Low-Priced Apartments Next Door, Protecting Identity; Insuring Solar Panels
Keeping Prices Up in a Co-op
Q. I am a shareholder in a co-op building and concerned that other shareholders might be pricing their units well below market rate to sell them quickly. For example, a two-bedroom currently on the market is priced significantly below other two-bedrooms in our complex in similar condition. This low asking price will negatively impact the pricing for all other units in the entire community. Should the board block a sale if it is priced far below market value? Isn’t it the board’s fiduciary responsibility to protect the corporation and its shareholders?
A. Before you descend into fire-sale panic, try to have a little faith in the market, which, at the moment, is quite favorable to sellers. With inventories low and buyers desperate for a deal, an apartment that is priced slightly lower than the competition could ultimately fetch the higher price.
“If you price low, you create a frenzy,” said Jonathan J. Miller, the president of the appraisal firm Miller Samuel.
Consider this scenario: Weary buyers open their daily email blasts, expecting the same dearth of affordable listings. But instead, they see the unit in your building, with a modest price tag. After the Sunday open house, nearly every apartment hunter in Hartsdale makes an offer, driving up the price.
And what about the high-priced two-bedroom down the hall? It might languish on the market, never becoming the object of a bidding war. “If you price it too high, you’re just throwing it out there to see what will stick,” Mr. Miller said. “You probably will be selling it for less, because it becomes stagnant.”
However, if a unit is priced suspiciously low, buyers will likely be wary of a deal too good to be true and steer clear, Mr. Miller added.
But what if the invisible hand of the market fails to intervene, and a paltry offer ends up before the board? Well, the co-op board does have the right to reject a sale if it deems the price too low — and most court decisions have supported boards on this call.
“A co-op board can turn down a purchaser for any reason or no reason, so long as it’s not discriminatory,” said Aaron Shmulewitz, a lawyer who represents condo and co-op boards.
You are correct to point out that the board has a fiduciary duty to protect the interests of its shareholders. In some cases, that could mean rejecting an unreasonably low sales price, particularly if other sellers are also trying to unload their units for a song.
But there are risks to this, too: If a board goes down this road too readily, its actions could create a chilling effect, hurting future sales. The brokerage community could steer buyers away from a building with a reputation for a fickle board.
If a board turns down every applicant that comes before it,” Mr. Shmulewitz said, “people are going to shun that building.”
Protecting Your Identity in a Co-op Application
Q. My husband and I submitted our tax returns as backup for our daughter’s rental of a co-op apartment. We would like to ensure that all copies of our documents are destroyed. Is there a mechanism to do this?
Upper West Side, Manhattan
A. The application process for a co-op apartment can be a truly humbling experience. By the end of it, the co-op board might know more about your financial health than your own family does. In your case, you did not even get to enjoy the privilege of living in the building after baring your financial soul.
With such high demands, co-op boards and their managing agents should have policies in place that protect the private and sensitive information that they request. The New York State Social SecurityNumber Protection Law, a statute that applies to co-op boards and managing agents, prohibits the dissemination of your Social Security number to the general public. But laws alone do not prevent sloppiness.
“The law doesn’t have huge teeth, but it has a little bit of teeth,” said Adam B. Ginder, the general counsel for MNS, a real estate brokerage.
When the board reviewed your daughter’s application, each member was likely given a copy of the financial package to review, which means that your information was duplicated many times. To protect against snoopers, some managing agents deliver application packages in tamper-proof packaging. Others redact all identifying and sensitive information from the application. By now, all but one of those copies should have been shredded. The remaining packet should be kept electronically in an encrypted format and protected with security codes, not stored on paper.
“Having a hard copy in a filing cabinet, that’s not the way to go these days,” Mr. Ginder said.
To set your mind at ease, ask your daughter’s broker or lawyer to speak with the managing agent about its policies for destroying and storing the information. Confirm with management that your personal information has been handled with care and is protected — and ask if it would kindly return the original documents to you. (The management might refuse.) “If not, there may not be much you can do but cross your fingers,” said Steven W. Birbach, the chairman of Carlton Management.
When an Insurer Shuns Solar Panels
Q. Four years ago I had solar panels installed on the roof of a building I own. I recently decided to look for a new insurance carrier to replace my existing coverage, hoping to get a lower rate. But when I requested a quote from a different carrier, I was rejected. The company said it would not insure the building because it has solar panels. The installation was done with all the necessary permits and inspections. I received federal, state and city subsidies. How can a company reject my application based on the solar panels? If I had known it could have been an issue, I might have reconsidered the installation.
Manhattan Valley, Manhattan
A. Solar installations on residential rooftops are hardly novel. There are about 1,373 residential arrays citywide, according to Sustainable CUNY, which promotes solar energy. A well-installed solar array, like the one you describe, should set even the most risk-averse insurer at ease. That said, who knows what makes an insurer tick? (After all, your current carrier does not seem to mind the panels on your roof.)
“To tell you the truth, it just sounds like they got one weird company,” said Bret Heilig, the founder of Fiveboro Solar, a solar installation company in the city. Mr. Heilig pointed out that his insurance company did not flinch when he installed a solar array on the roof of his own home.
Rooftop solar panels are “not an issue with very many insurance companies,” said Stuart Cohen, the founder of the City Building Owners Insurance Program, an insurance broker that specializes in small buildings. “There are some that won’t do it, but there are just as many that don’t care about it.”
Get back on that insurance-hunting horse and try to find an insurer who will embrace your green ways. Enlist an insurance broker who is familiar with the marketplace — perhaps one that specializes in small residential buildings. A broker should be able to offer you several quotes from competing insurance companies. This will not only ensure that you get adequate coverage for your property, but it also might help you fetch a lower price.