New York's Cooperative and Condominium Community
Does the board have the right not to interview a buyer after paying for
a credit check?
There is a whole list of purchaser characteristics known as "Protected Classes" which prevent boards from denying the sale of an apartment. Some better-known Protected Classes are race, religion, sexual orientation, age, handicap, etc. If a purchaser falls into any one of these classes and their application is denied, they can sue for discrimination.
This leaves a very limited list of reasons a purchase can be denied. The most common one is the purchaser's financials. Lesser known reasons are diplomatic immunity or status, firearm ownership, disallowed pets, etc.
It is for this reason that all board members and anyone involved in the purchase review should never have *any* contact with a purchaser, ever. The financials must be reviewed and approved before the interview is scheduled, otherwise, the board leaves itself open to a discrimination suit for the briefest of encounters.
Putting shares into a trust is an entirely different situation. It's much more legally complicated than simply titling the shares in the name of the trust. The board needs to pass a resolution allowing shares be held in a trust, and a lot of ancillary issues worked out and agreed upon before the formal transfer takes place (who's allowed to live in the apartment, who is responsible for maintenance and assessment payment, who are noise and other complaints directed to and notices served upon, etc)
The co-op may not allow shares to be held in a trust, which is why they refused to interview the purchasers. The board knew they would reject the sale and did not want to allow a situation where the board could be accused of discrimination if any of the protected class characteristics were obvious at the interview.
From this point, the only communication should be through the attorneys. And since I AM NOT AN ATTORNEY, this advice is worth what you're paying for it. ;-)
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As usual, Steven424's answer is excellent. I do have to disagree with one sentence, though: "This leaves a very limited list of reasons a purchase can be denied." It's just the opposite: there's a "very limited list of reasons" for which you *cannot* deny a purchase. It is perfectly legal - though idiotic and infuriating - for a board to deny an application for a ridiculous reason. Left-handed? Enjoys Beethoven? Has the same name as a board member and you don't want mail getting confused? (I've read that this has actually happened.) None of those are protected classes, so there's no legal hurdle. But of course it would be hideously inadvisable and misguided to do so, and your coop would get a terrible reputation.
In practice, rejections are *overwhelmingly* for financial reasons. A poor credit report would certainly fall into that category. The runner-up reason would be the proposed use for the apartment. "I plan to practice flamenco dancing for approximately 16 hours per day."
And to repeat Steve's important point: do not have *any* contact with the prospective purchaser(s) before the interview. Make your decision based on the application and associated documents, then after you've decided to say Yes, make the interview a meet-and-greet. Do not interview at all if the financials are unsatisfactory, including the credit check.
Note: I AM NOT A LAWYER.
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Thanks for the additional information and updates, Marty. The only rejection we really ever considered was for financials, and we were able to work something out.
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I agree Steven. In my 25 years on the Board, I think that every rejection was for financial reasons.
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I would think so. Paying for a credit check is normally a routine part of submitting an application, whether or not the application is ultimately approved. It's just a step in the process. There are many reasons why an applicant might be denied after an application is submitted:
1) The applicant's credit check may reveal a poor credit history and thus, a bad risk for the co-op.
2) The applicant may not be making enough income to be relied upon to pay their monthly maintenance on time and in full
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On May5 shareholders of co-op will protesting. Board avoid to do election for new board.
They want to be for life. On our letters HPD not respond. What else shareholders can to do, for election. Protest will be on: 156-11 Aguilar Ave, Flushing NY,11367
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Glenn - I suggest you start a whole new topic thread for your question. Right now it's buried in the middle of a thread discussing rejecting a new purchaser and I don't thiddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddddnk very many people will see it in its current location.
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Coincidentally, Cooperator News just published an interesting article on this subject at https://cooperatornews.com/article/the-board-approval-process
Some quotes:
"Boards can demand troves of personal information from buyers, and can approve or deny a purchase for just about any reason--or no reason at all--but they may not engage in illegal discriminatory practices."
"Unusual demands aside, most boards are primarily looking at the purchaser’s financial profile when assessing their application. Can this person afford to buy the apartment and cover the monthly carrying costs? Do they have the resources to pay a special assessment, should one be necessary?"
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We have applicants who bought a co-op of three hundred thousand, and the board refused to interview the people who would put in a trust fund. The daughter paid all cash for the apartment for the parents.
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