Corrupt Board

Where did the coop get money to buy the apartment? Bank financing? Otherwise that is large cash reserve!!

I'm curious what story was told to shareholders at the time of the 2015 sale?

Yes, like did they buy it for the super?

I know someone on this board whom I consider to be the furthest thing from corrupt. I am going to alert said person to this thread to give them a chance to respond because this is a serious accusation that should not be made lightly.

Guys, grow up! More than half of boards and managing agents in NYC are corrupted anyway, if they don't harass you, that's already a plus. Suck it up.

^ True!

I do not think most of the boards are corrupt. They may make irrational economic decisions or may be difficult but not corrupt. There are always some bad Apples but other board members watch them closely.

I got the story. The 2015 "sale" was a swap to a larger previously rent-controlled apartment whose tenant died. Swapping shareholder was not on the board at the time and bore all costs to effect the swap and renovate the apartment to modern standards. The apartment that is the subject of this post was deemed of similar value to significantly larger apartment because this apartment was fully renovated, whereas swapped larger apartment had not been touched since the 30's.

sounds like an irresponsible post. perhaps the board was trying to protect the value of the building and wanted to prevent an apartment from being sold below market. if they are correct they can sell it later at a profit. standard operating procedure for coops who can borrow money on behalf of the building.

Not an irresponsible post. There is no such thin as "swapping" apartments in a co-op. Corporation shares are bought and sold not swapped. In 2015 the co-op corporation bought a shareholder's (former and current board member) apartment and fast forward to 2019 have listed it for sale at what will be a loss to the co-op after commissions and transfer taxes. As fiduciary to it's shareholders the board was not acting in its shareholders best interest purchasing a shareholders apartment at, if not above, it's market value and reselling at a loss.

Did the coop sell an apartment at about the same time to fund this purchase? When I looked at recorded sale a few back, if memory serves me right it seemed so. What were the net proceeds of the two transactions to the coop?

https://streeteasy.com/closing/10343891

https://streeteasy.com/closing/10339707

Ioserin, what do you think now?

Thanks 300_mercer for posting both transactions. I fully understand why it is difficult to get people to volunteer for boards. Like you I do not think most boards are corrupt, but rather comprised of very busy individuals whose business judgment might not match that of Jamie Dimon’s. In the case of the individual I know who serves on this particular board, I wish said individual were on the board of my own building, so I consider the shareholders of Garden Terrace fortunate to have what I suspect is quite a solid board.

One would think a broker like Issac Oserin will check some facts before commenting.

300_mercer. I don't understand your point. It just seems suspect that a co-op corporation would purchase a shareholders unit at a market price regardless of how it was funded.

There are two units involved - one the coop bought and the other the coop sold to the same shareholder. Net proceeds seems to close to zero. So it is a relative price of the two units discussion. Presumably, the board went through proper discussion and appraisal before doing it.

300_mercer, yes I see two units were involved. We obviously don't know the complete details but
regardless, a co-op board is a fiduciary to it's shareholders and it's poor judgement to be making transactions that are not at arm's length.

Is that “corruption” - as title of thread says - or “business judgement” not every one will agree with? I completely understand people questioning the latter.

@300_mercer - you are more patient than I.
@ioserin - I would argue that rendering an opinion without full information is "poor judgment." If you are genuinely concerned about this situation or know any shareholder who feels aggrieved by the purchase, the proper course of action is to contact the building's board of directors through the managing agent such that you fully understand the situation before forming an opinion, not to mention before publishing an opinion in a forum such as this one.

I have crossed paths with a co-op board or two that likely have corruption issues- but I couldn't prove it, and wouldn't post on a public forum without proof. One of those boards was taken over by a publicly appointed administrator - which re-enforced my belief. That said, typically boards have to make decisions that fall under the business judgement rule that isn't always obvious or popular. Before jumping to conclusions, I would have to give them the benefit of the doubt. It was wrong to call them out without knowing the full facts. I have served on my condo board as President and Treasurer, and despite turning around the health of the building, I have had to deal with a lot of angry owners over the years. In the big picture, despite all the anger and insults- I fixed most of the problems.

Fortunately, I live in a building where most residents are very appreciative of the work of the board - and it is needed a fair bit of voluntary work for the collective benefit of every one.