A buyer asks: I entered into a contract for the purchase of the shares of a cooperative unit. The purchase was contingent on the approval of the cooperative corporation (board). What if I don't get their approval?Generally, a properly-drafted contract will permit the buyer to recover his down-payment and cancel the contract if despite the buyer's best efforts, the cooperative corporation fails to give its consent to the transaction. Keep in mind that the contract will often require the purchaser to use his best efforts, that is, cooperate with the cooperative corporation by providing all information, financial disclosures and personal interviews that the board requires in order to complete the decision-making process. If, despite the fact that the buyer cooperates in every respect with the decision-making process of the board, the cooperative corporation nevertheless declines to approve the transaction, the purchaser will generally be entitled to cancel the deal and recover the down payment from the seller.The tougher question is, what happens when the cooperative corporation "conditions" its approval for the purchase upon the buyer? For example, placing a sum of money into escrow to cover advance maintenance payments on the cooperative unit. If the contract does not provide for cancellation by the buyer unless the approval of the board is "unconditional," the seller may take the position that even a conditional approval satisfies the contract and obligates the buyer to complete the purchase, no matter how onerous the condition imposed by the cooperative corporation.Caveat: To avoid that situation, it is good draftsmanship for the purchaser's attorney to place a clause in the contract of sale to the effect that the purchaser may cancel the purchase, if, despite the purchaser's best efforts, the cooperative corporation does not provide an "unconditional" approval of the purchase.A buyer asks: I entered into a contract to purchase a piece of property and a title search reveals building-code violations. If the seller cannot correct the violations, what is my recourse?Generally, a contract of sale will provide for contingencies in situations in which a title search reveals building-code or certificate-of-occupancy problems with regard to the real property involved. Most contracts provide that at the buyer's option the purchaser may give the seller a reasonable opportunity to clear title by correcting the title defects, i.e., clearing up the violations.If the seller is unable to clear the violations after being given reasonable opportunity to do so, the purchaser generally has the option of taking possession of the premises "as is," with no rebate in the purchase price, or of cancelling the contract and recovering the down payment.Caveat: Unless the contract provides otherwise, or the seller agrees to do so, the purchaser generally has no right to insist on a reduction in the purchase price due to the inability of the seller to clear up the violations on the property. Generally, the contract will only permit the buyer, as a matter of right, to take the property "as is" in that situation.This is a part of a series arranged by the Queens County Bar Association as a public service to our readers. Nelson E. Timken is a member of the Legal Education Committee of the QCBA.
©2005 Community News Group
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