A new law was passed a few years ago in Nassau County that co-op managements and boards have 40 days to review their applicant’s board packages once received to speed things up and to provide a scheduled interview and either pass or fail that individual or couple. If not done within that time constraint, the first time a warning would be issued by the county, the second time there would be a $2,000 fine and thereafter a similar fine.
Suffolk County has had a law on its books for a multitude of years, whereby if an applicant is turned down and denied by the co-op board for the purchase, then the board has a legal requirement to respond to the buyer within 45 days as to why the offer was not accepted.
Since the law has been in effect, I am quite sure more have gotten to the closing table celebrating their successful purchase; but without the law I believe it would be business as usual and fewer individuals and families would end up being happy campers.
In Queens there are some co-op boards that actually disclose what verified and documented incomes are required to purchase a one-, two- and three-bedroom unit. Also, in their resolution they are allowed to set prices on a monthly basis. If a co-op has no resolution, then setting prices or denying an applicant is what I believe is anti-trust under the Sherman Anti-Trust Act of 1890 against setting prices. If a buyer believes that they were turned down either due to discrimination or price fixing, then a buyer’s attorney should be sending out a letter to the management and co-op board president.
Also, when the price is lower than what the board would accept, maybe they should visit the specific unit to understand why it is selling for less to be more informed. The buyer would most likely be renovating, so then the market value would be comparable to others who are selling their units in similar condition.
Another idea is to have a seller’s concession so the price that is shown after it closes is more related to the standard selling price in that particular development, but my professional opinion is that my first idea is much better. To me it’s called transparency and making it easier for purchasers to know what is expected of them.
But some co-op boards have debt/income ratios less than 30 percent as added protection to make sure buyers are not overleveraged with debt, especially today with what and how the Covid-19 pandemic has affected incomes. More co-ops should adopt a similar system so Realtors would be that much more educated as to what is necessary for a buyer to qualify. Making it more challenging and difficult for the agent in a way discriminates against us in earning a living. Being open and transparent by allowing us to do a better job in searching out qualified individuals in a team cooperation mindset will save a lot of time, effort and aggravation for all involved parties.
Unfortunately, discrimination today still occurs in our world, but at least there is much more legal protection and avenues for recourse if this were to happen. An individual’s and family’s financial situation, including income via tax returns, debt/income ratios and business and/or job status as well as a background checks should be the only variables used to judge whether or not those being reviewed are a sound and viable fit for the specific co-op.
But I would venture to say there have been marked improvements and more positive outcomes in the purchasing process due to the passing of the co-op board process and review law. I am not making a generalization about all co-op boards, but those discriminating for any reason outside of financial reasons are breaking the law.
I am quite sure the majorities of boards use their due diligence in carefully reviewing prospective buyers and tenants and act accordingly by doing the right thing. But in the very near future I truly believe that the Nassau County Legislature should and will do the right thing, too, and pass a similar law to Suffolk County’s so within 45 days purchasers who are turned down will be provided a reason.
Some co-op board members might disagree with that potential law, but if you are treating people fairly and basing their approval on financials, then you have nothing to be concerned about unless you discriminate arbitrarily due to race, religion, national origin, gender, family status.
If real estate Brokers and their salespersons were being scrutinized as Newsday’s three-year investigation disclosed and over 68 Brokers and agents were caught steering buyers to other communities had their licenses suspended or revoked, so should some type of punishment or fines be levied against co-op boards that don’t stay within the laws.
I recently had one of my clients who wasn’t even given the opportunity to get a review and I was told that they shredded up the 1,000-plus pages of his application without returning it to him. He wasn’t provided any reason and was extremely perplexed and frustrated as the coop board wasn’t obligated to let him know why. It is now in the hands of his attorney.
I believe the state and local legislatures should standardize the requirements that co-ops should have in place so all are treated equally and fairly. The necessary documentation for all buyers would still be required, but at least we as Realtors would know in advance what we needed to do searching for qualified purchasers, reducing wasted time and money.