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New York City Real Estate: HDFC Co-Operative Apartment Building: Proportional assignment of voting rights

New York, NY |

Our HDFC in New York City assigns shares and maintenance by the number of rooms an apartment has, yet when it comes to voting each apartment has the same number of votes, no matter how many rooms a shareholder has or much maintenance the shareholder pays. As we are an economic cooperative, this seems unjust. Is there any way to change this so that we can vote proportionally to our shares? What language would have to be changed and in which document. Our Prop Lease and by-laws are the standard HDFC documents. Thank you

Attorney Answers 1

Posted

Dear HDFC Shareholder:

If you are an HPD supervised Housing Development Fund Corporation you may not be allowed to change the method for voting without HPD approval. HPD determined in relation to East Midtown Plaza, that supervised cooperatives vote on the basis of apartments and not share allocations.

See: http://www.courts.state.ny.us/CTAPPS/Decisions/2012/Nov12/187opn12.pdf

If the Certificate of Incorporation in your HDFC contains the same language as contained in the Certificate of Incorporation for East Midtown Plaza to the affect that shareholders: "shall be entitled to one vote at any and all meetings of stockholders for any and all purposes regardless of the number of shares held by such holder, except as otherwise provided by statute...", then as the Court of Appeals ruled, the Certificate of Incorporation controls the voting as one vote per apartment.

Amending the standard HPD Proprietary Lease and By Laws, will not affect the Certificate of Incorporation.

You may want to consult with an attorney to review your corporate documents.

Good luck.

The answer provided to you is in the nature of general information. The general proposition being that you should try to avoid a bad outcome if you can.

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4 comments

Asker

Posted

Thanks. That seems nuts.

Steven Warren Smollens

Steven Warren Smollens

Posted

OK. The Certificate of Incorporation controls how shares are voted in a corporation. That is not news. I suspect HPD utilized a standard Certificate of Incorporation in all city supervised HDFCs. You have to look at yours to see if that is so. Good luck.

Asker

Posted

Thanks. Will do. Do you specialize in HDFCs?

Steven Warren Smollens

Steven Warren Smollens

Posted

Call my office on Thursday.

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