Co-op board wants to ban incompetent broker. Can it?

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By Teri Karush Rogers  |
January 5, 2011 - 10:39AM

Co-op boards have been known to go to great lengths to protect resale values, including turning down a sale if they believe the price is too low or encouraging buyers and sellers to strike backroom deals that produce artificially inflated closing prices.

Now, stung by a lowball sale of an apartment that lingered for a year on the market in the hands of an allegedly inattentive agent, a board member on Habitat’s BoardTalk forum wants to know if it’s okay to bar the agent from handling any future sales in the building.

BrickUnderground checked in with a few of our legal experts and found opinions strongly divided.

Co-op boards have “exclusive control over the operation of the building subject to the shareholder’s rights contained in the proprietary lease and bylaws,” says real estate lawyer Stuart Saft.  “Since I have never seen either document contain a right for a shareholder to use a particular broker, the board could certainly ban an incompetent broker or one who is dishonest from handling sales in the building…unless there is a showing of self-dealing, discrimination or bad faith and unless a broker-board member is attempting to control a building’s sales.”

While agreeing a board has a right to ban brokers, attorney Dean M. Roberts questions whether incompetence is a strong enough reason to interfere with a shareholder’s freedom to hire.

Real estate attorney Robert Braverman, meanwhile, says the board has no power to blackball a seller's agent.

“That is a private business arrangement between the shareholder and the broker,” he explains. “What does an individual’s decision to retain a particular broker have to do with operation of the building? A proprietary lease does not give a shareholder the right to eat Kashi Wheat Flakes for breakfast. Does that mean a board can ban the cereal from the building because it is partially sweetened and not the healthiest choice for your morning meal?”

As a practical matter, he notes, a ban might not even be necessary:  “Why would another shareholder retain an incompetent broker who failed to get a good price on the sale of a neighbor’s unit?”

Related posts:

Killing deals to protect property values

4 neat ways to use an investigative lawyer in a co-op or condo

1 in 10 co-op sales inflated to pass board

Hiring an insider to sell your apartment

Trouble selling? Cherchez le doorman

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Teri Karush Rogers

Founder & Publisher

Founder and publisher Teri Karush Rogers launched Brick Underground in 2009. As a freelance journalist, she had previously covered New York City real estate for The New York Times. Teri has been featured as an expert on New York City residential real estate by The New York Times, New York Daily News, amNew York, NBC Nightly News, The Real Deal, Business Insider, the Huffington Post, and NY1 News, among others. Teri earned a BA in journalism and a law degree from New York University.

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