Legislation Could Open Coops To Further Litigation

Potential legislation being proposed by some members of the New York City Council that would require cooperatives to give a written explanation to denied applicants is raising concerns that it could open them up to possible litigation.
Intro 119, also know as the “Fair and Prompt Coop Disclosure Law,” is currently in committee. It would amend New York City’s human rights law.
“The council finds that there has historically been and continues to be widespread resistance on the part of cooperative corporations to provide reasons when these corporations withhold consent to the sale of an apartment,” Intro 119 states. “This unwillingness to provide reasons has frequently served to conceal both arbitrary refusals to consent to sales and discriminatory refusals to consent to sales.”
The piece of legislation states that by not giving reasoning for not taking someone, the city is unable to “identify unlawful discriminatory practices” and has “interfered with economic transactions, limited mobility, exacerbated the City’s housing shortage by impeding the optimal efficiency of the housing market, and has reinforced economic, racial, and other forms of segregation in the City.”
If passed, Intro 119 would require that coops send a written letter explaining refusal to accept a buyer within five business days of the decision.
“The requirement includes identifying: each element of the purchaser’s application which was found by the cooperative corporation to be deficient, any specific ways that the application failed to meet any specific policies, standards or requirements of the cooperative corporation, and the source of any negative information relied upon by the cooperative corporation with any of its reasons for withholding consent,” the legislation says. “The statement must be calculated to convey sufficient information to enable a prospective purchaser to take specific steps to remedy any specific deficiencies in that prospective purchaser’s application.”
Non-compliance could result in $1,000 to $25,000 in fines depending on how many offenses the corporation has had. Legal action can also be taken within six months of the coops failure to send a disclosure. It also allows for the possibility of having a commission.
“The prevailing party in such an action may be awarded costs and reasonable attorneys’ fees and shall be away appropriate relief,” Intro 119 states. “In the even that the finder of fact determines that non-compliance was willful, the finder of fact may award punitive damages.”
There are concerns among coops that this piece of legislation could open them up to lawsuits.
“For the Towers, as well as other cooperatives, they’ll have to build another courthouse just to handle the explosion of litigation that this will create,” said North Shore Towers attorney Errol Brett.
Brett explained that part of the statue allows real estate brokers to bring legal action if there is an allegation of discrimination. He said that one way in which this can be costly to the cooperative is by raising insurance premiums and deductibles. Such rates have already increased at the Towers because of litigation brought on by shareholders.
Explaining that this piece of legislation is meant to protect those who are being discriminated against, Brett also said that there are already laws in place to accomplish that. He said that parties who feel they are being discriminated against by a cooperative board can bring a proceeding about with the New York State Human Rights Commission or can bring action in the Supreme Court of the county they are in.
“To create another layer of procedures [that] could foster further litigation doesn’t seem to be of any benefit,” Brett said.
Intro 119 is currently still in
committee.