Co-ops are a unique form of residential real estate in New York City. A co-op (short for cooperative unit) isn’t an apartment rented by the month or year. However, it’s not a condominium or townhouse that’s owned by the person who purchased it.
When someone “purchases” a co-op, they’re actually purchasing stock in the cooperative corporation that owns the property. Co-ops are governed by boards that have the authority to approve (or not approve) a potential resident. Some are notoriously particular.
So, if you live in a co-op, do you have the right to leave it to a family member or other beneficiary in your estate plan? The answer is somewhat complicated.
They may or may not get approval from the co-op board to live there
A co-op owner can bequeath it in their will or other estate plan document. However, whether the beneficiary will be allowed to live there is another matter.
It depends on what the proprietary lease and bylaws of the co-op say, so it’s necessary to review those as you craft your estate plan. Sometimes the regulations state that surviving spouses are automatically approved to live there. Even adult children, if they’re deemed “financially responsible,” may also be automatically approved if they inherit the co-op.
In most cases, however, the co-op board must review and approve a beneficiary’s right to reside in the property, even if they were already living there with the person who’s now deceased – especially if it’s anyone other than the surviving spouse.
Some co-ops require that the owner use it as their primary residence. They may reject a new owner if they won’t be residing there most of the time — or for any number of other reasons, like their inability to show they can afford the financial obligations. In that case, they would need to sell it. However, it can still be a valuable inheritance for them.
Consider your choice of a beneficiary carefully
If you’re considering leaving your co-op to one of your adult children or other loved one, it’s crucial to ensure that they want it. If they intend to keep it, it’s crucial that you and they know what kind of approval process they’ll need to go through and what kind of financial and other documentation they’ll need to provide.
Inheriting a Brooklyn co-op can be a dream come true – or a nightmare. Having sound estate planning guidance can help you ensure that the process goes as smoothly as possible.