Lisa Prevost in Co-op/Condo Buyers on June 6, 2017
Are lawmakers looking for solutions to problems that don’t exist? Or are co-op boards treating would-be-buyers badly?
It depends on whom you ask. But those are the two chief issues that come up almost every year as new bills are offered up at the New York State Legislature and the New York City Council. The bills now being considered would require boards to act on purchase applications within a set time frame. Some would also require boards to disclose a reason for rejecting an applicant.
While proponents say the laws are necessary to protect buyers and sellers from a prolonged or discriminatory process, those intimately familiar with the co-op application and review process counter that the laws are impractical and potentially damaging to co-ops.
“I’m a big believer in the old maxim, ‘If it ain’t broke, don’t fix it,’” says Bruce Cholst, a partner at Anderson Kill, a law firm representing about 225 buildings, and a long-time board member at his own 370-unit co-op. “Most boards do act within a matter of weeks, and if they don’t, there are usually legitimate reasons. I don’t see any reason for fixing something that isn’t broken on a widespread scale.”
Co-op advocacy groups vehemently oppose such laws as an infringement on their court-upheld right as private corporations to pick and choose shareholders on their own terms, provided they’re not discriminatory. While the occasional board may “behave badly,” says Mary Ann Rothman, the executive director of the Council of New York Cooperatives & Condominiums (CNYC), “there are thousands of cooperatives functioning very nicely. It seems grossly unfair for the legislature or real estate brokers selling apartments to interfere.”
Proponents of the legislation say that under the current system, it is buyers who are being treated unfairly. What particularly grates on some real estate professionals is that co-op boards, as managers of private corporations, may accept or reject buyers as they please and at their own pace. Brokers say they sometimes spend months working with clients on their admissions package only to see them unexpectedly turned away by a board for reasons unknown.
The New York State Association of Realtors is a primary backer of the legislation. A bill pending in the state assembly would require co-ops to provide every applicant with the requirements for purchasing, as well as guidance on how to access information on fair housing laws. Within 10 days of receiving an application, the co-op would have to provide the buyer with notice of receipt or, if the application is incomplete, notice of what is missing. The board would then have 45 days to make a decision. Failure to act within the 45-day window would constitute approval. Another bill pending in the senate would require boards rejecting a purchaser to disclose a reason, something that is rarely done now.
New York City Councilmember Brad Lander, a Democrat representing Brooklyn’s 39th District, is sponsoring similar legislation before the council. He views mandatory disclosure as a way of combatting discrimination. “I have only heard a handful of stories about discrimination, but [that’s] enough to [make me] believe that it’s out there,” Lander says.
But Arthur Weinstein, an attorney who represents many co-ops and sits on the board of the CNYC, calls the anti-discrimination rationale “a sham” created by the real estate industry to drum up support for legislation that is really aimed at bolstering their commissions.
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