Asked and AnsweredCan a corporation or other business entity own the shares of a cooperative apartment?
For the most part, no. Who may own shares in a cooperative is dictated solely by the by-laws and proprietary lease. Co-ops often prohibit corporations, limited liability companies and trusts from owning shares in a co-op because there is no personal liability on the part of the beneficial owners of the co-op (that is, the individual who owns stock of the corporate purchaser or the grantor of the trust). When co-ops do permit ownership by an entity, it is almost always in the form of a trust. To secure payment of the co-op's obligations, the grantor of the trust that's purchasing the co-op is required to guaranty the payment of the obligations owed to the co-op for monthly maintenance payments, special assessments and general liability issues. To accommodate professional corporations and limited liability companies (that is, entities formed by doctors and other licensed professionals), a co-op will often require the doctors who own the professional corporation to buy the apartment, but the co-op then allows the doctors to lease the apartment back to the professional corporation. This procedure allows the cooperative to maintain personal liability over the shareholders of the apartment, but allows the doctors to use the co-op for a business purpose. As a general rule, a condominium will not restrict the type of entity that may purchase a condo. That's why condos are popular with individuals who need flexibility and confidentiality.
For more on co-op basics, see "Co-ops 1.0"