You Inherited a Co-op: How Much Power Does the Board Have?
Co-op boards have a lot of power, and if you've ever applied to one, you may think their proceedings are shrouded in mystery. And they can be!
Co-op boards can reject you for almost any reason, as long as they aren't violating any laws. They can refuse to allow you to live in the building even if you own shares. If you inherit someone's shares in a co-op, you may not be able to occupy it. You might not even be allowed to keep the shares (though you will be allowed to keep the proceeds of the sale of the shares).
Usually, the original owner's proprietary lease can be transferred to a spouse who was living with the shareholder when he or she died. That rule may even apply to a family member who was living there. Before same-sex marriage was legal in every state, many co-ops extended the same privilege to same-sex couples who were cohabiting. When the shares are left to someone who wasn't living there already and/or isn't a relative by blood or marriage, things get a little tougher. The new shareholder still has to be approved by the co-op board before they'll be granted a proprietary lease, and permission to live in the building. You can be rejected by the board for any number of weird reasons.
In an ideal world, if you want to live in the place you inherited, you'll pass the board interview with flying colors. But if you don't, you do have options. You can sell your shares, knowing that any buyer will have to be approved by the board. You may be able to lease your place to a tenant, provided the building allows you to do that, and that the tenant can pass muster with the board. If you own a co-op, make sure you explore your options when you're planning your estate. You don't want to leave your heirs with a headache, property they can't occupy or sell. Find out exactly what your lease stipulates, and plan accordingly.