Inheriting Shares in a Co-op? You May Need Board Approval to Move In

The power of co-op boards is legendary, and that power lives on even after a shareholder dies.

Consider these facts of co-op life compiled by realtor.com: If you recently inherited shares in a housing cooperative from a deceased shareholder, you may legally own the shares, but you may still have to jump through board hoops before you can legally live in the deceased shareholder's apartment. Even if you lived in the unit before the inheritance, you might still need approval of the co-op board to stay there. If you weren’t already living there, you’ll need approval before you can move in, with few exceptions.

“Co-op boards are like a box of chocolates — every one is different,” says Noemi Ergas Bitterman, a residential real-estate salesperson with the Corcoran Group. “Their laws, bylaws and personalities can range from the conservative to the downright eccentric. Predicting what any given board will do when an heir wants to move into their family’s apartment is like trying to forecast the weather.”

Here are a few common scenarios:

If the shareholder has an unmarried partner who lives in the unit, that survivor has no right to continue to live there without board approval. “However, that person is known to the building, and I would imagine that most boards, unless he or she doesn’t have the financial wherewithal, would be inclined to find a reason to allow them to stay,” says Margery Weinstein, a partner at the law firm Schwartz Sladkus Reich Greenberg Atlas. “But they still need to go through the board approval process.”

If the shareholder passes away and leaves the unit to a child, most proprietary leases allow “financially responsible adult children” to occupy it. Once again, board approval is required.

If the deceased shareholder was married and bequeaths the shares to a spouse whose name is on the stock certificate and proprietary lease, that surviving spouse automatically gets to stay. No board approval is necessary.

If the deceased shareholder was married but the spouse’s name is not on the stock and lease, then the terms of the proprietary lease dictate what happens. Most leases state that if the owner dies, the surviving spouse doesn’t need consent to occupy the unit.

Many co-ops don't allow units to be used as pieds-a-terre. At such a co-op in Morningside Heights, Julia Boland, an associate broker with Corcoran, recently sold a two-bedroom unit that had originally been inherited by two brothers who didn’t live in Manhattan. Since the building requires owners to occupy apartments as their primary residence, the brothers had a stark choice: move into the unit, or sell it. They agreed to sell.

The bottom line: unless you are a surviving spouse, there is no guarantee a board will approve you even if you inherited the shares from your parent. Weinstein says that the most common standard for approving or rejecting an heir is whether the board deems that person to be "financially responsible." She suggests that marginal candidates might consider offering to escrow maintenance fees for the coming year to strengthen their financial appeal to the board.

But remember, there are no guarantees because every board is like a box of chocolates. You never know exactly which flavor you're going to get.