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BLOG / 11.13.25 /Kenneth R. Jacobs

Gravely Flawed Co-op “Admissions” and “Disclosure” Bills in Front of New York City Council

The New York City Council is considering three pending bills that micromanage the admissions and financial disclosure practices in NYC cooperatives. We oppose these bills and urge you to tell your Councilpersons that your Co-op does too.

1.     Int. 407 – (the “Reasons” Bill). Requires Co-ops to provide the specific reasons why it is rejecting an applicant, in enough detail that the applicant can correct the deficiencies. The Co-op’s statement must include how many other purchase applications it has considered and rejected within the past three years. The officer signing the statement must certify that these are the only reasons that Board members cited for rejecting the applicant. The Co-op incurs penalties for not meeting deadlines for providing these statements.

If an applicant believes that the Co-op has violated the statute, it can sue. The Co-op may not produce any evidence that was not contained in the rejection statement. The prevailing party may collect its legal fees. A court action does not bar the Human Rights Commission from starting its own investigation.

We oppose this bill. It is wildly overwritten and unrealistic. How many volunteer officers of a Co-op would be willing to certify that all of the reasons for rejecting an applicant have been properly stated in a “reasons” letter, or to devote all of the time needed to deal with a disgruntled claimant? And what if the reason includes a negative reaction to the personality of the applicant, concerns about their past and future behavior (e.g, if they are an existing shareholder), or a desire not to increase the voting power of an applicant in the cooperative? How can these be “remedied”?

The bill is also unnecessary. The NYC Human Rights Commission has very broad authority to investigate claims of discrimination. No Co-op Board would want to expend the time and money needed to deal with an HRC complaint.

2.     Int. 1120 – (the “Timing” Bill). Requires a Co-op to advise a purchaser, within ten days after it has received their application and any supplementary materials, (i) whether the application is complete, and (ii) what are the deficiencies in the application. (For summer applications, provided the Board has notified everyone that it doesn’t meet in July and August, responses are required by September 10^th.) Thereafter, the Board must notify applicants within 45 days after receipt of a completed application whether they consent unconditionally, consent conditionally, or reject the application. If the Co-op does not comply with the time periods in the bill, the application is automatically deemed accepted. An aggrieved purchaser may bring a court action and may be entitled to attorney’s fees.

We oppose this bill because it imposes unrealistic, “one size fits all” time limits on Board action – especially for smaller, more informally run cooperatives. Most Co-op Boards need more than ten days to review and consider the financial details of many applications or to deal with other application-specific issues. Again, Board volunteers are being penalized for their service.

3.     Int. 438 – (the “Co-op Financial Disclosure” Bill). Requires Co-ops to provide records to prospective purchasers of (i) the Co-op’s operating expenses, cash flow, debt, assets and liabilities; (ii) capital improvements planned or underway, and their cost; (iii) the amount in their reserve fund: and (iv) the most recent budget (if they have one). The applicant may request other financial information as well.

We oppose this bill. It requires more information to be given to applicants than are ordinarily provided even to existing shareholders. Legally a non-shareholder has no right to much of the information requested, and there are no confidentiality requirements. In many cases the information is only an estimate or a projection.  Boards usually have sound reasons for restricting this type of information until the decisions of the Board have been finalized, since shareholders and brokers have a distressing tendency to cherry-pick data that distorts the Co-op’s true finances.

There is strong statutory and judicial history allowing cooperatives to exercise their business judgment, just like other private business corporations, that these bills turn on its head. We think they represent the usual political responses to anecdotal claims of discrimination or unreasonable delays. In fact, when most of these claims are investigated, they either remain unsupported or the actions of the cooperative turn out to be justified. And if necessary, there are other vehicles for making human rights claims.

What you can do. The City Council is conducting hearings on these bills on Tuesday, December 2nd at 250 Broadway at 10:00 AM. Co-op Boards should reach out to their councilperson to express your opposition to these bills. A directory of City Council members by district is available HERE. The Council of New York Cooperatives is also putting together a sign-up sheet for co-ops that oppose the bills and is preparing written testimony.