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Bill Would Require Co-op Boards to Give Reasons for Rejecting Sales

Bill Morris in Legal/Financial on March 25, 2021

Westchester County

Co-op purchase applications, timelines, reasons for rejection, housing discrimination, co-op boards.
March 25, 2021

Here we go again – make that yet again. In a dress rehearsal for a perennial legislative battle now brewing in Albany, a Westchester County legislator has introduced a bill that would give co-op boards in the county 15 days to acknowledge receipt of a completed purchase application or identify any defects in an application. The board would then have 60 days to act on the completed application – including, significantly, telling an applicant and the Human Rights Commission the reason(s) why an application was rejected. Boards that violate the law could be fined up to $2,000. As in years past, pairs of similar bills have been introduced in the state Assembly and Senate.

The Westchester bill was introduced by Catherine Borgia on March 22, a followup to the 2018 Co-op Disclosure Law, which established timelines for county co-op boards to act on applications. After aggressive pushback from co-op activists, the bill’s proposed requirement that boards give reasons for rejections was deleted from the final law.

Those activists are already mobilizing against the new Westchester bill – a precursor to a likely lobbying push in Albany over the statewide bills. Leading the charge is the Cooperative & Condominium Advisory Council of Westchester, which has sent a mailing to members urging them to contact their legislators and voice their opposition. The headline on the mailing reads: “We can’t afford the added liability of the Housing Co-ops bill.”

“There’s a narrative being pushed that we’re in favor of housing discrimination,” says Tim Foley, executive director of the Westchester advisory council. “And there’s a thought among the original proponents of the bill that purchase rejections are based on discrimination.”

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Foley notes that in the two years since the county’s Co-op Disclosure Law went into effect, 3,830 co-op transactions have been approved, compared with 400 rejections.

“In other words, only 10% get rejected,” Foley says, “and the majority of those are for financial reasons. The majority of the rest were rejected for something that came up in the credit or reference check – or because, during the interview, it became clear the applicants weren’t going to follow the house rules. Beyond that, co-op boards are concerned that this bill will open them to liability.”

Bills to require co-op boards to act on applications in a timely fashion and reveal reasons for rejecting buyers have been floated at the city, county and state levels for well over a decade. They traditionally win the support of the New York State Association of Realtors, but co-op advocates have been largely successful at blocking such proposals. Mary Ann Rothman, executive director of the New York Council of Cooperatives & Condominiums, explains the opposition by calling such bills “the start of a slippery slope towards total oversight of the admissions process.” She adds: No one-size-fits-all, government-imposed process is going to do anything positive for the admissions process.”

Foley adopts an if-it-ain’t-broke-don’t-fix-it approach. “For most co-ops, the application process is working quite well,” he says. “A tiny sliver of rejected sales are for reasons other than financial. That doesn’t strike me a problem that needs this heavy-handed intrusion. Housing discrimination is abhorrent, and it’s already illegal at the county, state and federal levels. And we have a Human Rights Commission here in Westchester that has the power to levy severe penalties.”

Borgia, the Westchester bill’s sponsor, did not respond to a request for a comment.

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