Board rejection: price too low

First of all, only the BOARD determines whether a buyer is "qualified" (or even "lovely", for that matter).

Second, WHO gave you that explanation? Was it in writing? Unless you have IN WRITING from any (or all) board members that the reason they rejected was over price, you have zero power in this situation.

Stop wasting time on this and move forward with a buyer who's really qualified.

The coop's attorney explained this (over the phone, not in writing) to me, my lawyer, the purchaser, and the puchaser's lawyer. Four separate phone calls. I understand it is not in writing, and I am surprised they gave any explanation at all, as they are not legally required to do so.

And yes, the board determines whether someone is qualified, but, knowing the financials of the purchaser (whom I've known for years), he is in much better shape than most current shareholders in the coop, including myself, and is putting down 33%, when only 10% is required.

But the qualification of the purchaser is not what I'm asking about, though I appreciate your concern, NYCMatt! I'm asking, do I have any power in this scenario, and is it legal for the board to demand that my apartment sell for 20% more than any other one-bedroom apt in the entire coop? For instance, is it legal for a board to approve sales of other one-bedroom apts for $800,000 to $1,000,000 but to insist that my totally comparable apt sell for at least $1,200,000?

Any advice pertaining to this question is highly appreciated.

nothing you can do about this one now but i think start making yourself a royal PITA so that next time you have a qualified buyer, the board will be none to eager to have you move out.
don't do things to get fined/against the rules, just do things to reduce everybody's quality of life around you or to increase the stress levels, but that are not 'against' the rules.

You do realize that the market is up a lot in the last 1-2 yrs in NYC, don't you. Wouldn't surprise me at all if your demanded price of 20% above the last 1-BR is because the last 1-BR sold 2 years ago.

What crescent said.
You probably couldnt have picked a worse 2 years to wait.

"Resale co-ops experienced double digit gains in all three price
metrics and across all bedroom categories compared to last
year. This quarter median price was $720,000 and price per
foot was $956, which are 15% and 12% higher, respectively,
than last year. Average price was up an even higher 23%
to $1.222MM. Quarter-over-quarter, co-ops also saw positive
growth with an 8% increase in median price and a 1% increase
in price per square foot."

This is just the last year, not 2 years.

source
http://media.corcoran.com/pdf/reports/2014_Q1/Manhattan_Q12014.pdf

page 8 for co-ops plus chart

And wow I really hate the new version of their reports.

For the record, I would fire that attorney in a hot New York minute for shooting off his mouth like that, and exposing the board to litigation. Is this his first job out of law school??

Sir there was an earlier thread on this subject I'd like to quote:

http://decisions.courts.state.ny.us/fcas/fcas_docs/2011OCT/3001022822011001SCIV.pdf
Plaintiff Chappell, Mitra won against Trump Plaza coop. This should set precedent against coop boards unreasonable sale denial decisions and price fixing attempts at the expense of financially strapped seller.
Flutistic
about 11 weeks ago
Posts: 196
Member since: Apr 2007
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I just heard of a board turning down a sale because of price protection, and the board admitting exactly this in writing.
This happened in Brooklyn. The board sent an email to the buyer and to the seller specifically telling them they would not consider any sales in the building below a particular fixed price. They asked the buyer and seller to "work it out" to agree to a higher price, and to send a new contract, or a rider to the existing contract, to the managing agent for the board package.
Interestingly, the price on the contract was $4400 higher than a closing price on the exact same floor plan, one floor below, six months ago. The unit downstairs was in worse condition though.
The buyers refused to offer more money, and the sellers refused to enter into a shady side agreement that would rebate money to the buyers after the closing. So the apartment is back on the market.

What happened next in my example is, the buyers increased the price, and the board still turned the buyers down.

However I was very interested in the decision quoted by another poster, and linked to above.

The problem is.....going to litigation. And everybody knows that.

Expect to be asked to pass money under the table---that's what happened in my example.

I was offered this option from a seller... who's coop board required a higher price... The problem with this strategy is... The buyer is not protected in any way... I was offered deal... where I would buy a unit for $50k above agreed upon amount, then given this $50k in green cash under the table...

Well, who do I call when the hand giving me this $$$ under the table is empty? This was why I said "no." Then, I was given referrals to attorneys who "specialized" in these sorts of deals, where they would protect my interests, by offering me legal recourse through the use of "forgiveness" letters... Which was a very interesting legal approach towards managing these types of deals...

Well, just throwing my experiences out there for you all!!! enjoy! :)

Very interesting superlun, and you are smart, I hadn't even thought of that. In my example the buyer's attorney advocated the cash under the table, but sellers screamed no way, and seller's atty backed it up. Our issue is that you're lying to somebody about the real sales price. BTW there was a mortgage involved in this sale that did not happen. I don't know how the buyer's atty planned to get away with this.

Flutistic:

It seems to me that ay such contract between seller and buyer would be judicially unenforceable
under New York's contract illegality caselaw. Which means that a buyer who has paid a higher sales
price would have no legal method of compelling a seller to rebate any extra funds paid the seller.

What rb345 said.

rb345 and fieldchester simply haven't been exposed to strategies which lawyers use to actually enforce such a transaction. But if done correctly, in all actuality, interests can in fact be protected in a "under the table" transaction.

rb345 quotes the caselaw's as they were originally intended to be used... But in fact, if you have attorneys who are aware of all the components needed to make a transaction occur, which in this case, is cash under the table... Then the attorney again, can formulate the contracts in such a way that all interests INCLUDING the cash, can be protected.

I think how they do it... Is...
Actual sale price: $800k
Contract : $900k
(Seller owe's unofficially to the buyer $100k, due at closing)
Both parties enter into an agreement/contract before closing that Seller acknowledges liability for $100k of repairs/misrepresentations associated with the sale (this contract is post-dated). During time of supposed cash "hand-off" a forgiveness letter is given to the seller from the buyer for the above mentioned liabilities in exchange for the cash owed to the buyer.

>rb345 and fieldchester simply haven't been exposed to strategies which lawyers use to actually enforce such a transaction.

Hysterical. This is fraud, plain and simple. Not only will NYC and NYS be interested, if you get a mortgage, your bank will be interested. More than $10K in cash? Better file with the Treasury on your own. Are you a member of the bar? How about registered professionally with the SEC or CFTC? Those organizations will be interested in this if you are caught.
Ridiculous - but you are right, I have not been willingly a participant (euphemistically "exposed") to fraud in my personal and business dealings.

Superlun really is smart! (not kidding!) This is what I think the buyer's attorney wanted to do. But to me, it is a fraud--it is just not right, even if you can get away with it and everybody just looks the other way. In my example the amount involved was over $10,000 which has implications too, as gothamsboro points out.

I suspect this issue is going to raise its head again in this environment. The judge's analysis in the Mitra v. Trump Plaza case that Flutistic linked is compelling, and I sense that most boards are still not aware that board members are on shaky ground (to say the least) in rejecting a transaction based on low sales price. Anyone know if there have been any updates since the Mitra v. Trump Plaza slip opinion? Where is NWT when we need him? Have not seen a post from him since I re-engaged with SE Forums a few months ago and fear he might be gone for good. :(

mcr, I didn't get your email re managing agent. 300streeteasy@gmail.com.

@300 - just sent you question re managing agent. Many thanks.