Seeking NYC10023 & others re reduction in shares

Check your proprietary lease. There will be no possibility for reallocation of shares without the consent of all or a super-majority of shareholders.

As you said, either adding shares to the other apartments or reducing the total number of shares would both result in the other apartments paying more maintenance. It's not going to happen.

Fascinating- getting paid for buying back shares and saying no.

There is probably some wiggle room to do what you want, but it won't be easy or cheap.

A couple of years ago, I added a half bath by annexing an unused half bath in the common area adjacent to my apartment. Part of the deal involved adding two shares to my apartment's allocation, which were priced based on recent transactions. The shares came from "Treasury stock" which is shares that were originally issued when my coop was built but never allocated to any units (it is common practice at corporations to have some such stock). The result is that I have a little more space, use a little more utilities, and pay a little more in fees.

What you want to do is the reverse, kind of. You want to "sell" some shares to the corporation that would be held as Treasury stock. Your apartment's share allocation and the total number of shares allocated to all apartments would decline. All else equal (as in the building's budget), per share fees will rise (same numerator, smaller denominator). Your fees decline and everyone else's fees rise. Therefore, you will have to pay the building to sell them your shares. If the Board is on its toes, they will ask for at least enough money to fully compensate everyone else for their higher fees. Will it still be worth it for you? Maybe, maybe not.

bloomingdale, are you sure you're looking at it the right way? Coop shares are not divvied up on a per-square-foot basis, as condo shares are. Because RE tax is incorporated, an attempt is made at the initial apportionment to reflect the relative value of the unit ... the view, what floor it's on, etc.

That said, I'd expect the chopped-up equivalent of an otherwise nearly identical original to get some more points for having more kitchens, which I imagine get more points than, say, bedrooms. And larger apartments in the 1980s did not yet carry quite the same premium that they do today, so certainly no points for that alone in the original layouts.

Thank you all - Alanhart I hear what you're saying, and I don't know whether I am looking at this correctly, but the only basis that makes sense to me to explain the greater share allocation to my apartment is its size relative to other apartments at the time of the co-op conversion. There are apartments in the building with much better (e.g. direct river) views on higher floors that have a lower per-square-foot share allocation and hence maintenance. But I believe at the time of the initial share allocation in the 80s those apartments had been cut up into smaller apartments, since recombined into their original floor plan (but still retaining the lower maintenance.)

I went back to the by-laws and it says that the board of directors shall allocate to each apartment shares based on a "reasonable relationship" test, e.g. the value of that apartment in relationship to the total equity of the building.

I had hoped that if a partial buy-back did not affect other shareholders' shares or responsibility for maintenance, and the price simply could be computed based on the present value of the lost future stream of income to the building from the bought-back shares, that would be a nice way to reduce my maintenance -- if the numbers made financial sense -- increase the value of my apartment (which helps all shareholders), and allows the building to add to its reserves. However, I understand that it may be much more complicated than this.

Bloomingdale:

1. New York's Second Appellate Department very recently had a case with just those facts
2. it is the appeals court for Brooklyn and Queens
3. but the decision likely would be followed in Manhattan at the trial and appellate levels

4. shareholder in that case sued to reduce share allocation and monthly maintenance
5. the court dismissed the lawsuit as time-barred

Yes that ruling makes sense to me; chaos would ensue otherwise. I have no interest in bringing a lawsuit, only to understand better what a negotiated transaction might look like if it could be structured so everyone benefitted.

bloomingdale:

1. the coop and its shareholders wouldnt benefit from reducing your maintenance charges
2. only you would
3. they would suffer
4. so it is unlikely they would give you what you want

Eric_14's scenario is possible. The other shareholders' maintenance would go up a bit, but some of that up could be balanced by the down resulting from your payment to the co-op. E.g., if your payment was $100K and that resulted in the co-op not having to assess everybody for some project. Problem is, the entire expense of the proceeding would fall on you, probably wiping out any possible benefit from reduced maintenance or eventually higher sale price. In other words, there's no way for everybody's benefit to balance. To make it worthwhile for the other shareholders, you'd have to cough up more than it'd be worth to you, unless maybe you think there'd be some asymetry in the impact on future sale prices.

Just let it go, unless the other owners of post-conversion combos wanted to broach it together to the shareholders as a whole.

The case rb345 cited is at http://www.courts.state.ny.us/courts/ad2/calendar/webcal/decisions/2013/D37359.pdf

There, the number of shares on the proprietary lease and the amended offering plan were different, so the shareholder claimed mistake. He waited way too long to make that claim, and there were other issues.

Thanks for the case citation and for everyone's interesting insights. Again, it was more out of curiosity and surprise that it had been suggested on a previous thread as a possibility.