My co-op created its share distribution years ago and I've noticed something is off: My neighbor and I both have apartments that are 650 square feet, but we don't have the same number of shares. Why would this be? Can my shares be challenged or changed?
There may be other reasons for the difference between your neighbor's share allocation and your own, our experts say, and challenging the valuation could be quite difficult.
"Cooperative share allocations may be based on the size, value, location, views, and amenities. So units of the same size that are located on different floors or with different exposures may have different share allocations," says Jeffrey Reich, a partner in the law firm of Schwartz Sladkus Reich Greenberg Atlas.
Consider whether there may be differences between the apartments aside from square footage that could affect share allocation. If you can't find any and suspect the shares were misallocated, you still may find it difficult to address the error.
"If the apartment corporation re-allocated the shares, there may be an issue as to when that action occurred," says Kevin McConnell, a partner with Himmelstein, McConnell, Gribben, Donoghue & Joseph (a Brick sponsor). "The shareholder may have missed the statute of limitations, which could be as short as four months."
It's also possible that you waived your right to object to the share allocation when you purchased the apartment.
"Before purchasing, the tenant-shareholder is charged with the obligation to perform 'due diligence.' This would include inquiry into the number of shares allocated to the apartment the person is considering purchasing," McConnell says.
Another hurdle you face to challenging your number of shares is the fact that typically, an expert—often a real estate broker—confirms that the allocation represents the value of the apartment relative to the building when it's determined.
That said, you may be able to take the issue to court—though again, the statute of limitations could hinder you in your ability to challenge your board.
"Where a misallocation of shares had been made by error, it is possible to pursue an action to force a reallocation of shares," Reich says. "New York courts have reached conflicting determinations with regard to reallocation claims, and the complaining shareholder’s action may be barred by New York’s statute of limitations depending on when the shareholder learned or should have become aware of the misallocation."
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