In an effort to achieve greater transparency, new legislation is being proposed that would require co-op boards to disclose to prospective buyers the reason(s) they were rejected in writing. As you may recall, a similar bill was proposed in May 2021 by NY State Senator Brian Kavanagh. Currently, co-op boards can reject a buyer’s application without an explanation. The new bill sponsored by NYC Public Advocate Jumaane Williams and City Council Member Pierina Sanchez would require co-op boards to respond within five business days of their decision to help combat potential discrimination against buyers.
There are two other bills on the table that would 1) regulate the application process to ensure timely approvals/rejections from the co-op board and 2) require the board to share financial information about the co-op within 14 days of the request by the prospective buyer. Non-compliance by the board could result in fines up to $25,000 if the legislation is passed.
Naturally, there is concern among co-op boards around their susceptibility to expensive litigation. The Council of New York Cooperatives and Condominiums President, Marc Luxemberg says this legislation is an "outrageous intrusion into the functioning of boards”. Attorney Geoffrey Mazel refers to the proposed bills as punitive, saying the legislation will make co-op boards a target by attorneys looking to make money by suing co-ops. He also said co-op volunteers should not be treated as though they were paid landlords.
While the fate of these proposed bills remains up in the air (for now), it’s certainly something buyers should keep in mind. Co-ops tend to be less expensive than condos, but there are more hoops to jump through to get approved. Brick Underground offers 10 steps for preparing a board package that may help increase a buyer’s chances of getting approved. However, a good and experienced real estate broker should assist buyers throughout the process and guide them on preparing an acceptable board package. The agent should also perform due diligence on the board and how they operate before completing the package, as well as prep the prospective buyer for the board interview.