New Bills Would Speed Buyer Approval

City Councilmen Jumaane Williams and Brad Lander introduced two bills to the New York City Council earlier this summer that, if they become law, would drastically change the co-op admissions process.

The first, Int. No. 761, would require co-ops to provide prospective purchasers with a written statement of the reasons for their rejection within five days of the decision. Explanations must be precise, with boards required to point to each part of the buyer’s application that is found to be deficient or fails to meet “specific policies, standards, or requirements.” This allows the rejected buyer to correct the application, and, theoretically, be approved. Any co-op that fails to supply this statement would be liable for statutory damages of up to $25,000.

Int. No. 822 would “regulate the application process for cooperative apartments in order to ensure that applicants receive timely approvals or denials.” Within 10 days of receiving a sales application, the board must notify a potential buyer that his or her purchase application has been received. Within 45 days of receiving any of the many documents that make up an application, the board must tell the buyer whether the application has been approved, approved conditionally, or denied. Boards are allowed a two-week extension after the completed application is received, or if they do not meet in July and/or August.

“The decision to approve a candidate is certainly important, and cooperative boards exercise their authority over admissions judiciously,” says Michael Wolfe, president of Midboro Management. “These are volunteer board members. They may not have all the resources and all the time to go through an application within ‘x’ period of time.”

Wolfe is not alone in his concerns. An email from the law firm Stroock & Stroock & Lavan encouraged boards and managers to oppose the bills, contending that the proposed legislation’s disclosure requirement might end up discouraging shareholders from serving on boards, and that the proposed 45-day requirement “is generally an insufficient time for boards to properly evaluate an applicant’s financials, references, [and] credit history.” The email contained a sample letter from the Real Estate Board of New York (REBNY) for shareholders to send to the city council (download here: http://bit.ly/REBNYsample). Both bills are currently in committee.