Bad Board Behavior Feeding Co-op Disclosure Bill: A Case Study
With the City Council bill Intro. 119, the "Fair and Prompt Coop Disclosure Law," wending its way through the legislative process, much heated and sometimes misinformative debate has been taking place. We would add to all the theoretical arguments this real-life example of the type of board behavior that helps fuel such legislation. Whatever the merits pro and con, this example illustrates how a lack of simple common courtesy only breeds continued calls for disclosure laws. – Frank Lovece, Web Editor
Growing up in Manhattan, I had lived in rentals my whole life, and when I got married in the early 1980s, my wife had a wonderful deal on a rent-controlled apartment in Manhattan's Upper West Side. We lived there happily for years until she died suddenly. After that, I continued to live there and later brought my second wife, Liz, to live there, too. Liz already owned a co-op apartment on Cabrini Boulevard in Washington Heights, and we tried spending weekends in our co-op and weekdays in our rental. But eventually, for convenience and size, we liked my rental apartment better and decided to sell my wife's co-op.
In February 2005, we put Liz's apartment on the market with a local realtor. Before long, we had a prospective buyer, a female professor at Columbia University. Our asking price was $359,000.
The woman met with the co-op board. She submitted what seemed like pounds of paperwork, showing how strong her financial picture was, along with sterling character references. I had heard how tough some co-op boards were, but neither Liz nor I expected any trouble. After all, my wife had been a long-time model resident and our potential buyer seemed perfect.
We waited... and waited... and waited for the board's decision. Finally, some four months later, we were told our buyer had been rejected. No further explanation was forthcoming, and neither the head of the co-op board nor the managing agent had the courtesy to return our calls. My wife tried everything to get in touch with the board president — calling, writing, putting a message in the co-op board complaint box, even going to her door. But Liz received no answer or communication from her whatsoever.
Our buyer's finances were impeccable,
her references excellent. Shouldn't the
board have given us some hint as to
what kind of resident was acceptable?
All we wanted to know was what had we done wrong? Our buyer's finances were impeccable, her references excellent. Shouldn't the board at the very least have given us some hint as to why she had been turned down so that we would know what kind of resident was acceptable? And why did it take the board four months to come to a decision? Even Congress moves faster than that.
We inquired around among other co-op owners we knew, and they told us that the co-op board was not required to give us any explanation of its decision, a fact I still find unbelievable. I am told boards are worried about lawsuits; to my mind, they should worry about the resale value of their buildings. If they get a reputation as erratic or idiosyncratic, why would any broker bring a potential buyer to them?
That's probably what happened to us when we tried to find another buyer. Although we were stunned by the rejection we had dutifully put the apartment back on the market. But from August 2005 until September 2006, our unit went unsold, partly, I suspect, because most brokers were wary of this board and this building. For more than a year, we had to pay mortgage fees and carrying charges on an apartment we no longer needed or wanted. It cost us a lot of money and grief.
talk of the town
The apartment was finally sold when a realtor found a couple whom the co-op board (miraculously) approved. It still took them months to get to that decision. We finally sold the apartment for $309,000. That's a full $50,000 less than we would have gotten if our original buyer had been approved.
We still don't know why she wasn't, and we wonder: Why do co-op boards and managing agents feel they can stonewall co-op owners who have legitimate concerns? Shouldn't a board, at the very least, try to move quickly on a decision? If they're not going to give an okay — and I understand that financial concerns are the paramount issue — shouldn't they at least do that with all deliberate speed? You'd think it would only enhance the value of a building to have a no-nonsense approval process.
Adapted from Habitat May 2009. For the complete article and more, join our Archive >>