Normally, a cooperative can terminate a proprietary lease of a shareholder after a shareholder defaults on its obligations under the lease. If the shareholder does not vacate the cooperative unit, the cooperative can commence holdover proceedings to evict the tenant. However, what happens when a bank forecloses on cooperative shares after the shareholder defaults on payment of its loan.
The answer is that the bank also has the right to evict the shareholder from the cooperative unit. In Emigrant Mortgage Co v. Greenberg, the Court ruled that a bank has the right to evict a shareholder who did not vacate a cooperative unit after having his shares foreclosed upon. The court ruled that even though the cooperative shares were deemed personal property, the bank became the owner of the shares after the foreclosure and could assert its right to remove a party who remained in the unit without legal authority or basis. The case was decided in the District Court of New York, Nassau County.