PRESIDENT'S CORNER: Could Co-op Transparency be Coming Soon?
Barry Kramer | February 12, 2018
As a long-time advocate for legislation that would improve transparency in co-op transactions, I am pleased that progress is being made. After several years serving as Vice Chair of the NYSAR Co-op Working Group under the excellent leadership of Chair Barbara Ford, I am honored to now serve as Chair along with Long Island’s Liz English serving as my Vice Chair. We are committed to the passage of legislation that would require a timeframe in co-op transactions and that a reason is given if the application is denied. We are advocating on a state, county and local level.
Co-ops are what some consider affordable housing in our area. They represent an opportunity for first-time home buyers and a great place for seniors to downsize. Often co-ops are an option for families that can’t afford other types of housing or simply want the maintenance-free lifestyle that co-ops offer.
However buying a co-op has challenges. Unlike purchasing a home, buyers are required to receive co-op board approval on their purchase. Buyers submit a lengthy application and are usually interviewed prior to approval. Despite laws that prevent co-ops from turning an applicant down based on any form of discrimination, a co-op board does not have to give a reason why a person is denied, even when they are financially qualified. In addition, there are no time restrictions for a co-op board to adhere to in processing applications.
A co-op could deny a single parent with no reason given. A co-op could deny a gay couple from buying, again no reason given. A person with an ethnic sounding name could be denied with no reason given. We see co-ops now declining applicants because they do not feel the price is right. Sometimes co-ops take so long to schedule an interview that buyers are forced to simply give up and the failure to schedule an interview becomes the denial in itself.
Co-op boards are quick to say that they want the ability to pick their neighbors. I’ve heard some co-op advocates pride themselves that they are in fact allowed to act like a county club, with only the select few gaining admittance.
In the Hudson Valley region co-ops represent some of the most affordable housing available. Co-ops account for approximately 20% of the residential sales in the Hudson Valley region and even more if we count Manhattan. The issue of co-op transparency affects the entire region. Even though there are fewer co-ops in Putnam, Rockland and Orange counties, they are directly affected when a co-op transaction fails. For example, a co-op seller moving from Westchester to Rockland will not be able to do so if the co-op board denies their sale.
We’ve seen some sellers give up entirely after several applicants are turned down, resulting in foreclosures, short sales and bankruptcies. In many instances buyers and sellers blame their Realtor for a failed transaction.
Legislation that would require a co-op board to give a reason for denial and set a time frame advances a more transparent transaction. It was passed in Suffolk County in 2009 and in the Village of Hempstead in 2012. This legislation requires that applications be processed within 45 days or they are deemed approved. If an applicant is denied a reason must be provided. There has been no litigation or challenges as a result of this legislation.
The good news is that we are making progress. The Rockland County Legislature recently passed legislation that would mandate a time frame in co-op transactions. The legislation calls for the managing agent to review an application within 10 days and deem if it is complete and ready for board review. The co-op board then has 45 days to review that application and determine whether the applicant will be accepted. If there is no determination by the board within 45 days the application is deemed accepted. Unfortunately, this legislation does not require that an applicant be given a reason for denial. I do believe it is a start, and additional legislation could follow in the future. The legislation is awaiting the Rockland County Executive’s signature before it is signed into law.
In New York State and New York City various legislation has been proposed awaiting sponsors and review. While our state representatives have been advocating for this legislation it faces significant opposition from co-op groups.
I do see possible legislation passing in Westchester. At the time of this writing, Government Affairs Director Philip Weiden and I are scheduled to meet with representatives from the County Board of Legislators to discuss passage of co-op legislation in Westchester that would include both a time frame and that co-op boards give a reason why someone is denied. I believe that this legislation has support from the majority of the County Board of Legislators and the support of County Executive George Latimer, who voted in favor of similar state legislation when he was a State Senator.
We need your help! In the near future the Westchester County Board of Legislators will hold public hearings to discuss this legislation. Advocates for co-op boards will come out strongly against this and many of them will participate in public hearings. As local Realtors we need your participation and sharing of any stories related to co-op rejections. If you know someone that was rejected by a co-op, contact them and suggest they share their story.
As advocates for housing in New York, I encourage all of you to lend your voice in support and make co-op purchases fair and transparent.