Fair Chance Act Remakes the Co-op Admissions Process

Co-op admissions have never been simple, but a new law has changed what used to be a fairly straightforward, one-step process into more complex two-step dance.

The law, which went into effect in January, is the New York City Fair Chance for Housing Act (Local Law 24), which is designed to protect potential co-op buyers from discrimination based on their criminal history.

In the past, criminal background checks were routinely part of a purchase application, which painted a financial picture of the buyer, including personal and professional references, plus acknowledgement that the purchaser had read the building's rules and regulations. When a buyer was deemed qualified, an in-person interview with the co-op board was scheduled.

The Fair Chance Act changed that. The required financial information and references can remain the same — but the board can consider an applicant's criminal history only after he has been granted conditional approval. If, after conducting a criminal background check, the board decides to withdraw the conditional approval, it must follow certain guidelines. It must provide the applicant with a written explanation of the withdrawal, including supporting documentation and a statement demonstrating how the criminal history is relevant to the legitimate interests of the housing provider.

"That is the key language," says Melissa Cafiero, president of Halstead Management. "You've really got to demonstrate, air-tight, that the criminal history would have a direct impact on the housing community."

It doesn't stop there. After turning down a purchaser based on the criminal background check, the board has to give the applicant a copy of the report and an opportunity to correct any errors or provide any information that they think may change the decision. The applicant will have five business days to respond.

To complicate matters, Fair Chance stipulates that boards can take into account only “reviewable" criminal history. “For most felonies, they can only go back five years, and for misdemeanors, three years," says Julie Schechter, a partner at the law firm Fox Rothschild. "The look-back window captures the time of release from jail or prison, or the time of an individual’s sentencing if they weren’t incarcerated.” The reviewable history also includes convictions on registered state or federal sex offense registries. Schechter advises boards to order criminal background checks from third-party vendors that will conduct searches solely for reviewable criminal history.

The law is buttressed by tough city oversight. “If a co-op or a condo violates the law, the applicant could file a lawsuit," Schechter says. "The New York City Commission on Human Rights is tasked with investigating complaints that are filed for violations of the new law. And if it finds that you are in violation, it can fine you, and the fines can be significant, up to $250,000. So boards have to make sure that they comply.”