The New York City Council is considering two bills that, if enacted into law, would substantially restrict the right of cooperatives to decline approval of purchase applications and potentially impose substantial liabilities on board members and managing agents. While similar bills have been considered and rejected in the past, we understand there may be more support in the Council for bills of this type than previously, particularly from the brokerage community. We suggest that cooperative boards that believe the bills are undesirable make their views known.
The first of the bills, Int. No. 1467 (Cooperative Corporations: Timing of Decisions) places strict deadlines on the timing of board and managing agent processing of applications. The deadlines imposed are inconsistent with and more restrictive than the current practice and likely abilities of most boards and managing agents. The other, Int. No. 1458 (Fair Residential Cooperative Disclosure Law), requires boards, whenever they reject a purchase application, to provide in writing (i) the specific reasons for the rejection; (ii) each element of the application that was deficient; (iii) any ways in which the application failed to meet specific requirements of the cooperative; (iv) the source of any negative information relied upon by the board in rejecting the application; and (v) detailed data concerning purchase applications for the prior three years. The rejected purchaser then has the option of addressing the specified deficiencies. Substantial monetary penalties and prevailing party legal fees are to be awarded in the event of a violation. The law may be enforced by either the purchaser or any broker who would have been entitled to a commission had the purchase been approved.
If you are concerned about the proposed restrictions and potential liability, you should express your views to your local Council Member. A list of Council Members along with their email addresses can be found here. The bill sponsors are Council Members Brad Lander and Jumaane Williams. You may get further information from the Council of New York Cooperatives and Condominiums here.
Similar legislation remains “in committee” with the State Senate in Albany. Bill S2540 would impose strict deadlines on responses to the co-op applications and would require all cooperative boards to adopt an application that sets forth the cooperative’s purchase requirements and informs the purchaser of the applicable fair housing and anti-discrimination laws. A copy of the bill may be found here. You may submit comments to the bill at the same site or contact your State Senator. Senators can be identified and emailed here.
Please contact us if you have any questions about these bills.