May 16, 2007

New law may require coops to give a reasons for a board turn-down


One of the first blogs I ever wrote was last July about a new law that would make the once secret Co-op sales prices public for the first time under a bill by the Albany legislature. The bill was awaiting signing by Governor Pataki and was strongly supported by Mayor Bloomberg.

When the law passed I wrote another blog in August NYC-Coop-Law-brings-Manhattan-Real-Estate-into-the-21st-Century. Before the law was passed there were many in the real estate industry that were opposed to the new transparency law. They liked having secret information that was how business was always done in Manhattan and they liked it.

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Janny Scott of The New York Times recently wrote an article Pushing coops to Explain why you can't buy about a bill before the New York City Council that will require Coop Boards to Explain why they are rejecting a buyer.

A city council member from Queens Hiram Monserrate introduced a version of the bill in 2004. He visited my office at one of our sales meetings introducing and explaining the bill to us and discussed the coop application process and rejections. All the agents in my office were behind the bill to make coop boards accountable and to get some transparency from the secret way in which coop boards decide which buyers to accept and which to reject.

While New York City is considered a progressive city with good civil rights and fair housing laws (11 protected classes) most home owners in Manhattan live in coops that are private corporations equivalent to private clubs.

Under current law coops do not have to offer any explanation when they reject a potential buyer from their building. Coops also do not have to tell buyers or brokers exactly what their requirements are or what they are looking for in a buyer. They can change rules and requirements when ever they want.

Having had two coop board turn downs in my career one as the listing agent and one as a buyers agent It can devastating for the buyer, the seller and the brokers. The seller might have already gone into contract on a new place and will likely lose their deposit. As the listing agent I was able to sell the apartment to another buyer. Rejected buyers are humiliated not knowing why they were rejected.

While I do honestly believe most coops are reputable and are only concerned about the buyers finances I also believe in a city as large as New York with so many coops that require no special skills, training or credentials to be elected to a board abuses and discrimination can and will take place.

Now nearly two-thirds of the members of the City Council are co-sponsoring a measure for a little more transparency from the secretive process by which co-op boards decide which apartment buyers to accept and which to reject. The bill wants co-op boards to be required to give their reasons for rejecting an applicant, and to do it in writing within five days of rejection. Seems quite reasonable to me in this day and age.

However, the same groups that opposed making coop sale prices public including REBNY (the real estate board of New York) which I am required to be a member of and pay dues to be a broker in NYC is opposed to it and is lobbying the city council to vote against it. REBNY members include management companies that represent coop boards. The council of New York Coops and Condominiums is also opposed to it.

IMHO the oppositions argument has no merit. If they are not discriminating and have valid reasons to reject someone then they have nothing to hide so they should put it in writing.

They are saying if you give reasons why someone is rejected it will open coops up to law suits. The New York Times article quoted Richard Siegler, a lawyer who represents co-op boards and condos. "Maybe someone has been turned down because he is a cheater at the golf club. This is something that is not discrimination, and it's just very difficult to put in formal language or even in every case to give a reason. It has been this way for a long time."

So does that make it right because it has always been done this way for a long time. Even though there are Fair Housing laws it is difficult to sue and prove discrimination if they are not given a reason or explanation. Many questions on most coop applications are illegal according to Fair Housing laws.

IMHO if someone cheats at the Golf club or they are obnoxious or they have blond hair or what ever "so called valid reason" the coop has for the rejection if the coop doesn't know how to explain that or if that is even a reason to reject someone then I believe the board deserves to be sued. If they don't have a valid reason they should not be allowed to get away with it anymore.

We are talking about buying an apartment. Financials or building quality of life issues like renovations should be their only concern. It is about time that coops explain their actions and are accountable.

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2 Responses to " New law may require coops to give a reasons for a board turn-down "
  1. Joseph Ferrara. Sellsius said...
    June 03, 2007

    I have had a buyer rejected (single parent)by a co-op Board. Based on the questions asked at the interview, there was evidence of discrimination based on familial status (single mom). I brought an Fair Housing Complaint where the Board is required to give a reason for the refusal. So they gave their reason (economics) yet my client had sufficient incoem and no calls were made to her employer to verify income. The result: a finding of a probability of discrimination. The Board offered to settle by approving the client. The client refused to be in a building that did not seem to want her, took a five figure settlement and bought somewhere else.

  2. Mitchell Hall said...
    June 16, 2007

    I don't blame the client for not wanting to live in that building that did not seem to want her. Good for you for filing a Fair Housing Complaint. Sounds like discrimination to me. Probably one of those "family buildings"

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