Boards of directors of co-ops should be aware that there is always a claim that may be filed when an applicant for a purchaser is rejected. The general rule has always been that a co-op board may reject anyone for any reason except on the basis of discrimination against a protected class. They also did not have to give a reason for the rejection.
In fact, the laws regulating disclosure of the reasons for a co-op’s denial of an application are rapidly changing. While the state legislature often has bills pending to establish a statewide disclosure requirement, none has yet passed on that level.
However, several New York counties have adopted various forms of disclosure requirements. It is critical for any co-op management team to understand the disclosure and time requirements for processing and/or denying co-op purchase applications in the affected counties.
To promote transparency, Suffolk County requires co-ops to disclose, in writing, their reasons for denying an application. According to Suffolk County § 391,
- Every co-op must develop a standardized form application available to anyone;
- Every application will include a notice of how applicants can access fair housing and anti-discrimination laws;
- Co-ops have 10 days to provide acknowledgement to the applicant of receipt of the application, with instructions on completing any incomplete applications submitted;
- Co-ops must provide notice of approval or denial of all applications with 45 days of receipt;
- Upon rejecting an application, co-ops must provide notice of the grounds for the rejection; and
- Suffolk County will treat the failure to comply with the above requirements as human rights violations with significant potential consequences.
The law in Nassau County is less strict than Suffolk County in terms of disclosure requirements for co-ops. Nassau County passed their law in the latter part of 2019 enacting deadlines that include:
- 15 days to acknowledge receipt of a completed application; and
- 45 days to accept or reject application.
There is no requirement in the Nassau County law to provide the reason for rejection. The failure to adhere to these deadlines could result in fines from the Nassau County Department of Consumer Affairs.
Westchester County recently adopted the strictest disclosure requirements.
- 15 days to acknowledge receipt of application.
- 60 days from the completed application to provide written notice of approval or denial;
- For all application denials, the Cooperative must notify the Westchester County Human Rights Commission of the reason for the denial.
Although the 15-day and 60-day deadlines are less stringent than those in other counties, the requirement of reporting all denials to the Human Rights Commission makes Westchester laws much stricter. Further, Westchester County requires that the co-op purchase application provide the minimum financial requirements that applicants must meet and also requires all board members to undergo Fair Housing training.
A look at New York State and City Law
The state has been slower to adopt disclosure requirements for co-ops and condos, but it is currently pushing a couple of bills that are being considered, including New York Assembly Bill 6510, which would require notice of reasons for rejection within five days after the rejection is issued. New York City currently does not have a disclosure requirement for co-ops.
Conclusion: Be cautious with rejections
Given the different requirements in each of the above counties, co-op boards should proceed with caution when processing applications, and even greater caution, when rejecting an applicant.
Make sure you know the law in your area and talk with an experienced attorney like those at Tane Waterman & Wurtzel, P.C. who can help you protect your interests and avoid exposure to legal problems.