Q: I represent a seller in connection with the sale of her co-op apartment. After searching all of her records and turning her apartment inside out, the seller is unable to locate her stock and lease for the apartment. In addition to requiring the seller to execute a Lost Stock and Lease Affidavit, the managing agent for the co-op is now requiring the seller to post a bond. Is this common?
A: No, it is not common for a co-op to require a shareholder to post a bond if the shareholder loses their stock and lease. While the co-op has the right to request a bond, generally, the co-op simply requires the shareholder (or the party who lost the stock and lease) to execute a Lost Stock and Lease Affidavit. The Lost Stock and Lease Affidavit generally states that the shareholder: (i) is unable to locate the stock and lease and (ii) is required to indemnify the managing agent and coop for any loss that the co-op incurs as a result of the loss of the stock and lease. The shareholder (or the party who lost the stock and lease) will likely incur a fee in connection with the Lost Stock and Lease Affidavit.
Important Tip: One of the first questions that a real estate broker should ask a seller of a co-op apartment is who has the original stock and lease. If the shareholder has a loan, then it is likely that the original stock and lease will be in the possession of the lender. If the stock and lease is lost, then the managing agent for the co-op should be contacted immediately so as to determine the co-op’s procedures concerning lost stocks and leases.
Neil B. Garfinkel
REBNY Broker Counsel
Partner-in-charge of real estate and banking practices at Abrams Garfinkel Margolis Bergson, LLP