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BLOG / 02.02.26 /Kenneth R. Jacobs

City Council Overrides Veto and Passes Co-op “Timing” Bill for Buildings with 10 or more Dwelling Units

The New York City Council overrode a veto by former Mayor Adams and reinstated a bill requiring cooperative corporations with 10 or more units to (a) acknowledge receipt of purchase applications within 15 days after submission; (b) advise prospective purchasers of any deficiencies in the applications within 15 days after receipt; and (c) review the applications within 45 days after the deficiencies have been remedied, subject to certain short extensions. The law takes effect 180 days after it was passed, i.e., on or about July 29, 2026.

The bill applies to any type of transfer subject to Co-op approval, including transfers without consideration such as gifts, inheritance, or operation of law. The bill does not apply to HDFC’s, co-ops like Mitchell-Lamas for which the sale of shares is subject to the approval of a governmental housing agency (like HPC, DHCR or HUD), or Co-ops with less than 10 dwelling units.

1. Within 15 days after receipt of an application, a Co-op must provide to the purchaser via e-mail and registered mail, a written acknowledgment of receipt.

2. The acknowledgment must identify each deficiency in the application, with reference to the portion of the application for each such item, and any additional materials requested. If the Co-op does not provide such written acknowledgment within the 15-day period, the application will be deemed to be complete.

3. Within 45 days after receipt of a complete application, the Co-op shall notify a purchaser whether its consent to a sale has been (i) approved; (ii) conditionally approved; or (iii) denied.

• Note 1: The Co-op may request additional materials during the review period. The purchaser may also consent (in writing) to an extension of the review period. But if the purchaser does not consent to a longer extension, the Co-op may only extend the review period for another 14 days.
• Note 2: The timetable for acknowledgment of receipt and consideration of an application will be deferred during the “Summer Recess Period,” which is a written policy setting forth times during July and August that the Co-op Board does not customarily meet.

4. Nothing in the bill prohibits the Co-op from “lawfully” withholding or denying consent, or granting consent subject to “lawful” conditions.

5. Enforcement and Penalties. HPD is authorized to enforce the statute. Penalties are $1,000 for the first violation, $1,500 for a second violation, and $2,000 for a third or subsequent violation.

Initial Takeaway: It could be worse. The requirement that the Co-op provide the reasons for its denial has been removed from the statute. Instead it focuses on what the Council considers “timely” consideration of a proposed purchase application (likely based on what Council members “know” after the same anecdote has been repeated 40 times). Also, the monetary penalties are high enough to send a message, but low enough not to bankrupt the Co-op.

Issues and Ambiguities.

(a) The Co-op Corporation is defined to include both the Board and the Managing Agent. Many Boards leave it entirely up the Managing Agent to conduct the initial review. Boards must be careful to make sure that their Agents comply with the 15-day guideline for initial review of the application.

(b) Conditional Approval. The Co-op must be careful to clearly set out the conditions for approval of an application that has not been unconditionally accepted. The statute provides that a Co-op may “lawfully” deny an application due to a “lawful condition. Despite virtually no evidence that Co-ops in New York City have discriminated against purchasers, the NYC Human Rights Commission remains ever-vigilant.

The law could deter Co-ops from exhibiting flexibility in consideration of an application. After a comparable bill was passed in Westchester, rejections went up for several years; Boards did not want to take the chance that “conditional approval” of a nuanced application would pass the deadline or expose them to claims of discrimination or breach of fiduciary duty in superficially similar conditions in the future. It was simply safer to deny the application.

(c) Adequate Documentation Requirement puts Pressure on Co-ops and Managing Agents. The Co-op has to make sure that its form of Application asks for everything that the Board might consider in an application. The statute requires that the standardized application form include “all forms, authorizations, questionnaires, and supporting documents that a cooperative corporation requires to be submitted…and “ a complete list of requirements, documents, information, forms, fees, disclosures and procedural steps that a [Co-op] requires a purchaser or seller to submit….including any interview, consent form, authorization or third-party report that is described in the Co-op’s standardized application, written policies, or governing documents….”

Larger management companies may have established procedures for timely intake, notice and review of applications. Smaller buildings who self-manage, have back-office management, or simply utilize less sophisticated methods may not. We expect that many buildings will need to get counsel and management involved in developing application procedures to avoid violations. (We also expect arguments between Boards and management over who should be paying for a violation.)

(d) Notice of acknowledgment and acceptance/denial must be given by e-mail and registered mail. Is notice deemed to be given when it is e-mailed? Registered mail can take days or weeks for acknowledgment of delivery.

(e) Are Condos Far Behind? It may not take long for the law to be extended to Condos as well as Co-ops, especially if anecdotes start to circulate about Condo applications that read like Co-op applications.

In sum, we expect everyone in the industry to be heavily involved in preparing for and adapting to the new law over the next six months.