Q Our cooperative board has approved a buyer for one of our units. The seller and prospective buyer have already gone to contract. There are presently a number of board members who have second thoughts about approving the buyer and would like the board to revote. Can the board reconsider their approval after a contract has been signed? In general, up until what point can a board reconsider? Is there a difference if the reason is financial or character-based?

— Questioning Co-op Board

A “A cooperative board cannot discriminate against a prospective purchaser based upon race, color, creed, etc., and the only reasons a board can reject is purely financial or character-based such as the existence of a criminal background,” says Hackensack-based attorney Donald M. Onorato.

“The letter writer is unclear concerning the scenario in this matter, [but] it appears that the selling shareholder and prospective purchaser have entered into a contract, and all contracts state that the transaction is subject to the board’s approval of the purchaser. The board can certainly ‘reconsider their approval after a contract has been signed’ if information came to their attention which would change their vote. Again, the letter writer is unclear whether the board’s initial decision was communicated to all the parties therefore approving the transaction.

“If enough members of the board had ‘second thoughts’ and asked for a revote of the matter, as long as the reconsideration is not based upon any discriminatory practice, the board certainly is permitted to revote the issue. However, the board must do so quickly in the process to avoid the parties taking any action that would be reliance on the board’s initial decision and which could be detrimental to them in the future.”