Co-op Boards May Have to Explain Rejections Per New Proposed Bill

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Recently, New York State Senator Brian Kavanagh introduced legislation that would force co-op boards to explain the reasoning behind their rejections — a major step in creating fair and equitable housing practices in New York.  

The current ruling in the state of New York allows co-op boards to reject individuals without any explanation, except in the event of discrimination claims. However, this new bill would require transparency from co-op boards and is designed to “ensure that the process of purchasing cooperative housing is fair, transparent and does the utmost to protect against illegal discrimination,” per the bill’s language. 

What This Means for Buyers 

If the bill is signed into law, buyers can expect more transparency from co-op boards throughout the entire application process. Specifically, the proposed legislation mandates that buyers receive notification of their application status no later than 21 days after submission. Then, once the application is complete and received, co-op boards must communicate the date that the prospective buyer can expect to hear back with their decision. 

If the applicant is rejected, this new legislation would require co-op board members to list the specific reasoning behind the rejection. This transparency would allow buyers to confirm that they’re not being denied on an arbitrary discriminatory basis.  

Furthermore, a quick search on the web provides buyers a host of tips on how to get approved by a co-op board. Therefore, this legislation could eliminate the intimidation and secrecy of co-op board decisions.  

What This Means for Co-op Boards 

If passed, co-op boards will be required to communicate clearly and, in some cases, expedite their approval processes. More precisely, co-ops will not only have to notify applicants of their status, but also of the expected decision date, as well. Moreover, in the event of rejection, these boards must have a legitimate, written reasoning for their decision and address this document to the applicant.  

As expected, many co-op boards are strongly opposed to the legislation, as they believe that the court should not have authority over how they determine their housing environments.  

As of right now, this bill has passed through both the Assembly and the Senate, and is expected to hit the Governor’s desk next. 

About: 

Real Estate and Corporate Transactions Attorney Nataly Goldstein is a graduate of Cardozo School of Law, where she served as President of the Real Estate Law Association.  She is experienced in both residential and commercial real estate transactions, and she prides herself on guiding her clients through every step of their transaction, whether they are first home buyers or franchised businesses.