Real Estate

Westchester County Co-ops Now Have To Say Why They Reject Buyers

Boards in Westchester County now have to notify the county Human Rights Commission about rejections and the reasonings for them.

New York State’s Westchester County passed a groundbreaking amendment to its Co-op Disclosure Law late last month.

Now, cooperatives must disclose the reasons applicants are denied and provide minimum financial requirements to potential buyers before they apply. 

Per a report by The Real Deal, the amendment passed through the Westchester County Board of Legislators 15 votes to two, and is effective immediately. Boards in Westchester County will have 15 days after a rejection to provide the Westchester County Human Rights the reasoning for it.

The law was originally signed into play with a 13 to four vote in 2018 and did two major things. It set deadlines for boards to accept or reject applicants, and made it a requirement that boards notify the county Human Rights Commission about the rejections. However, it did not require that they provide the reasons behind the rejections. 

Steven Ebert, a New York-based partner at Cassin & Cassin LLP, told Inman that the idea behind the original law was to help the HRC better investigate possible fair housing violations by pinpointing buildings that were rejecting a lot of applicants.

But because of the many steps involved in a co-op approval process, it can be hard to test for discrimantion at a low cost, Ebert explained.

That dilemma, he continued, is a factor that helped push the new amendment. 

A rejection because of discrimination cuts two different ways, against the buyer or the seller. 

There are a lot of moving parts that go into the process of  buying a co-op, like consulting with an attorney, signing a contract with the seller, and submitting an application to the board.

“Most times people think of discrimnation as turning down a buyer,” Ebert said. “But I do want to point out that you can easily hold it against the seller. Remember in a co-op, until you have that co-op’s consent, there’s no deal.”

The new amendment will hopefully add some transparency to the process, prevent discrimination against both buyers and sellers, and influence other major markets to pass parallel legislation.

In April, Inman reported about a similar proposal in New York City. Brian Kavanagh, New York State Senator and chair of the housing committee, has sponsored a bill that would require residential co-op and condominium boards to provide a written explanation for why they turned down a potential buyer. In addition, boards would have 90 days to let a potential buyer know the decision. 

New York City’s co-op boards have long been known for their exclusivity. As Inman reported, they are protected by a law that dates back centuries and can turn down anyone for any reason without having to disclose it. 

“I think this is going to put pressure on New York City, but I don’t think it’s going to happen immediately,” Ebert said, referring to the Westchester County amendment. 

While there are a few key differences between New York City and Westchester, like a broader price range, if the Westchester model proves effective, Ebert expects it to light a fire under the passing of a similar rule for co-ops in the boroughs in the next few years

“Hopefully this will have a positive influence,” he said. “This movement was based on a reaction. The movement for disclosure was based on people being turned down and wanting to know why.”

Email Libertina Brandt

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