Co-op Transparency: What Do You Think?
We’re going to be on the Brian Lehrer show on WNYC tomorrow at 10:20 a.m. to discuss the recent proposal by City Council to require co-op boards to give a written explanation within five days to people they reject. We thought it would be interesting to see what readers think of the proposal, so please…
We’re going to be on the Brian Lehrer show on WNYC tomorrow at 10:20 a.m. to discuss the recent proposal by City Council to require co-op boards to give a written explanation within five days to people they reject. We thought it would be interesting to see what readers think of the proposal, so please take a minute to answer the three-question co-op survey and then listen in tomorrow. There’s a field on the survey for your comments. Thanks!
Check out the results here
When Co-Ops Say “No”, They May Have to Say Why [Gothamist]
Pushing Co-ops to Explain Why You Can’t Buy [NY Times]
If you believe you have been denied shares in a co-op because of discrimination, please call the attorney general’s office at (212) 416-8000. THEY WILL WALK YOU THROUGH THE PROCESS of filing a complaint and THEY WILL HANDLE THE LAWSUIT! You don’t have to hire a lawyer or pay legal fees! Please take on the bastards who violate the law!
Finally, a note about our fine friends in the real estate brokerage community. While many, if not most, are fine citizens who strive to uphold only the highest moral and ethical standards, some of them are driven by money.
As Councilman Monserrate (the sponsor of the bill) said today on Brian Lehrer’s show (the same one where Our Dear Blog Host appeared), this very legistlation was pushed for by the Real Estate Board of New York.
Well, OK, whatever, right?
Hold on. The legislation (please read it if you live in or seek to live in a co-op) expands the right to sue for discrimination beyond the person/people who was/were turned down. Who else can sue for discrimination? Their REAL ESTATE AGENT ! ! !
So even if the turned-down buyer is to bummed/busy/broken to file suit, real estate agents could ask their staff attorneys (or, for freelancers, find one who’s willing to take the case) to file papers at the courthouse.
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When it comes to this particular bill before the city council, let me say first that I am against discrimination (yea!) and I am for corporate transparency (yea!).
But as many posters have pointed out, you don’t always get to go to the prom with the one you have your eye on, or into the college you want, or the job you are absolutely convinced you’re perfect for.
Is that because your ideal prom date was racist? Because your college doesn’t care for your essay about life as a queer? The job invterviewer felt uncomfortable by your wheelchair? If you think so, call the state attorney general’s office. (Take that, non-prom date!)
I was rejected by two colleges. They didn’t tell me why. I have been turned down for more jobs than I care to remember. Sometimes they didn’t even have the courtesy to tell me they weren’t going to hire me! The nerve, huh?
If I thought I had been turned down because of my race, religion, sexual preference, physical limitations, marriage & parenthood status, etc., I could have called the state attorney general’s office. They investigate civil rights complaints, and they tend to take such things seriously.
Same thing applies here. If you get your news from Fox, you may be surprised to hear that the former attorney general, Elliot Spitzer (currently our governor), earned his reputation by taking on corporations. (Reminder: A co-op is a corporation too, governed by many of the same state laws.) Our current attorney general, Andrew Cuomo, is showing himself to be a thorn in the side of many huge corporations. (Citicorp, Sallie Mae to name but two.)
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Aside from paying their bills, many people who move into our co-op are first-time buyers and are surprised to find out that when a pipe in the basement bursts, or the roof leaks, everyone in the building has to pay for it — even if the pipe or roof leak flood someone else’s apartment.
That’s when the maintenance increases (or an assessment is levied). In short, the costs of home ownership only increase. Potential owners must be able to afford living in our building now AND in the future. If you would be strapped just making the payments now, you won’t be able to afford the payments in five years.
To those who are on the edge we may offer to approve them if they put, typically, one year’s maintence in escrow. It’s a win-win situation because the co-op knows it has the shareholder’s maintenance available if she can’t make her payments, and the shareholder gets her apartment. (If you can’t afford to put a year’s maintenance in escrow, you should probably reconsider investing in an apartment — or home, for that matter. Then rent “The Money Pit.”)
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Co-ops are governed by New York State corporate law (we’re an “S” Corporation, for Co-operative Housing Associations, for the juridically minded). Believe me, most co-op owners who understand the law would be ecstatic to be able to change the way our business is run, but we can’t. The legislature would have to do that.
To those who believe that a rejection based on a potential applicant’s financial status is “window dressing” to obscure the true capricious & malevolent machinations of the board, let me give you an example.
In our co-op, as in most, at least a few people are behind in their monthly maintenance payments. Aside from the obvious problem of being short on cash, a shareholder who can’t pay her maintenance creates a problem for the co-op. In our building we don’t have piles of money stashed away to pay our bills. We rely on shareholders to uphold their obligation to pay their share in the business.
