coop board election - sponsor majority

Most offering plans which I have seen limit the number of representatives the sponsor can have on the board.

With a building 65% sponsor controlled, all people elected to the board will be voted in by the sponsor and while technically the number of sponsor reps are limited, the building is in essence sponsor controlled.
Buying into this building is not a good idea for so many reasons, one being that it would be very difficult to get a mortgage.

With a building 65% sponsor controlled, all people elected to the board will be voted in by the sponsor and while technically the number of sponsor reps are limited, the building is in essence sponsor controlled.
Buying into this building is not a good idea for so many reasons, one being that it would be very difficult to get a mortgage.

Another thought would be how long has this building been a coop? If it changed over more than 20 years ago I would wonder why the 65% Sponsorship. This was prevalent back in the 80's when tons of buildings converted and there were many sponsor units. All these years later it seems kind of odd if not quaint.

Sponsor can't control the board after five years or 50% sold, whichever comes first. See page 4 at https://www.ag.ny.gov/sites/default/files/pdfs/bureaus/real_estate_finance/Coop.%20problems.pdf

We already own in this building. It *was* difficult to find a mortgage, but there is one or two lenders who have a history here.

Streetsmart, you are right: our concern is that the sponsor effectively controls the board. Any ideas/examples of how to influence that? Can the renters influence? Is it unusual for the remaining shareholders to persuade the sponsor? (FWIW, he seems to care about a) collecting his $ and b) having no headaches.)

Bill7284, it was converted in the 80's. When we bought, it was claimed that sponsor sells one unit per year. However, in practice, he lets one undesirable unit sit on the market, unadvertised, unoccupied. He seems to have no intension of exiting. The board says they have THOUGHT about acting against this, but have not done so. Current board leadership has been on board for 30 years.

NWT, I read about that, but the sponsor has 2 of 5 seats. So not technically "control." BUT, as noted above, he has majority of the votes.

https://www.ag.ny.gov/sites/default/files/pdfs/bureaus/real_estate_finance/Coop.%20problems.pdf

NWT answered another aspect in the other thread -- renters have no vote or formal power. But they could certainly form a tenant association that could demand presence at meetings, other input and consultation, etc. despite not having any actual power. As long as the building is meeting its legal obligations to those tenants (i.e. city agencies don't find a lot to cite) their leverage may be limited, though.

How is the voting working for the 3 of 5 tenant-shareholder majority on the board? The remaining 35% of voters vote for those? Or does the sponsor get to vote on those seats too, even though the candidates aren't formally sponsor representatives?

However it works, if you want some changes you probably need to replace all three non-sponsor board members in order to outvote the sponsor designees.

Replacing board members won't help because the sponsor has the majority of voting power.

You can try suing the sponsor. There was a landmark case where the unit owners did this, won, and forced the sponsor to sell. I will try to search for the name of the case and get back. I spoke to the attorney who represented the unit owners a few years ago.

If it's Frost House you're thinking of, the sponsor agreed to sell one apartment per year, and the co-op has to pay the sponsor some money for each of those sales.

Two out of five is not a majority. If the three owner members can't get together and do what the owners want, then the owners should replace them.

Isn't Frost house the other way around - with shareholders owning 2/3 and the sponsor owning 1/3?

I think the case to which streetsmart is referring is 511 W 232nd Owners Corp. v Jennifer Realty Co. from 2002. It is a powerful tool for shareholders in OP's situation if the facts line up. You can google it to get the gist.

Yes city resident, thank you, that was the case. If one googles it they can find the name of the attorney.

Suing the sponsor definitely is something on the agenda. We were duped during the interview -- we were told that the sponsor was doing his diligence to sell units regularly, which turns out to be very untrue. (I'm familiar with the Jennifer case.)

However, until the old board that protects the sponsor (inertia? laziness? fear?) is voted out, there's little to do.

So, is it crazy to try to get the renters to lobby the sponsor to vote my way? Uptown Joe's notion of a renter's association is sort of something I was hoping to inspire. Has anyone seen this done?

I'm not sure why the renters would want to do such a thing. Isn't it contrary to their interests?

Is this a building on W.16th Street?

True -- renters have no interest in the sponsor selling off units. BUT, the impetus at this building for a leadership change is a myriad of other issues -- most pertaining to harassment and neglect. The renters are quite hopeful for a change for that reason.

The building is in Queens.

There's never going to be a board that will not look out for the sponsor's interests. He elects them. Any lawyer that would let his client buy into this building is a lawyer who doesn't care about his client.

I would sell, as one person owning 65% of the units is very risky. If he should come upon hard times and would default on his obligations, this would be a disaster. The building may even revert back to a rental.

Most buildings where there have been sponsor defaults have actually come out the other side in much better condition.