Support Transparency Requirement in Co-op Board Approval Process

The law should be changed to require co-op boards to disclose exactly why an applicant is rejected.

I have written before on the positive impact co-ops have had on the Westchester housing market, due in large part to their affordability. However, not all that glitters is gold. There is a battle being fought in Albany that is hinged on the approach that some co-op boards take, due to their unusual form of ownership, with the approval of new applicants for ownership. 

Because co-op ownership is essentially that of a shareholder of a corporation and not holding a deed to true real estate, co-op boards have historically required that they approve prospective owners after their financing is secured. This is unusual- with homes or condos if you can afford it, you get the keys. Not so with co-ops. The law will not permit boards to discriminate illegally, but it also does not require them to disclose their reasons for rejecting an applicant. This has resulted in cases where people have felt that they were victims of bias but could not prove it. 

Legislation supported by the NY State Association of REALTORS is on the table to require that boards disclose the specifics for the rejection of an applicant. It is opposed by many boards, mostly based in Manhattan but also aligned with local interests, and an interesting exchange was witnessed by area REALTORS when each side was presenting their case in Albany. A lawyer for the co-op board interests said that their clients should be able to choose their neighbors. This was a poor choice of words. Moreover, it is a less than compelling argument against what should be a transparent process. 

Housing is among our most important needs, and with the 1,449 co-ops currently for sale in Westchester alone at a median list price of $149,000, they are among the most affordable options for those on a budget. However, if boards are not held accountable for their decisions against applicants, a perception can grow from an already skeptical public that dissuades commerce. This is bad for the local housing market that is already bleeding people to surrounding counties, but also bad for the consumer, whose protections should be of paramount importance to that of the corporations. 

All of us should support the proposed legislation that mandates a clear explanation from co-op boards for their decisions on applicants. It is more in the spirit of fair housing, but it is also better for the financial health of the corporations.

For more real estate commentary, log onto Westchester Real Estate Blog, authored by J. Philip Faranda, broker and owner of J. Philip Real Estate.


This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Thomas OConnell January 11, 2012 at 02:30 PM
"being able to choose your neighbors" is not a poor choice of words. == The system works it is not broken. So it does not need to be repaired. == I can see your intertest in this matter because if a person is rejected the broker is out the the sale. == There are multiple factors, that can lead to an applicants rejection. == Sorry to say in this age of litagation, the first words are discrimination.
Jason Wellingham January 12, 2012 at 04:30 AM
Philip: This is a wonderful puff piece for your blog so you can sell coops. Unfortunately it distorts reality. As a long time coop board member I am offended by brokers who constantly blame boards for rejections and delays when it is the brokers fault that they occur. It is YOUR JOB to vet the buyers before the contract is signed to insure that they meet minimum standards, and you should insist that you review the completed package to insure all the required paperwork is included before it is submitted to the managing agent. I would guess that at most 25% of agents get off their rear ends and do this. The result? Financially unqualified buyers and/or packages with missing documents are submitted with the obvious results. The boards get blamed but its the brokers fault for being negligent. So instead of trying to line your pockets and blame others, do your job and the process will go a whole lot faster and you perform your fiduciary obligation to your client.
Mike Rodriques February 10, 2012 at 03:36 PM
Coops are private organizations, yes? If that's the case than they should be able to pick whomever they would like as a neighbor.
Maria Hull June 18, 2012 at 07:24 PM
I live in Old Yorktown Village - it's a Co-op. The people living upstairs are noisy and arrogant - they disturbe me almost every night of the week after 11pm and they have no problems with disturbing the neighbors either. I have called the police about 4 times - others have called the police as well - they keep getting away with it. The guy who is living there is an attorney and is renting from his aunt. The board seems to be reluctant to help even though I have gone there twice, I have called the police a number of times, My neighbors have called the managment company, we have written emails and letters and one neighbor came to the board meetings with me to testify for me. What do I do now? The aunt who owns the unit stands behind her nephew and has been accusing me of making problems for her when she lived there - when I didn't. Who can I get to help me since the board and managment company are not helping me. Do I need an attorney? Can you suggest one?
Craig July 16, 2012 at 12:26 AM
Allowing co op boards to behave in this fashion is a license to discriminate. Why don't they give a reason for disqualifying an applicant? At the very least, a reason should be mandatory. They take your non refundable application fee and sit on it. They don't act in good faith and easily deny applicants for an honest or minor mistake. They also make decisions based on personal reasons. They act like a bunch of pompous a-holes. I'd rather buy a house or condo than be part of this ridiculous process. Let them become victims of their own arrogance as their value plummets . Just look at how many are on the market.,


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