New bill would force co-op boards to explain rejections

Written explanation to denied buyers could be required

Assemblyman N. Nick Perry and Sen. Brian Kavanagh (Getty, iStock, NY State Assembly)
Assemblyman N. Nick Perry and Sen. Brian Kavanagh (Getty, iStock, NY State Assembly)

State lawmakers are proposing rules to add transparency to co-op and condo boards’ application review process.

A new Senate bill would require residential co-op and condominium boards that reject applications from prospective buyers to explain why in writing, the Wall Street Journal reported. Applicants are often frustrated as they have no idea why they got rejected and some sue, alleging discrimination.

The bill is sponsored by Manhattan Democrat Brian Kavanagh, who heads the Senate housing committee.

Assemblyman N. Nick Perry, who sponsored an Assembly version of the bill, told the Journal that more transparency is needed to root out discrimination, intentional or not.

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“The intent is to prevent discriminatory decisions,” the Brooklyn Democrat said.

This is not the first bill of this kind, however. Similar measures in the past failed to overcome strong opposition from co-op boards. Opponents say they fear that clearly stating the reason for rejections would make them more vulnerable to litigation.

“I am concerned that something like this may actually create fodder for somebody who wants to make a claim of discrimination where the reasons [for rejection] may be legitimate,” Steven Wagner, a real-estate attorney, told the Wall Street Journal.

Unlike in condominiums, residents of cooperatives own shares of their buildings, rather than their units. As a result, co-op boards have been known to be more stringent in reviewing applications. They are entitled to reject prospective residents as long as their decisions don’t violate housing discrimination laws.

[WSJ] — Akiko Matsuda