Human Rights Commission: 138 co-op applications rejected in 6 months

While rejections appear plentiful, co-op representatives say the undisclosed reasons are usually due to incomplete applications or financial shortcomings.

Akiko Matsuda
Rockland/Westchester Journal News

A new law to help gauge how many co-op applications were rejected in Westchester County yielded a higher number than some expected, a six-month analysis revealed this month.

For perspective, in recent years, roughly 1,000 co-ops are sold in a six-month period in Westchester. 

Since the start of the law on Dec. 14, 138 co-op applications were rejected as of June 14, according to the Westchester Human Rights Commission, which gets notified of the rejections under the law.

Multiple co-op buildings line Garth Road in Eastchester. A bill approved by the Westchester County Board of Legislators would regulate co-op boards' decision making.

"There were a number of individuals who said that there was no problem in Westchester County," said Legislator Chris Johnson, a Yonkers Democrat who co-sponsored the bill. "Now, with this number, we know that there are people getting rejected, and we can do a study and make sure there’s nothing unfair going on." 

The legislation, commonly known as a co-op disclosure law, was a result of years of legislative battles and compromises. The law aims to make a co-op approval process more timely and accountable, but it does not require co-op boards to include the reason for rejections in their notices. 

Barry Kramer, immediate past president of Hudson Gateway Association of Realtors and an advocate of making the co-op application process more transparent, said the number of rejections was "far more than I thought." 

"The legislation has provided us an insight as to just how many board rejections there are," Kramer said. "It provides us the basis for justifying that co-op boards should give a reason why someone is rejected."

When the proposed law was being negotiated, real estate agents who handle co-ops had argued that disclosing the reason for rejections would be helpful. They explained that their clients have been unable to sell their co-op units for months because prospective buyers were rejected by their co-op boards, but they had no way of knowing why. 

But Ken Finger, general chief counsel for the Building Realty Institute of Westchester & Mid-Hudson Region (BRI), a trade organization representing 600 co-ops in Westchester County, said the reason for rejections are obvious. 

"Most of the rejections we see are because those applications are incomplete," Finger said. "And once they do get through to a board to review, a majority of those who are rejected, probably 90-95% of them, were rejected because they don’t meet the financial standards." 

Disclosing reasons could be costly

The law's opponents, led by BRI, had argued that disclosing the reason for rejections could invite lawsuits against the co-op boards, making it more expensive to operate co-ops because of legal and insurance cost. 

Requiring a co-op board to disclose a reason for rejection isn't a new concept. Suffolk County and the village of Hempstead on Long Island have enacted local laws doing just that.

A co-op complex on Garth Road in Eastchetser. The Westchester County Board of Legislators is set to vote on a bill that would make co-op transactions more transparent.

Westchester's new law also set a 15-day deadline for a co-op board to either acknowledge the receipt of completed application or notify the applicant of any defect. It also provides for a 60-day deadline for a co-op board to either reject or approve a completed application. 

As to the rejection notices, co-op boards are required to file them with the Human Rights Commission within 15 days.

If a board fails to meet the requirement, it would be fined $1,000 for the first offense, $1,500 for the second offense, and $2,000 for the subsequent offenses.

So far, no violation has been issued, according to the Human Rights Commission. 

Tejash Sanchala, the commission's director, said his office is taking affirmative steps to keep track of all the data provided and reach out to all stakeholders as needed. 

"We look forward to working with co-op boards, real estate agents and the public as we continue to monitor all aspects of co-op disclosure," he said. 

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DISCLOSURE BILL: Deadlines to be set for co-ops to decide on buyers but won't require explanation for rejections

ENACTED: Co-op disclosure law signed in Westchester