Real Estate Marketing & Beyond
Lawmakers in New York are trying to push through a bill that would force co-op boards to explain why they reject potential buyers of their apartments. The bill is meant to prevent discrimination by co-ops when they make such decisions, proponents of the new law say.
If the state senate bill is approved, it would require both residential co-op and condominium boards to provide a written explanation to anyone whose application to purchase a unit in the building is turned down. At present, these boards do not need to provide a reason as to why they reject applicants.
Co-op apartments, also known as cooperatives, are owned by a corporation and are not considered real property. When buying a co-op apartment in NYC, people are actually buying shares in the corporation that are allocated to that apartment and this entitles them to a proprietary lease on that unit.
Some co-op boards are against the bill, saying it would leave them at risk of more 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 may be legitimate," Steven Wagner, a real-estate attorney, told The Wall Street Journal. He said, for example, an applicant may be denied due to weak financial credentials or an application that lacks required documents.
But advocates of the bill argue that there is a clear lack of transparency in co-op decisions that leaves a lot of room for some applicants to be discriminated against.
“I think it will always be the case, and it’s not always intentional,” said assemblyman N. Nick Perry, who sponsored the bill. “The intent is to prevent discriminatory decisions.”
Some say the bill could actually benefit the co-op sector. Donna Olshan, president of a New York-based brokerage called Olshan Realty Inc., told the Journal that the gap between co-op and condo values continues to grow in the city. She pointed to data from Douglas Elliman that shows that in the first quarter of this year, the average price per square foot for a condo in New York was $1,714, compared to just $1,054 per square foot for a co-op.
Olshan said that by creating more transparency in the co-op application process, this would help to “unlock value” and “be fair and less discriminatory.”
