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The Flip Side Of The Coin

OK, so there’s nothing, but you, to prevent a specialist on the inside from selling every apartment in the building. But what if a broker on the outside says, it’s not fair.  The board is condoning the monopoly because it only approves applications submitted by a single real estate agent – and I’m being left out in the cold.

That’s exactly what one outsider said. The specialist there was also a shareholder in the building, a member of the board, and an officer of the co-op – talk about too close for comfort. A competing outside real estate agent was told his purchasers would be rejected unless the insider was the broker on the deal.  He sued the building claiming the board was guilty of antitrust violations in interfering with the free exercise of his business.  But the court said a single building was too small to be a market and, anyway, a conspiracy among the broker and the building’s officers and management didn’t violate the law.

But what if a shareholder owed a fiduciary duty by board members challenged this comfy arrangement when his buyer was rejected.  Think the result would have been different? Let’s hope you never have to put it to the test.

To access Benjamin of Forest Hills Realty, Inc. v. Austin Sheppard Realty, Inc., 34 A.D. 3d 91 (2d Dept. 2006), click here, then under Search By Citation, enter the case volume and page number.

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