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City, State Bills to Regulate Co-op Admissions: What You Need to Know

Jennifer V. Hughes in Board Operations on July 11, 2013

New York City, Queens

July 11, 2013

Friends in real estate told Doobay, 50, it sounded fishy and suggested she file a complaint, but she never did. "I was busy looking for a home, bogged down and overwhelmed," she says. "It made me feel bad, like I wasn't welcome there."

Just three months later, she submitted the same application to another Queens co-op and was admitted almost immediately for that apartment, which was priced at $180,000.

The Numbers Add Up. Nothing Else Does

What's going on? Both instances rely on the same income/debt ratio and other financial factors — yet the apartment for which was accepted cost more than the one for which she rejected. And Doobay is not alone in such situations. For years, would-be purchasers and sellers have complained of delays and disappointments, of turning over tons of paperwork to boards and then waiting for months, only to get rejected.

Now, in response, bills are pending before the New York City Council and New York State legislature that would institute timelines for when boards have to reach a decision and require boards to either give a reason why they rejected a potential buyer or to swear that the reasons for rejection were not based on discrimination. 

"People have the right to know why they are denied," argues Barbara Ford, a director for the New York State Association of Realtors. "You can't correct a problem if no one will tell you why you were rejected."

Does a Problem Exist?

But co-op boards and their spokesmen argue that there is no problem to correct, that most cooperatives move with deliberate speed, and that the examples frequently cited are extraordinary exceptions. Given the low number of complaints about co-op discrimination, Bob Friedrich, president of the 110-building, 10,000-resident Glen Oaks Village complex in Queens, argues that the issue is manufactured by real-estate brokers losing commissions when deals fall through. "A broker's interest is just to close the deal as quickly as possible," he says. "They don't care about the mess they leave behind." 

Bills that would fundamentally change the way co-ops handle admissions have been bandied about for almost a decade. Two were introduced before the City Council in 2010, and the one from Councilman Lewis Fidler (D - 46th District) which is widely thought to have the best chance at passage, was subject to a contentious hearing before the Housing Committee in April. Co-op admissions bills were introduced in Albany in early 2013 and await transfer to committee.

We have given co-op

boards virtually absolute

power over people.

All the bills contain time clocks that would require a co-op board to acknowledge receipt of a completed application after 10 days and accept or reject an applicant within 45 days of receiving a completed application. The bills proffered by Fidler and by State Assemblyman N. Nick Perry (D - 58th Assembly District) would automatically grant acceptance to a shareholder if the board doesn't meet the deadline (with a 10-day grace period).

As well, Fidler's bill — which allows prospective shareholder to pursue civil action against the co-op corporation, the board of directors and the managing agent — requires boards to sign statements swearing they were not rejecting based on a protected class such as age, race, or religion. City Councilman Brad Lander's (D - 39th District) bill, which has not progressed as far, takes the more controversial step of requiring boards to state reasons for rejection.

As for the argument by opponents that no other form of housing requires this type of scrutiny, Fidler responds no other form of housing has a third party deciding whether the buyer gets the home. "No one likes to give up their little perch of power, and we have given co-op boards virtually absolute power over people," he says. Arguing that discrimination doesn't exist is "ridiculous. They're not living in the same world I am."

And while it's not illegal discrimination, the bills also address a problem with co-ops and the housing market, says Richard Haggerty, chief executive officer of Hudson Gateway Association of Realtors, which includes Westchester County, where similar bills have been proposed.

"In a difficult market, we hear from our members that applicants are being rejected because of price," says Haggerty. "The board doesn't want to see sales go through at a certain price and you can have sellers who are trying to sell and see three, four, five sales fall through. That's not fair to anyone."

To read about how regulated co-op admissions already work in the real world, read part two. This is a preview from the upcoming July/August issue of Habitat.


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