all the shareholders have given their blessings as well. Otherwise, they could say, well! what about the sponsor...it owns shares; is it happy about the assessment?
Recommendations: now that you know what to assess means in your builidng, then you should look for an amemndment of your proprietary lease to give you more flexibility to impose assessments as needed or before you adopt one (for fear of being challenged) you should follow to the T what your proprietary lease says. Let the sponsor know what is going on and let them challenge your assessmen.
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No need to re-read, but here I go again!
If you are technical about it, it was not illegal that you did not try to obtain a vote from your shareholders. It only meant that you should first count with the sponsor to make sure that it is in posiiton to provide YOU support on your assessment. If THE SPONSOR DOES not AGREE WITH YOUR PROPOSED ASESSMENT, then, you need to look for the support of the rest of the shareholders TO REMOVE THE OBJECTION.
In your case, the SPONSOR is in control OF THE DECISION TO ASESS, even if it owns one apartment or one share OF YOUR BUILDING. IT HAS THE POWER to sour your proposed assessment. This is why, äs long as THE SPONSOR owns a share, an assessement requires the vote of the shareholders." HOWEVER, IF THE SPONSOR AGREES WITH THE ASSESSMENT, YOU HAVE INDEED REMOVED THE NEED TO GO TO YOUR SHAREHOLDERS AT LARGE.
You may argue that this is not what the language suggestS. True... if you have not encountered opposition FROM YOUR SHAREHOLDERS AT LARGE, then it means all the shareholders have given their blessings as well. DON'T THEY HAVE A COPY OF THEIR BY-LAWS AND PROPRIETARY LEASE TO RAISE THE OBJECTION? What about the sponsor...it owns shares; is it happy about the assessment? WE NEED TO VOTE.
Recommendations: (1)now that you know what to assess means in your builidng, then you should look for an amemndment of your proprietary lease to give you more flexibility to impose assessments as needed or before you adopt one (for fear of being challenged) you should follow to the T what your proprietary lease says. (2) Let the sponsor know what is going on and find out if there are any obejctions to the assessment for which a general vote may be required. (3) Ask your attorney for a deeper interpretation of your proprietary lease / bylaws in regards to this clause.
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I asume from your posting that you have a sponsor or investor.
If you have one and it has not said a word about past assessments,in fact, it has paid for the assessments without giving you problems, then you should not worry. The sponsor has given its blessings.
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