Decided February 20, 1992 Appeal from (1st Dept: 174 A.D.2d 58) MOTIONS FOR LEAVE TO APPEAL GRANTED OR DENIED

Ordered that the order is modified, on the law, by deleting the provision thereof granting that branch of the petition which was for a judgment declaring that Roland McDowell was not qualified to be elected to the Board of Directors of 300 Ocean Owners Corp. at its annual meeting on February 12, 2008; as so modified, the order is affirmed insofar as appealed from, without costs or disbursements. A cooperative corporation cannot prevent the sponsor or its successor as holder of the unsold snares from voting for any director unless "it is shown that the director" ( Matter of Park Briar Assoc. v Park Briar Owners, 182 AD2d 685, 686) is part of a slate prepared by the holder of the unsold shares or "receives a salary or other remuneration from it" ( id.; see Matter of Welco Assoc. v Gordon, 174 AD2d 58; Rego Park Gardens Assoc. v Rego Park Gardens Owners, 174 AD2d 337). The question in this case is whether the appellant, by accepting a mortgage loan for the purchase of shares allocated to a cooperative apartment from a holder of the unsold shares, received remuneration as a matter of law, disqualifying him from being elected to the Board of Directors of 300 Ocean Owners Corp. (hereinafter the Board of Directors).

The order of February 1996 properly divested defendants of voting control of the board. The sponsor is permitted to hold a majority of board votes only during the initial five-year period ( see, Matter of Welco Assocs. v. Gordon, 174 A.D.2d 58, 63, lv denied 79 N.Y.2d 754), and after the five years have expired, the sponsor cannot use its voting rights to elect a majority of directors nominated or designated by it ( see, Matter of Park Briar Assocs. v. Park Briar Owners, 182 A.D.2d 685, 687). Deeming the wrap-around mortgage satisfied was proper, since the holder defaulted in payment due on the underlying mortgage and the applicable grace period expired ( see, 13 NYCRR 18.3 [s] [10] [ii]), and defendants failed to cure in a reasonable amount of time ( see, Gregory House Owners Corp. v. Coronet Props. Co., 207 A.D.2d 695, lv denied 85 N.Y.2d 810). We modify the judgment, reducing the interest amount from $99,298 to $49,634, thereby reducing the total amount awarded to $266,148.

This regulation applies where there are no other limitations set out in a cooperative's offering plan or by-laws and where the offering plan or by-laws of a cooperative address the limits of a sponsor's control of a board of directors by incorporating the language of the regulation that a sponsor, or other holder of unsold shares, must relinquish voting control of the cooperative's board. See Matter of Park Briar Assoc. v Park Briar Owners, Inc., 182 AD2d 685 (2d Dept 1992); Rego Park Gardens Assoc. v Rego Park Gardens Owners, 174 AD2d 337 (1st Dept 1991); see also Matter of Welco Assoc. v Gordon, 174 AD2d 58, 63 (1st Dept 1992).