And bills we have. We pay ConEd. We pay for insurance. We pay property tax. And, the biggest bill of all, the mortgage.
When shareholders withhold their payments, the board either stops paying bills (frankly, not an option when it comes to property tax, insurance or a mortgage) or we have to borrow from a bank to cover the gap.
Guess who pays the interest on that loan? All the other shareholders! Believe me, they are not pleased when they must do so.
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I’ve been a co-op treasurer for almost three years, and on the board for more than three.
Contrary to what appears to be a popular feeling, most co-ops are neither snooty nor filled with the wealthy. My co-op is in Washington Heights — not exactly a tony neighborhood where the elite meet to deny apartments to buyers. In fact, we have never rejected a buyer, and, in fact, have welcomed musicians, actors, parents of small (and noisy) children, and live among elderly renters.
Yes, renters in a co-op — that’s because, like most co-ops, our building was once all rental.
Twenty years ago the landlord decided to sell. The renters could buy their apartments, for which they would get a mortgage. They would also pay monthly maintenance, a healthy chunk of which goes to paying off the mortgage on the building.
That’s right, co-op owners pay two mortgages, one on their apartment and one on the building.
That’s because the landlord sold the building to a corporation — not IBM, but a corporation whose shareholders are apartment owners. So the corporation owns the building, and, legally speaking, leases the apartments to shareholders (whose shares entitle them to live in their apartment) who are, legally speaking, renters (or, even more legally speaking, lessors).
Bizarre? You betcha.
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I have been posting my concerns about the proposed law as a former president of a 4-unit coop I used to live in. Several of my posts are above. I have no ties to, nor love for, the real estate industry in NY. I was once ripped off by a developer and had to sue him. I have also been an attorney in NYC for 12 years and I have been around the local courts enough to see what people sue about. I also know that the one time my tiny self-managed coop board rejected someone, I was called numerous times by the attorney, day and night, trying to pry an answer out of me and I knew the more I said, teh more likely we would be sued. The risk is real, my friends.
So too, as I have posted several times, is the fact of discrimination. In my first post — on the forum page before Mr. B opened up comments here –I asked whether there was any way to balance both the interest in preventing discrimination and preserve the legitimate discretion co-ops need. I think the law as proposed is going to impose a chilling effect on honest, tiny coops, but it would be great to see some suggestions of how to reach a compromise.
The discussion about smaller co-ops reminds me about what happens every time there is a discussion about rent regulation. The big boys always bring out the mom-and-pop landlord to show how greedy tenants are beating up on good people trying to eke out a living. Let’s be real: whatever you think about having the law apply to small buildings (fewer than 6 units, say), that’s not what drives the Real Estate Board and the other coop industry lobbyists. They are opposed to any disclosure and any accountability PERIOD.
Isn’t it true that the number of turndowns per building per year is very small? Isn’t that especially the case in small buildings? Isn’t the industry claiming that most of the turndowns are on financial grounds, so that the “rejected for obnoxiousness” or other soft reasons is only a small percentage of a small percentage? Isn’t the percentage of turndowns where the demographics of the person is sufficiently different from the demographics of the building to allow even the thought of a fair housing lawsuit a small percentage of the small percentage of the small percentage?
“Risk of litigation” is a scare tactic. We need a more calm discussion.
OK, so if you have a four unit brownstone coop with everyone on the board and a slightly uneven distribution of shares and you need a majority of shares to approve an applicant and three people like the pplicant but one, with slightly mroe than 25% of the shares thinks that person will not be pleasant to deal with and therefore votes no, and three people think the financials are fine but a different member, with 25% of the shares, thinks not and votes no, what is the “reason” for rejection that should be disclosed. The “co-op” did not make a decision as to teh “reason” for rejection. Individuals voted their own views.
The risk of litigation is mroeover real. If a co-op discloses a reason — for example, if everyone thought the applciant came off as a little hostile and shifty at the interview — and the applicant feels snubbed and insulted, they may find a lawyer to help them claim that the reason was pretextual. Even if the claim is groundless, the motion opractice alone is going to cost the co-op members $5k-$20k before the case is gone. Split that four ways and that is a pretty penny. Small coops will be afraid not to take people who seem like they might be litigious, when, in fact, they should be afraid to take such people.
Small coops do not have the resources to insulate themselves through managing companies and the regular advice of counsel. I think back to my brownstone co-op days and, other than teh fact that we almost never rejected anyone (we were lucky that our sellers always found personable, affluent buyers), I shudder to think how we would have handled disclosure in a difficult case. I am sure that if there was someone we thought would make a bad member, we would have hired counsel just to draft the rejection. Is that where we want this to go?