Buying hallway space?

I think the coop will decide based on precedence. It should be similar to price per sq ft of an apartment in estate condition. If coop wants to squeeze you as you really want it, they can charge higher.

Also, the above assumes they be allocating additional shares in proportion to the extra square footage.

Agree with 300.
But I am curious as to how boards/buildings work out the additional shares.
Does the co-op "add shares" and sell them to the unit. I think shares in a corporation are finite and this is not legal.
So then they have to redistribute (take away) some shares proportionally from the other units.

THis can be dicey for both scenarios.

A) What if down the road the co-op wants to sell the whole building to a developer. Every other unit has devalued their compensation by giving up some shares or the dilution of.
B) What about everyone's other legal documents and their mortgages that state their exact amount of shares and proportion of ownership. Do all those need to get amended? I realize the amount is small but in principal, wouldnt a creditor be averse to or have to give an ok to a dilution of "value" this way?

Additional shares can indeed be issued for a consideration. Believe legal documents for other units do not change as the number of shares for other units remains unchanged.

If there are no additional shares to allocate, the board could approve a situation where you pay a flat fee for a lease of the hallway (co-terminus with your proprietary lease) to acquire the space.

Then you would pay monthly rent equal to the shares that would have been allocated based on the square footage of the hallway space.

The board would likely want to have an outside appraiser value the hallway space, though some boards might arbitrarily assign value themselves. I would prefer the former as it is more transparent.

Unless the corporate formation documents do not permit it (highly unlikely), a corporation may create new shares - they are infinite (practicality aside). Issuing new shares is dilutive to voting rights for existing shareholders, but in practical terms is insignificant, because hallway space may only represent a few shares, and a very small percentage (<1%) of total shares.

There is no financial dilution, as the corporation has increased stockholders equity (from the cash brought in from the sale of the shares), and has improved their debt to equity ratio, something that lenders to the stockholders (who have the stockholders shares as collateral).

missed the end of the sentence:
... something that lenders to the stockholders (who have the stockholders shares as collateral) should be happy about.

But there is dilution in the individuals percentage of ownership of the building (company) as a whole.
Albeit a hallway would be too small and inconsequential but how about ...say....a roof space.

Lets say there is a 10 unit building with 1000 outstanding shares. All equal size apartments so everyone has 100 shares.
Unit 9 wants to buy the roof space above his/her unit for private use and the board assesses thats worth 25 shares.
Unit 10 wants the same deal and gets it too.
Now you have 1050 outstanding shares.

3 years later a developer offering 50% above market wants to buy the entire building and the board agrees.

Pre roof space transaction, you as unit 1 would get 10% of the purchase price for the building.
Post roof spacetransaction, you are getting 9.5% of the purchase price.
An extreme example but there is your dilution.

The proceeds of additional shares add to the cash balance of the coop; any money paid by the developer is additional. It is similar to a public company issuing shares at fair market value.

In your example, the proceeds to be divided are
Price paid by the developer plus the additional cash due to sale of the roof rights.

yeah I guess, my example was quite extreme anyway

No one would want the shares, and the added monthlies and allocation of future assessments. But this is an opportunity for a near term and long term money grab by the coop, so they will take it, recovering capital for the share sale and additional monthly maintenance, despite having yielded the obligation to maintain the space to the purchaser. The share sale requires approval of the coop; a lease of the hallway space could be done by the board.

You have to look at the Offering Plan and the number of shares authorized vs allocated. Of course, the Coop Attorney with advise the Board that they can do WTF they want to and hang it on the Business Judgement Rule, but actually there are buildings where legally the requirement would be to get a supermajority vote on any share reallocation. The Board could also find itself subject to a "waste of corporate assets" case for giving up the space on the cheap.

The closest case I can think of is ?Scianna? Vs Glass House Owners (can't find a link right now)

Thank you!