Bank Can Evict Shareholder After Foreclosing On Shares

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.

About Peter Moulinos
The founder and partner of Moulinos & Associates LLC. His experience as an attorney includes practice on matters involving commercial law, real estate law, litigation, international law, employment law, estate practice and trademark matters.

Comments

  1. bob says:

    But, does the shareholder have any additional rights after she has been foreclosed upon, and has paid the difference (from other monies) between the selling price of the home, and the amount demanded in the original foreclosure? The number of shares held are higher than average, but are not worth much based on current trading prices. The bank has no grounds to attach the shares, but is also in a hurry to have the shareholder removed for not having color of title. But, the shareholder, ironically has a legal claim to general assets? In addition, the bank has bought the home at a higher price than what it was currently worth, and if anyone should get a deal, it should be said shareholder currently living in the home. Any thoughts?

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