Bills to Transform Co-op Purchases May Finally Become Law

As predictable as April showers, two bills have been introduced in the State Legislature in Albany that would transform the process of selling apartments in housing cooperatives – by requiring co-op boards to give a reason why they rejected a purchase application. Such bills have been introduced seven times since 2009 – without ever becoming law. Now there is anxiety in the co-op community that this might finally change under the Democrat-controlled state Senate and Assembly. 

“It has increased support, and I’m hearing all over that this time there’s a real chance it will succeed,” says Bruce Cholst, a partner at the law firm Herrick, Feinstein. “That’s too bad because it’s arbitrary and unnecessary, and it will discourage people from serving on co-op boards. Prospective purchasers who feel they’ve been discriminated against by co-op boards already have numerous avenues of recourse.”

There are also financial concerns. “I think this is going to increase legal costs for boards,” says Deborah Koplovitz, a fellow partner at the firm. “If there’s a denial, the board will need a lawyer to review it. Managing agents may want more fees, and that’s going to have to get born by the community.”

(Like what you're reading? To get the Habitat Weekly newsletter sent to your inbox free every Thursday, click here.)

The Council of New York Cooperatives & Condominiums has reiterated its opposition to such measures. The council’s website states: “CNYC has long argued that there cannot be a one-size-fits-all framework for this important procedure for ensuring prospective members of the cooperative community are qualified. Please urge your elected representatives to cease sponsorship of such legislation and to oppose any that comes before them.”

What’s about to come before them are two new companion bills – S2874 in the Senate and A1623 in the Assembly. They would require co-op boards to do the following: create “uniform processes” for purchase applications and give written notice of those processes to all buyers and sellers on request; acknowledge receipt of a purchase application within 21 days, stating that it’s complete or giving reasons why it’s incomplete; render a decision within 90 days of receiving a completed application; and, most significantly, give the reason for denying a sale. Under current rules, co-op boards have the power to reject a sale for any reason or no reason, provided the rejection is not driven by discrimination.  

An even more stringent bill was introduced in Westchester County last month. It would give boards just 15 days to acknowledge the receipt of a completed application and then just 60 days to act on that application. It, too, would require boards to give their reasons for rejecting a purchaser.

That bill got immediate pushback from the Cooperative & Condominium Advisory Council of Westchester, which is urging its members to contact their legislators and voice opposition to the measure. “There’s a narrative being pushed that we’re in favor of housing discrimination,” says Tim Foley, executive director of the advisory council. “And there’s a thought among the original proponents of the bill that purchase rejections are based on discrimination.” In fact, he says, data shows that only about 10% of co-op purchase applications in Westchester County are rejected, and the bulk of those are for financial reasons or because it became apparent during the board interview that the applicant did not intend to abide by the house rules. Foley adds that he considers housing discrimination “abhorrent.”

Catherine Borgia, the member of the Westchester County Board of Legislators who introduced the county bill, explained her motivation to Habitat: “Policies need to evolve with time, and right now we need to give buyers greater confidence that if their applications to live in a co-op are denied, the reasons for it are legitimate and non-discriminatory. I introduced updated legislation requiring co-op boards to provide a reason for an application denial so we can increase that transparency and confidence.”