Cooperative boards of directors may be limited in their power to reject a proposed apartment purchaser. These limitations are set forth in the cooperative’s proprietary lease. When a board acts contrary to those restraints, it risks suit by the aggrieved seller to force the board to approve the sale to the proposed purchaser and, in addition, to recover the seller’s attorney fees and damages for the seller’s costs incurred to carry the apartment until the court-ordered transfer occurs.

This is what happened in Kotler v. 979 Corp., Index No. 653398/2019, Supreme Court, New York County. The executor of a deceased shareholder that resided in a duplex apartment at 9 East 79th Street in Manhattan requested the cooperative board to approve the estate sale of the 510 shares allocated to the duplex and the assignment of the proprietary lease to the decedent’s daughter. The daughter had been raised in the apartment, lived with her mother there for 27 years, had friends in the building, and desired to raise her family in her childhood home. In the application, the executor showed the board that the daughter had several million dollars in her bank account, was the beneficiary of trusts valued in the tens of millions of dollars, had annual income in excess of $500,000, was gainfully employed, and thus was a financially responsible member of the decedent’s family.