As most legal answers go, the answer to “Is a Cooperative Apartment Realty or Personalty in Florida Probate” is: it depends. The main consideration is what state is your co-op located in? If your co-op is in Florida, then it is treated as real property for some homestead purposes. Florida’s homestead laws will govern the co-op for purposes of exemption from forced sale by creditors and the exemption from ad valorem taxation. It is not subject to Florida’s homestead protections on devise and descent.
It is important to understand that when an individual buys into a co-op they become a shareholder of the corporation that owns the property. As this corporate shareholder, the individual is then entitled to the exclusive use of a unit for housing in that property.
This definition—treating a co-op as real property—is not uniform throughout the United States. In fact, most states do not treat co-ops as real property. In New York for example, where an estimate 99% of the world’s cooperatives are, a co-op is considered personal property and not real property. State Tax Comm’n v. Shor, 378 N.Y.S.2d 222 (Sup. Ct. 1975) (holding that a co-op apartment is not sold but leased under a so-called proprietary lease, considering the nature of that proprietary lease, which a shareholder in a co-operative acquires, such lease is personalty and not realty).
How is a Co-op Treated in Probate?
It is important to remember the three contexts in which Florida’s homestead law applies:
- Exemption from ad valorem taxation;
- Protection from forced sale by creditors; and,
- Limitations on alienation and devise.
Under Florida law a co-op is treated as real property for the purposes of Homestead’s exemption from forced sale by creditors; however, a cooperative apartment may not be considered homestead property for the purpose of subjecting it to Florida Statutes regulating the descent of homestead property. Phillips v. Hirshon, 958 So. 2d 425, 426 (Fla. 3d 2007) (relying on In re Estate of Wartels, 357 So. 2d 708 (Fla. 1978)).
The purchaser of a co-op in Florida does not hold any type of proprietary interest in the apartment itself, the apartment building containing the unit, or the land upon which the building is situated. See State v. Swinscoe, 376 So. 2d 1 (Fla. 1979).
Devise is defined as a testamentary disposition of real or personal property. Fla. Stat. § 731.201(10). In probate proceedings, a co-op apartment is not considered homestead property for the purpose of the limitations on devise and descent. The constitutional protections governing descent and devise of homestead property concern an interest in realty. A co-operative apartment does not meet this definition because co-ops do not give owners of such units title to the apartment or the land the apartment or building is situated on. In re Estate of Wartels, 357 So. 2d at 710-11.
This is not to say that a co-op may be transferred freely without limitation. The Supreme Court noted in In re Estate of Wartels, that:
An owner of stock in a cooperative apartment corporation is restricted from transferring that stock and is further restricted from transferring the lease he holds to the individual apartment unit. These restrictions are tied together. The transfer of the stock or the lease could not be effected without first obtaining consent from the Board of Directors of the corporation.
357 So. 2d at 709.
Therefore, a co-op apartment is not considered homestead property for the purpose of the limitations on descent of the property in probate. It may freely be devised through a testamentary instrument by its owner, subject of course to the restrictions imposed by the cooperative and its Board of Directors.
New York Co-Ops as Personalty
Where a Florida resident, who does domiciled in the State of Florida, owned a co-op in New York, it may be necessary to open an ancillary probate proceeding in New York. Consultation with the co-op’s Board of Directors is necessary to ascertain whether there are specific restrictions on the transfer of the stock or interest in the cooperative, or whether ancillary probate will be required. An attorney can aid you in this communication with the co-op board.
It is possible that an ancillary probate—a second or separate probate in addition to the probate filed in the deceased’s state of residence—may be required. Ancillary Probate is typically handled during the same time that the probate action in the state of residence is handled.
