Real Estate Agents on Co-op Boards: Walking a Fine Line
Sunday’s Real Estate section of The New York Times wonders whether it's a conflict of interest to have a real estate agent, who sells property in a building, also serving on that co-op's board of directors?
I have personal experience with this both as an agent who served on his co-op board for three years and as an agent who has represented a buyer for a co-op board that was greatly influenced by an agent whose behavior was unethical.
First, my experience playing both roles: I resisted becoming a board member but after multiple invitations and pleading from other board members, decided that my perspective of the real estate market could be an asset to the building and my fellow shareholders. My fellow board members found my perspectives quite useful in carrying out the management of the building and assisting with the determination of what improvements would be most effective in increasing the building's value etc. I also had the priviledge of selling eight of the buiilding’s 26 units while I was an active board member and always recused myself from meetings regarding admissions and remained cognizant of all disclosures that I made to prospective purchasers. It was also very helpful to know exactly what the Board was looking for from a financial perspective and my intimate knowledge of the building gave prospective purchasers a genuine confidence that they were buying in a solid building. For everyone, it was a win-win.
Now for the filp side: On more than one occasion, in more than one building, I have had complications with buyers attaining approval from a Board of Directors solely due to a real estate agent acting as a board member who was “annoyed” that they had not represented the seller with the sale. I have first hand reports from board members in these buildings who have disclosed to me that the “agent/board member” seemed to have a vendetta against me and my clients for not working with them on the sale. Fortunately, one agent on a co-op board does not have enough power to determine acceptance or not of a prospective shareholder. That said, they can make the process more painful than necessary and ultimately affect the “personality” of the board. My clients in these situations were always approved and I’m happy to report that at least in one instance, the agent/board member is now only an agent… and one who still needs some lessons in integrity.
Can anyone who knows alot about the flip tax please help me??
My grandmother passed away in October of 2006. She set up a trust for my mother to recieve the co-op when she passed away. After her death it was told to us by the co-op that all of the assests of my grandmother that were placed in the trust except the co-op could be passed on to my mother without a flip tax being imposed. The managing agent said the co-op had to be treated as a sale to be passed over to my mother from the estate of my grandmother over to my mother. This required my mother to pay a large sum(flip tax) with the sale of this apartment. Was this just???
My mother and I became owners of the apartment in January of 2007 and now are recieving word from the board that the flip tax is being waived as of March for those residents who set up a trust. I think this is totally unfair and would greatly appreciate it if anyone can email me with any pertinent informantion as to whether I can obtain any of my flip tax, legal fees or any monies back. I feel I was taken advantage of greatly? Would anyone advise me to hire a lawyer and if so can anyone recommend one in the NYC area?
My grandmother had a will which left everything to her trust and was probated.My mother was the sole beneficiary.
Is there a conflict of interest if a board member of a coop is also a real estate agent/broker?
Linn,
Not a question that can be easily answered. On the surface it seems to be an obvious conflict but it really depends on the integrity of the individual. That person should also ALWAYS be recused regarding the review and approval of sales applications IMHO.
