Cooperative Required to Recognize Purchaser of Apartments at Foreclosure Sale As Their New Owner
The owner of shares associated with three cooperative units granted a security interest in the shares to a lender. The Cooperative executed a “Recognition Agreement” in which it recognized the pledge of the shares. After a default on the loan, the pledged shares were sold at a foreclosure sale conducted under Uniform Commercial Code § 9-610. Plaintiff, a successor-in-interest by assignment from the purchaser, sued the Cooperative for an order requiring the Cooperative to issue plaintiff a new stock certificate naming it as the owner of the shares.
The court granted plaintiff the relief requested, because under the Recognition Agreement, the Cooperative was required to transfer the shares to the successful bidder at a foreclosure sale on the shares or its assignee. The Cooperative’s challenge to the validity of the UCC foreclosure sale was unavailing, because the Cooperative “was neither the debtor nor a secondary obligor of the collateral” and therefore lacked standing to challenge the sale. ARSR Solutions, LLC v. 304 E. 52nd Street Housing Corp., 2017 N.Y. App. Div. LEXIS 1513, 2017 N.Y. Slip Op. 1527(U) (2d Dep’t Mar. 1, 2017).