Our bank just told us that they cannot locate our original file with our stock, lease, note and other documentation. Our coop’s transfer agent says they cannot close without these items. What can we do?
It’s not all that unusual for lenders, in these decades of mergers and for other reasons, to lose or misplace, or just be unable to locate, legal documentation necessary for you to sell your coop unit.
Fortunately, most coops and their transfer agents will accept, in lieu of the original documents themselves, a form approved by them called an “AFFIDAVIT of LOST STOCK, LEASE & NOTE” (or entitled whatever the balance of lost documents consist of; e.g., sometimes only a Stock Certificate is lost, or only the note and security agreement).
The Affidavit is usually drafted by the Lender (sometimes by the closing agent) and is always required to be reviewed and approved by the closing/transfer agent prior to closing.
It must contain references to the date of prior closing, the name of the bank (or its predecessor-in-interest), the stock certificate number, the date of the proprietary lease and/or note, that due diligence has been made to locate the documents, and that the coop and its agents will be indemnified and held harmless by the Lender should the missing documents resurface or any claims be made by any other 3rd parties, individuals or entities asserting an interest in the unit or in the collateral or note.
The affidavit must be signed by an officer of the lending institution, who has authority to sign the document, and must be properly notarized. An original must be presented at the closing and given to the coop.
Usually the Seller has to pay an additional fee to the coop for preparation and review of the affidavit; this cost is often reimbursed by most Lenders post-closing, sometimes at the closing itself if an invoice from the coop is given to the Seller in advance.
A coop lien and judgment search will also be required to be done (and reviewed by the coop) to verify that no one else – of record, at least – shows an interest in the unit or the shares of stock.
In rare, but not so unusual instances, some coops will also require that the Seller provide a bond to insure the coop against any claims that might be made as a result of a lost or misplaced stock, lease or note. The bond is a percentage of usually double the current market value of the unit. Your closing attorney can assist you in obtaining a bond should your coop require this of you. Again, the Lender should be held liable for the cost of your having to provide this.