Read More »" /> Preserving the Cooperative into the Future | National Cooperative Law Center - Part 4

Preserving the Cooperative into the Future

Finally, it should be noted that most bylaws allow the board to make the decision on refinancing. If the cooperative enters into a new loan arrangement, it is typically precluded from making any changes to the form of the entity until and unless the new loan is paid off. Of course, if there is a prepayment penalty, it becomes expensive and unlikely that future boards will want to do anything while those obstructions are in place.

Whatever option is selected, it will require competent legal counsel to provide expert guidance and drafting in order to do it right. For example, a doctrine in the law known as the prohibition against restraint in alienation of property needs to circumvented by careful drafting. The risks are too great to attempt this without thorough consideration of the ramifications of the choices, in light of current law.

 

For more details please feel free to contact an attorney familiar with cooperative housing law.

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