De Kovessey v. Coronet Properties Co., 69 N.Y.2d 447 (1987)
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An estate cannot exercise a deceased tenant’s right to purchase shares in a cooperative conversion at an insider price because the right is personal to the tenant in occupancy at the time the conversion plan is accepted for filing.
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Summary
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This case addresses whether the estate of a deceased tenant can exercise the tenant’s right to purchase shares in a cooperative conversion at the insider price. The New York Court of Appeals held that the estate could not, reasoning that the right to purchase at the insider price is personal to the tenant who is in occupancy when the conversion plan is accepted for filing. The court emphasized that the purpose of the statute governing cooperative conversions is to protect tenants in occupancy, not to provide a windfall for their heirs. Allowing estates to exercise this right would contradict the statute’s intent and fundamental contract principles.
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Facts
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Several landlords (sponsors) offered tenants in rent-controlled buildings the opportunity to purchase shares in a cooperative conversion at a discounted, insider price. The tenants, who lived alone, died before accepting the offers. Their estates attempted to accept the offers, but the sponsors rejected these attempts. The estates then sued to enforce their right to purchase the shares at the insider price.
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Procedural History
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The lower courts granted summary judgment to the estates, ordering the sponsors to honor the estates’ acceptance of the cooperative conversion offers. The Appellate Division affirmed these decisions without issuing opinions. The sponsors then appealed to the New York Court of Appeals, which consolidated four similar cases for review.
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Issue(s)
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Whether the unexercised right of a deceased tenant in occupancy to purchase shares offered in a cooperative conversion plan at a less-than-market insider price may be exercised by the deceased’s estate.
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Holding
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No, because the right to purchase at the insider price is personal to the tenant in occupancy at the time the conversion plan is accepted for filing, and it does not survive the tenant’s death.
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Court’s Reasoning
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The Court of Appeals reversed, holding that the estates could not exercise the deceased tenants’ rights. The court reasoned that General Business Law § 352-eeee, which governs cooperative conversion plans, is intended to protect “tenants in occupancy,” not to provide a windfall for their heirs. The statute was enacted in response to a public emergency regarding rent control and evictions, aiming to protect tenants from unjust rents and disruptive conversion practices. Allowing estates to benefit from insider prices would undermine the legislative intent of preserving affordable housing for actual tenants.
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The court also applied fundamental contract principles, stating that an offer terminates upon the death of the offeree. “Since an offer can be accepted only by the person to whom it is made, the death of the offeree also has the effect of precluding the possibility of a contract.” (quoting 1 Williston, Contracts § 62, at 207 [3d ed 1957]). Therefore, the tenants’ death terminated the offer, and their estates could not accept it. Furthermore, the court distinguished the offering statement from an option contract, noting that offering statements are not made in return for consideration and are unilaterally amendable, unlike traditional option contracts. The court stated,