HABITAT Magazine
Q: A shareholder in a Queens co-op recently found a buyer willing to pay cash for her apartment. Documents were provided showing that the buyer could afford the apartment, the fees and the renovations. But the co-op board rejected the application. The shareholder emailed the board to ask for clarification on what it’s looking for in a buyer. She never got a response. How can a shareholder find out what the co-op board is looking for in potential buyers?
A: In New York City, a co-op board does not have to tell you why it rejected your buyer. It has the power to reject a purchase application “for any reason or no reason” — and isn’t obligated to spell out the reason. The members probably won’t tell you what they’re looking for, either.
“I’m always loath to give any particular criteria, because it locks the board into something,” says Steven Sladkus, a co-op board president and partner at the law firm Schwartz Sladkus Reich Greenberg Atlas.
The financial health of applicants is important, such as how much money they will have after closing, their debt-to-income ratio, a good credit profile and stable employment, Sladkus says. Other factors include whether applicants have a history of filing lawsuits, particularly against landlords.
A seller’s best move is probably to hire a broker who is familiar with the building and has experience guiding sellers through the process there. “If you have a broker,” Sladkus says, “they’re hopefully vetting purchasers for you so you don’t waste your time.”
Though vast, a co-op board’s powers are not limitless. A board cannot reject buyers for illegal reasons under federal, state and city fair housing laws. This would include basing a decision on their status in a protected class such as race, religion, national origin, age, disability, sexual orientation and gender identity, says Julie Schechter, a partner at the law firm Fox Rothschild. If the board does not disclose the reason for the rejection, and there is no other evidence, discrimination cases can be difficult to prove in court.
There have been repeated efforts to make the application process more transparent in New York City. Most recently public advocate Jumaane Williams sponsored a bill that would require co-op boards to provide their reason for denying a sale to a potential buyer within five days of making their decision. Such bills have met with stiff resistance from co-op advocates, and so far none has advanced in the City Council.Westchester County, however, does have a law that requires a board to disclose to an applicant its reason for rejection.