New legislation in the NYC Council would require co-op boards to tell prospective buyers why they were turned down for an apartment, as well as other protections for would-be property owners.
NYC Public Advocate Jumaane Williams is pushing for Intro. 0407, a bill he sponsored that would require co-op boards to provide unsuccessful buyers with a written statement explaining why they did not get the apartment.
A co-op owner is a person who buys shares in a corporation, which are then given to a specific apartment. In return, co-op owners are entitled to a long-term proprietary lease for the apartment.
If Williams’ bill is passed into law, co-op boards would be required to provide their reason for denying a sale to a potential buyer within five days of making their decision. The public advocate said the current process for denying sales is open for the possibility of discrimination and denial of housing to qualified applicants.
During a recent NYC Council hearing on housing and buildings, Williams, who won re-election in November, said the bill would help bring “clarity and accountability” to the process of purchasing a co-op apartment in the city.
He also stated that “discriminatory practices” have long existed in the industry, although he did not elaborate on their specific nature or extent.
“The extent of discrimination is difficult to quantify but it is estimated to be a factor in almost a fifth of board decisions with broker agents reporting common code words like ‘NOK’ or ‘NQ’ to indicate ‘not our kind’ or ‘not quite,’” he said. “Because a potential buyer can wait lengthy periods only to be denied with no explanation, it can be difficult to improve a subsequent application to access co-op ownership after a denial.”
There are more than 6,800 co-op buildings in NYC. Williams said this is more than other metro areas in the country. Intro. 0407 would provide transparency and “mitigate discrimination as secrecy” surrounding co-op denials.
“Eliminating this closed-door system would have a tremendous impact on efforts to make homeownership more equitable and accessible, setting an important precedent,” he said.
How NYC co-ops can make their decisions
A co-op typically has a board of directors that adheres to basic legal obligations.
Per the NYS Attorney General’s Office, boards must “exercise prudent business judgment” in making decisions, just like any other corporate board. It must follow the co-op’s internal rules, as set forth in the bylaws, the proprietary lease, the certificate of incorporation and the house rules.
As far as background checks, it is unlawful for co-ops to refuse to sell, rent or even approve the sale of housing based on a person’s criminal history. However, a board can review an applicant’s criminal history after the sale to find out whether or not they are on the state’s sex offense registry.
Protections for co-op buyers
Another bill in the council, Intro. 0438, sponsored by Council Member Pierina Sanchez, would require co-ops to disclose its finances to successful purchasers. Williams said these bills would “combat a history” of discrimination among co-op board processes.
Intro. 0407 had a NYC Council committee hearing on Dec. 2. The bill, along with Intro. 0438, are laid over in the committee, so it is unlikely that they will be passed before the end of the year.
