(a) Number of votes required.--Except:
(1) in the case of the taking of all of the units by eminent domain (section 4107);
(2) in the case of foreclosure of a security interest against the entire cooperative which has priority over the declaration or which is subordinate to a declaration that expressly provides that the holder of the security interest has the right to terminate the cooperative when the foreclosure of the security interest has been consummated; or
(3) in the case of the expiration or termination of a lease which has priority over the declaration (unless a contrary intent is expressly stated in the lease);
cooperative ownership may be terminated only at a meeting of the association and by the vote, in person or by proxy, of proprietary lessees of cooperative interests to which at least 80% of the votes in the association are allocated or any larger percentage the declaration specifies. The declaration may specify a smaller percentage only if all of the units in the cooperative are restricted exclusively to nonresidential uses.
(b) Execution and recording of termination agreement.--An agreement to terminate must be evidenced by the execution of a termination agreement or ratifications thereof, in the same manner as a deed, by the requisite number of proprietary lessees. The termination agreement must specify the date it was first executed or ratified by a proprietary lessee. If, pursuant to a termination agreement, the real estate in the cooperative is to be sold following termination, the termination agreement must set forth the terms of the sale. The termination agreement will become null and void unless it is recorded on or before the earlier of:
(1) The expiration of the year from the date and all ratifications thereof it was first executed and ratified by a proprietary lessee.
(2) Such date as shall be specified in the termination agreement.
A termination agreement and all ratifications thereof must be recorded in every county in which a portion of the cooperative is situated in the same records as are maintained for the recording of deeds of real property and indexed in the name of the cooperative and the association in both the grantor index and the grantee index. A termination agreement is effective only upon recordation.
(c) Status if real estate sold.--The association, on behalf of the proprietary lessees, may contract for the sale of real estate in the cooperative, but the contract is not binding until approved pursuant to subsections (a) and (b). Thereafter, the association has all powers necessary and appropriate to effect the sale. Until the sale has been concluded and the proceeds thereof distributed, the association continues in existence with all powers it had before termination. Except to the extent that any provisions in the declaration limit the amount that may be received by a proprietary lessee upon termination (section 4205(a)(10)), proceeds of the sale must be distributed to holders of liens against the association, against the cooperative interests and to proprietary lessees, all as their interests may appear, in accordance with subsections (d) and (e) with proprietary lessees being entitled to receive the entire balance of the association's assets, after payment of all such lienholders, pursuant to subsection (e), except that, in the case of a limited equity cooperative with a declaration of the type described in section 4321(e) (relating to limited equity cooperatives), the provisions of that section shall govern. Unless otherwise specified in the termination agreement, as long as the association holds title to the real estate, each proprietary lessee and his successors in interest have an exclusive right to occupancy of the portion of the real estate that formerly constituted his unit. During the period of that occupancy, each proprietary lessee and his successors in interest remain liable for all assessments and other obligations imposed on proprietary lessees by this subpart or the declaration.
(d) Priority of liens.--Following termination of the cooperative, the proceeds of any sale of real estate, together with the assets of the association, are held by the association as trustee for proprietary lessees and holders of liens against the association and the cooperative interests as their interests may appear. The declaration may provide that all creditors of the association have priority over any interests of proprietary lessees and creditors of proprietary lessees. In that event, following termination, creditors of the association holding liens on the cooperative which were perfected before termination may enforce their liens in the same manner as any lienholder, and any other creditor of the association is to be treated as if he had perfected a lien against the cooperative immediately before termination. Unless the declaration provides that all creditors of the association have that priority:
(1) The lien of each creditor of the association which was perfected against the association before termination becomes, upon termination, a lien against each cooperative interest as of the date the lien was perfected.
(2) Any other creditor of the association is to be treated upon termination as if he had perfected a lien against the cooperative interests immediately before termination.
(3) The amount of the lien of an association's creditor described in paragraphs (1) and (2) against each of the cooperative interests must be proportionate to the ratio which that cooperative interest's common expense liability bears to the common expense liability of all of the cooperative interests.
(4) The one lien, unless the declaration designates a greater number, against each proprietary lessee which was perfected prior to any other liens against the proprietary lessee and before termination continues as a lien against the proprietary lessee's cooperative interest as of the date the lien was perfected.
(5) Any other creditor of a proprietary lessee is to be treated upon termination as if he had perfected a lien against that proprietary lessee immediately before termination.
(6) The assets of the association shall be distributed to all proprietary lessees and all lienholders against their cooperative interests as their interests may appear in the order described in paragraphs (1) through (5), and creditors of the association are not entitled to payment from any proprietary lessee in excess of the amount of the creditor's lien against that proprietary lessee's cooperative interest. Regardless of the priority given to creditors of the association, no proprietary lessee shall have any personal liability to a creditor of the association beyond such proprietary lessee's cooperative interest.
(e) Valuation of proprietary lessee's interest.--The declaration may provide that the respective interests of proprietary lessees referred to in subsections (c) and (d) are the fair market values of the cooperative interests as of a date no earlier than six months prior to the termination as determined by one or more independent appraisers selected by the association. The decision of the independent appraisers shall be distributed to the proprietary lessees at least 30 days prior to a meeting of the association at which meeting the appraisal will be deemed approved unless it is rejected by vote, in person or by proxy, of proprietary lessees holding more than 50% of the votes in the association. If the declaration provides for such an appraisal procedure, the proportion of any proprietary lessee's interest to that of all proprietary lessees is determined by dividing the fair market value of that proprietary lessee's cooperative interest by the total fair market values of all the cooperative interests. If the declaration does not provide for such an appraisal procedure or if the appraisal is rejected by the requisite number of votes in the association, the interests of all proprietary lessees are their respective ownership interests in the association immediately before the termination. If the declaration provides for an appraisal procedure, there shall be no vote taken among the proprietary lessees as to whether or not the cooperative form of ownership should be terminated until after the vote is first taken as to whether or not the appraisal should be approved.
(f) Termination by successor in title.--In the case of a foreclosure of a lien against the entire cooperative or in the case of the expiration or termination of a lease which has priority over the declaration, the successor in title shall have the right to terminate the cooperative.
(g) Ineffectiveness of termination provision.--In the case of a declaration that contains no provision expressly providing for a means of terminating the cooperative other than a provision providing for a self-executing termination upon a specific date or upon the expiration of a specific time period, such termination provision shall be deemed ineffective if no earlier than five years before the date the cooperative would otherwise be terminated the owners of at least 80% of the units in the cooperative vote that the self-executing termination provision shall be annulled, in which event the self-executing termination provision shall have no force or effect.