What kind of housing do you live in? Chances are that if you live in Columbus, you live in a single family home. Alternatively, you might live in a condominium or an apartment. If someone mentions they live in a co-operative situation, however, the reaction that likely follows is a cock of the head and the question, "What is a co-op?"
To be sure, co-ops are not as common in our neck of the woods as they are in New York or Florida. But as recently as a year ago, there was one co-op organization in the Marble Cliff complex. It got featured in The Columbus Dispatch and the point of the story was how co-op living arrangements present unique challenges to buyers and sellers. And that got us thinking about what challenges such arrangements might present in the event of divorce.
Property division is a significant aspect of nearly every divorce. Coming to terms over real estate assets can be difficult in the best of circumstances and the implications of a co-op arrangement may raise legal issues that require special navigation.
To start with, co-ops differ from condos. When a couple buys into a co-op, they aren't buying a physical unit, they're buying shares of the corporation that owns the whole complex. As part of the purchase, the buyer gets a long-term lease on a unit.
In the context of divorce, logic might suggest that the asset be dealt with the way stocks might be divided. But it might get complicated because the regulating co-op board may wade in.
Say the divorcing couple decides to transfer all co-op shares to one spouse. The board may set its own provisions to protect its interests. For example, to be sure the resident spouse can afford being in the co-op, the board might demand both spouses submit financial disclosure statements and their divorce decree.
If the board worries the resident spouse can't maintain the unit, it might want a chunk of money set aside in escrow or ask the vacating spouse to sign some form of guarantee. The board also may have rights to screen prospective buyers, making the sale of the shares tricky.
What's clear is that legal issues that might never have been anticipated could arise and that makes working with an experienced attorney essential.
Source: The New York Times, "Divorce and the Board," Ronda Kaysen, Aug. 2, 2014