Co-op Conversion Vote Properly Counted

March 31, 2010

LVT Number: #22554

Facts: In 2004, HPD approved the conversion of a 746-unit Mitchell-Lama co-op building from affordable and moderate-income housing to free-market status. This was based on the votes of tenant-shareholders. Each share was counted toward the vote. Two years later, HPD decided that a new election was needed on a per-owner basis. Two-thirds of the tenant-shareholders voted against the conversion. The building owner then sued HPD, claiming that the votes should be counted on a per-share basis, not per-owner.

Facts: In 2004, HPD approved the conversion of a 746-unit Mitchell-Lama co-op building from affordable and moderate-income housing to free-market status. This was based on the votes of tenant-shareholders. Each share was counted toward the vote. Two years later, HPD decided that a new election was needed on a per-owner basis. Two-thirds of the tenant-shareholders voted against the conversion. The building owner then sued HPD, claiming that the votes should be counted on a per-share basis, not per-owner.

Court: Owner loses. The Business Corporation Law makes the owner’s 1963 certificate of incorporation the controlling document. And the certificate states that each tenant-holder of shares was entitled to one vote.

East Midtown Plaza Housing Co., Inc. v. Cuomo: NYLJ, 3/16/10, p. 40, col. 5 (Sup. Ct. NY; Goodman, J)

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