When Co-Ops Say "No", They May Have to Say Why

City Councilman Hiram Monserratte is the prime sponsor of a bill that would require co-op boards to explain why applicants were rejected when they deny a person's request to buy into a building. The secrecy behind the approval/refusal process by many co-op boards has generated long-held suspicions that the whole ordeal is simply a way to quietly discriminate against "undesirable" applicants.

Now nearly two-thirds of the members of the City Council are co-sponsoring a measure to shed a little light on the shadowy process by which co-op boards decide which apartment buyers to accept and which to reject. To the uninitiated, the council members’ aim may seem modest. What they want is for co-op boards to be required to give their reasons for rejecting an applicant, and to do it in writing within five days of rejection.

But the proposal — in a bill that its prime sponsor, Hiram Monserrate, contends is taking too long to get a Council hearing — is stirring up opposition from groups like the Real Estate Board of New York and the Council of New York Cooperatives and Condominiums, which in recent days began sending out an “action alert” urging co-op boards to contact council members and, if necessary, talk them out of backing the bill.

Opponents fear that passage of the bill will result in a wave of lawsuits against co-op boards by every person who doesn't agree with or like the reason for his or her rejection. Co-op boards are not legally allowed to discriminate on the basis of race, religion, family status, and several other protected categories, but the lack of transparency of the application process can make anti-discrimination laws difficult to enforce.

We found a Sydney Morning Herald article from 2003 that describes how arbitrary some co-op board decisions can be, no matter how famous the applicant. When Carly Simon applied to purchase a one-bedroom apartment in the Dakota, the building's board rejected her on the grounds that she was rude and disrespectful. She likened her interview with the board to "an inquisition."

Steven Gaines' book "The Sky's the Limit: Passion and Property in Manhattan" takes a look at the insular world of Manhattan's real estate co-ops. If you're in the market, you may want to pick up a copy of Sylvia Shapiro's "The New York Co-op Bible: Everything You Need to Know About Co-ops and Condos: Getting In, Staying In, Surviving, Thriving ".