Seward Park Co-op Board Voids Sale of One-Bedroom That Went at Auction for $329G
Linda Salamon sues to keep the apartment
BY BARBARA ROSS
NEW YORK DAILY NEWS
Thursday, December 1 2011
Linda Salamon thought she won the real estate lottery last May when she bought a $400,000 one-bedroom co-op apartment on the lower East Side for $329,000 at a public auction.
Three months later, her ticket was voided when the Seward Park Co-op board that runs the sprawling building complex — complete with fitness center, landscaped grounds and 24-hour doorman — claimed the sale was no good because it should have been offered the property first.
Salamon of Roslyn, L.I., is now suing the co-op and Chase Home Finance, which put the apartment on the block after the current occupant defaulted on a $349,600 loan .
Salamon declined to discuss her battle, but her lawyer Richard Klass said that under state law, the co-op board cannot exercise its right of first refusal because the sale is not voluntary; it was forced by the lender.
He also noted that Seward Park's board was notified of the auction and could have bid on the apartment when Salamon won the unit.
Seward Park’s lawyer, Arthur Weinstein, said the board has “many legitimate reasons to exercise its right of first refusal.” Bargain basement prices hurt current co-op shareholders, he said, when they are looking to borrow money against their units because appraisers “use comparable sales to determine the value of individual apartments and entire buildings.”
Both lawyers agreed that while condominiums often exercise a right of first refusal, very few co-ops in the city have that provision in their bylaws.
Jacob Goldman, owner of LoHo Realty, which specializes in co-ops on the lower East Side, said Seward Park, East River Housing, Amalgamated Housing and Hillman Housing all adopted the provision in 1997 and each has used it to block a sale.
Goldman said auction sales are not the only events that have triggered use of this rule. Sometimes, he said, estates will offer to sell a unit at less than market value and the board has opted to buy the unit, flip it for a higher price and put the profit into the co-op’s maintenance budget or reserve fund.
“It might not seem fair to a person who got a deal of a lifetime, but the rule is there in the best interest of all the shareholders,” Goldman said.