Co-op boards would have to tell prospective homebuyers the specific reasons they’re being rejected from co-op buildings under a contentious bill the New York City Council is considering as it nears the end of this year’s legislative session.
Supporters say the long-stalled measure would help uncover and combat housing discrimination within co-ops, where boards have approval power over purchase applications, by providing a baseline of transparency for people trying to buy or sell homes. But opponents, including many co-op owners, argue the measure would restrict board members’ discretion when choosing new neighbors, add significant administrative burdens to all-volunteer boards and increase liability for members.
Public Advocate Jumaane Williams introduced the bill nearly two years ago, but it’s been stuck in legislative limbo since then. Attempts to pass similar measures going back decades have failed, facing fierce opposition from co-op boards.
The City Council heard testimony on the bill Tuesday, with just a month and only two full meetings left in the year. If Speaker Adrianne Adams doesn’t schedule it for a vote by then, it’ll have to go through the legislative process again next year.
“The Council heard an ample amount of testimony about the potential impacts of the legislation on the operations of co-op boards and prospective homebuyers,” Council spokesperson Rendy Desamours said. “We will be reviewing this feedback.”
The bill would mandate co-op boards of buildings with 10 or more units to provide prospective purchasers written statements detailing why they’re rejecting sales within five days of issuing decisions. Failure to comply with the bill could result in a fine up to $25,000.
“This transparency would allow applicants to better understand and address any genuine application deficiencies, and it would further mitigate discrimination as a secrecy surrounding those decisions fosters an environment in which discrimination thrives,” Williams said during the hearing.
Rebecca Poole, director of membership for the Council of New York Cooperatives and Condominiums, said the bill threatens co-ops’ affordability.
“When shareholders do not make timely payments, break community rules, refuse to participate or fail to follow municipal laws, all other shareholders must cover the cost, liability and consequences,” she said. “The personal and corporate risk this opens is clear, the legal costs and insurance repercussions are large and will be borne by New York City homeowners.”
In co-ops, residents purchase shares in building-owning corporations for the exclusive rights to their units. The city is home to more than 450,000 apartments in co-op buildings, which are collectively owned by residents who share expenses and elect board members to steer decisions about what to spend money on and who can live there.
Sellers and agents work with potential buyers and enter into agreements before buyers then submit extensive financial documents to the boards and sit for interviews. If a board decides to reject a prospective buyer, it typically does not provide a reason why.
“It’s not like a few co-ops are saying we won’t tell you. Whenever somebody is turned down, it’s industry policy not to let them know why, and that makes it very difficult to assess whether discrimination is going on,” said Craig Gurian, a civil rights attorney who serves as a spokesperson for a coalition of groups backing the disclosure legislation.
Officials with the city Commission on Human Rights, which investigates housing discrimination claims, said discrimination in co-op sales is difficult to quantify. Prospective buyers who believe they’ve been rejected can file complaints with the commission or the state Division of Human Rights. They can also pursue civil legal action, but officials say they don’t have data insight into those filings. Of the 500 annual complaints the city commission gets, just 3%-8% are about co-op sales, or 15 to 40.
JoAnn Kamuf Ward from the Commission on Human Rights said there are likely more people who believe they’ve been discriminated against but avoid filing complaints.
“There’s people who do not want to report discrimination, they want to get housing and they want to move on,” she said.
Ward, along with officials from the city’s Department of Housing Preservation and Development who testified at the hearing, expressed support for the bill’s intent, but cautioned the legislation’s goals would have to be balanced with the paperwork and compliance burdens it would cause.
Another bill up for the Council’s consideration would establish a timeline for the co-op approval process by mandating that an application be answered within 45 days of its completion. A third would require co-ops to disclose their finances to prospective buyers who have been approved within 15 days of the buyers requesting the information.