City Council Intro 0188 Will Hamstring Co-op Boards

The City Council is continuing its unfair and unwarranted onslaught against co-ops and co-op Boards.

ARC has received the following notification from our General Counsel, Mr. Marc Luxemburg:

A bill has again been introduced in the New York City Council that constitutes a grave danger to every cooperative Board and Director of a cooperative.  The bill would place strict limitations on the way the Board responds to an application for purchase of an apartment with strict time deadlines and severe penalties for failure to comply.  The bill is a serious threat to the continued operation of cooperatives as we know them and should be vigorously opposed by all Board members and shareholders of cooperatives.

The bill is City Council Intro 0188-2010.  Although the bill is ostensibly aimed at preventing discrimination by cooperative boards, the legislative preamble specifically admits that there is no evidence that housing discrimination is more prevalent in cooperative buildings than in any other form of housing.  Nonetheless, the legislature proposes to have a uniform process that would severely restrict the ability of the board to respond to an application and would specifically redown to the benefit of both sellers and prospective purchasers.  Notably missing from the list of people benefitted by this legislation are existing shareholders and members of the Board whose rights are not only ignored but trampled upon by this legislation.  We note that although the legislation ostensibly has a civil rights orientation, it is in fact being pushed and supported principally by real estate brokers who evidently see it as a way to prevent boards from turning down their deals.

Specifically, Intro 188, known ironically as the “Fair Cooperative Procedure Law” requires the following:

  • That every Board adopt a standardized application form and a list of requirements that must be provided to “any applicant” upon request.
  • A copy of the standardized admission form and requirements must be provided to the NYC Commission on Human Rights.
  • Any change in the application form or requirements must be submitted within 5 business days of such change or modification to the Commission.
  • When an application is submitted, the Board has 10 business days to respond in writing either that the application is complete or explaining any deficiencies.
  • If further information is requested within the 10 days, the submission of further information is also upon receipt subject to the same 10 day limitation as to whether it is complete or requires more information.
  • Once all the information is received, the Board has 45 calendar days to approve or disapprove in writing the application.  If the application is disapproved, each Board member who participated in the decision is required to individually sign a written certification that the Board member did not discriminate on the basis of any known protected category.
  • Should the Board not respond within 45 days, any application fee paid to the Board or the Managing Agent, must be refunded, and the applicant is entitled to send a 10 day notice to the Board demanding a response.  If the Board does not respond within the 10 days, the application is deemed accepted.  (The Board is given an additional period of time if the application is received between July 1 and September 10.)

It must be evident to any Board member that 10 business days is a patently unreasonable requirement and that the obligation to locate all deficiencies within the 10 days is equally unrealistic.  Adding insult to injury, if the Board does not act within the 45 day window, the applicant may institute a civil action against the cooperative and be awarded three times the application fees, and $5,000 in attorneys’ fees.  Alternatively, a proceeding may be commenced before the Human Rights Commission for the same penalties.  In addition, the Court or the Commission may award a civil penalty against the cooperative that fails to comply with any of the requirements of the law.  The penalty can be as high as $15,000, should there be a third instance of non-compliance, and of course, attorneys’ fees may be awarded.

It is evident that the Council has taken no cognizance of the fact that cooperatives are run by volunteer home owners who, without compensation, undertake the management of the cooperative for the benefit of their fellow shareholders.  Instead, the Board members are treated as if they are landlords.

We strongly suggest that every Board member and shareholder immediately write to their City Councilperson vigorously opposing this bill.  A sample letter is attached, however, it would be better if each person could write an individual letter based on the form, using the form for talking points.

NYS Assemblyman Jeffrey Dinowitz recognizes the need to defeat this Intro.  Read his letter of support:  Dinowitz ARC Legislation letter

 

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