Centereach, NY asked in Business Law for New York

Q: In a co-op when is a sponsor no longer a sponsor is it after he owes under5%of total units

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T. Augustus Claus
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A: In a cooperative (co-op) setting in New York, the term "sponsor" typically refers to the individual or entity that initially converted the building into a co-op and retains a significant ownership interest in the units. The transition from sponsor status to regular shareholder status is typically governed by the co-op's bylaws and may vary depending on the specific terms outlined in the offering plan. While there is no set rule stating that a sponsor automatically loses their status after owning less than 5% of the total units, it's possible that the offering plan or bylaws outline specific conditions or thresholds for the sponsor's ownership percentage to trigger a change in status.

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