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Our coop sponsor is in the process of securing a bank loan using the unsold shares as security. Is this a warning sign of somthing else to come? Would this make it easier for him to sell his interest to another party as 'holder of unsold shares'?
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Hi,
Wow. Unless the sponsor is spending the funds in the building, this is a huge red flag. Our sponsor went bankrupt some years ago and what a mess that was (the co-op eventually received the unsold shares). You need a co-op/condo lawyer and fast.
First, remember the board has the final approval of whether of loans secured by the building's shares so the board can nix any loan against unsold shares. Second, now is the time for the board to buy the sponsor's unsold shares--by getting its own loan if it has to.
Third, Use the board's leverage to get a very good price for the shares.
Fourth, be prepared for tough negotiations but the board has the upper hand.
Fifth, Yes, get a lawyer but not the usual suspects on board of NY Co-operative Council: they usually represent sponsors or want to someday because boards hire and fire attorneys, are slow pays, argue abt fees, have trouble making decisions, etc.
You need to listen to Rita - she has been there and saved our co-op, where I am President now.
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Ask your Co-op attorney. If the attorney is hired or paid by your Sponsor, have the board engage another attorney so the board becomes her/his client and not the sponsor.
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