Estate Administration in New York involves the collection and distribution of the decedent’s assets. The New York Probate Lawyer Blog has discussed the many different types of assets that may be a part of a decedent’s estate. These assets include bank accounts, stocks and bonds, tangible personal property, and real estate. The estate fiduciary, whether it be an Executor or Administrator, has a fiduciary duty to find all of the decedent’s assets so that they can be protected and ultimately liquidated and/or paid out to the estate beneficiaries. Another type of asset that sometimes can be troublesome is a cooperative apartment.
Essentially, a decedent’s interest in a New York cooperative apartment is in the nature of a shareholder of the cooperative corporation. The decedent is the owner of shares of the corporation allocated to his apartment and as the owner he would also be the lessee under a proprietary lease or occupancy agreement. The cooperative corporation, which owns the actual land and building, would be the lessor. As a shareholder and lessee, the decedent and, ultimately, the decedent’s estate, would be subject to the rules and regulations of the corporation as set forth in the by-laws and the lease. Typically, there are provisions in these documents that require a corporate approval to transfer or sell the apartment and the manner in which such approval is needed when the shareholder dies.
Unlike selling a single family home to whomever the executor can find as a buyer, the corporation usually must approve the sale and can reject a prospective purchaser. This approval process can create problems for estate administration particularly where it may be difficult to find a purchaser that satisfies the cooperative corporation. Also, until the apartment is actually transferred, the estate is burdened with the monthly costs of corporate maintenance fees and perhaps a mortgage that the decedent had been paying. I have represented may executors and administrators and have sold and closed title on dozens of cooperative apartment transactions. I have also been involved in a number of matters where the cooperative corporation has presented roadblocks to a transfer or sale of the apartment.
The recent case of Estate of Rubenstein v. Berkeley Cooperative Towers Sec II Corp., decided by Queens Supreme Court Justice Allan Weiss on June 5, 2015, presents an example of the problems that an estate can face when trying to transfer a cooperative apartment. In Rubenstein, the decedent owned a cooperative apartment and the Queens Surrogate’s Court issued letters of administration to the decedent’s mother, who was the next of kin. The administrator/mother and the decedent’s brother attempted to have the apartment transferred to the brother. The application to the cooperative corporation to approve the transfer to the brother was denied by the corporation and the brother and the administrator commenced a lawsuit against the cooperative corporation.
After reviewing the cooperative corporation rules and by-laws, the Court dismissed the lawsuit. The corporate rules provided for a direct transfer to a direct legatee or distributee of the decedent. However, since there was no Last Will leaving the apartment to the brother and the decedent’s mother was the immediate next of kin of the decedent, the brother did not meet the corporation criteria for the direct transfer. The Court found that the corporate rules did not require that it transfer the apartment to the brother. The Court also found that the lawsuit had no basis to proceed upon other grounds and that the cooperative corporation had acted within its rights to reject the brother’s application.
Dealing with a cooperative corporation in estate administration can be very complicated and, indeed, stressful for an estate fiduciary. I have assisted many clients in these matters and if you have any questions regarding this issue call me now for a free review at (212) 355-2575.
New York Trusts and Estates Attorney Jules Martin Haas has helped many clients over the past 30 years resolve issues relating to probate and estate settlement throughout New York City including Manhattan and Brooklyn. If you or someone you know has any questions regarding these matters, please contact me at (212) 355-2575 for an initial consultation.
Jules Martin Haas provides his clients and members of the community with a free monthly e-newsletter which contains articles covering a variety of legal topics including estate planning, financial matters and real estate. If you wish to be placed on the e-newslist, simply e-mail me at firstname.lastname@example.org. You can cancel receiving the newsletter at anytime.