Q&A: Stock Certificates and Co-ops

Q. I purchased a unit in a cooperative building in 2014. The board of directors claimed they no longer used stock certificates, even though our stockholders’ agreement calls for a simultaneous transfer of the certificate and the lease assignment. They claim the word ‘stockholder’ was changed to ‘leaseholder’ in the documents in the 1960s,  and as such they no longer issue stock certificates. Would there ever be a situation where not issuing a stock certificate to new owner would  be legally correct? Are they wrong not to issue it?

                           —Confused Shareholder 

A. “Each of these documents are separate and distinct and each should be filled out by the board,” says attorney Eric M. Glazer of the firm Glazer & Sachs, P.A., which has offices in Fort Lauderdale, Tampa, and Orlando. “It is quite possible for the ownership of the co-op to be in the name of one person, as reflected on the stock certificate, but the right to occupy the unit is in the name of someone else as reflected in the proprietary lease.  So the board is incorrect when assuming that leaseholder and shareholder are automatically one in the same.

“There’s no question that sometimes this is a very confusing topic.  In fact, we know that when a person buys a home or a condominium unit, the deed gets recorded in the public records where the property is located.  But what gets recorded when a co-op unit is purchased?  You may be surprised to learn that county recorders do not use a specific method.  I have seen stock certificates get recorded, I have seen assignment of proprietary lease get recorded.  I have seen both get recorded together and I have seen a single document which attempts to act as an assignment of the lease and a transfer of stock ownership.  Bottom line: when purchasing or selling a co-op unit, get the advice of counsel.”

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