The Real Estate Board of New York to The City Council Committees on Housing and Buildings on Intros 407, 438, and 1120 on Coop Transparency

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The Real Estate Board of New York (REBNY) is the City’s leading real estate trade association representing commercial, residential, and institutional property owners, builders, managers, investors, brokers, salespeople, and other organizations and individuals active in New York City real estate. REBNY appreciates this opportunity to provide comments on the above-referenced legislation

BILL: Intro 0407-A-2024

SUBJECT: This bill would require coop boards to disclose in writing all reasons for denying the purchase of a coop unit within 5 days of deciding to deny such a purchase

SPONSORS: The Public Advocate (Mr. Williams) and Council Members Sanchez, Restler, Won, Krishnan, Narcisse, Ayala, Abreu, Williams, Avilés, Marte, Bottcher, Hanif, Cabán, Feliz, Farías, Ossé, Nurse, Hudson, Brooks-Powers, Gutiérrez, Salaam, Stevens, Joseph, De La Rosa, Louis, Hanks, Banks, Moya and Brannan (in

conjunction with the Brooklyn Borough President)

This bill would require coop boards to provide in writing all specific reasons a prospective purchaser of a coop unit is turned down within 5 days of such a decision. The bill would also hold board members personally liable for failure to disclose all reasons for denying a purchase and would establish a process to legally challenge a board’s decision regarding denying the purchase of a coop unit.

REBNY appreciates that many parties to co-op transactions would like to see more transparency regarding when proposed purchasers are denied. This bill seeks to shed light on whether discrimination plays a role in co-op board decision making. However, for several reasons outlined below, this legislation will make it harder for New Yorkers to purchase cooperatives units.

Discrimination in housing decisions is already prohibited by a significant body of federal, state, and local law. City and State law clearly prohibits discrimination in housing based on a wide range of protected classes and those who believe they have been denied the ability to purchase a cooperative unit due to discrimination can file claims at both City and State agencies and in court. It should be noted that, in spite of all the forums for complaints, there have been virtually no discrimination claims related to purchasing cooperative apartments in recent years.

In addition, co-op board members serve as unpaid volunteers who agree to help manage their co-op buildings. The potential assignment of personal liability would deter many residents from volunteering to serve on boards. In addition, the bill would further raise high insurance premiums and could lead to significant legal fees that could prevent co-ops from meeting many other fiduciary responsibilities.

Unfortunately, the unintended consequence of this bill will be to make it harder for New Yorkers to purchase cooperative units. This is the case not just because it will make operating costs of buildings more expensive but also because it will likely result in co-op boards raising the financial requirements needed to purchase shares to avoid any potential legal risks.

Bill: Intro 0438-2024

Subject: This bill would require co-op boards to disclose their finances to an accepted co-op perspective purchaser within 14 days of a request from such a potential purchaser.

Sponsors: Council Members Sanchez, the Public Advocate (Mr. Williams), Restler, Won, Farías, Cabán, Ayala, Louis, Salaam, Hudson, Avilés, Nurse, Stevens, Gutiérrez and Williams

This bill would require a co-op to disclose, upon request of a perspective purchaser, its assets and liabilities; capital projects planned or underway; the amount of any reserve fund; and its most recent budget or similar document. The bill also sets a penalty for failure to disclose such information.

REBNY believes that, in most cases, this information is already shared with perspective purchases. However, if the intent is to codify best practices, then the drafted language needs to be clarified. For example, it is not clear what “planned” nor “underway” capital projects means as some capital projects may be “planned” or in various stages of execution for many years before they are ever commenced. “Financial information” should be clearly defined as well by specifying the required fiscal year or allowing a current budget in lieu of audited statements.

Bill: Intro 1120-2024

Subject: This bill would establish timeframes for decisions regarding co-op transactions.

Sponsors: Council Members Amanda C. Farías, Nantasha M. Williams, Farah N. Louis, Chris Banks, Mercedes Narcisse, Robert F. Holden, Oswald J. Feliz, Rita C. Joseph, Rafael Salamanca, Jr., Susan Zhuang, Alexa Avilés, Diana I. Ayala, Selvena N. Brooks-Powers, Tiffany L. Cabán

This bill would require co-op boards to meet certain timeframes when making decisions about whether or not to accept prospective purchasers. In general, there would be a 10-day period for acknowledging receipt of offers and a 45-day period from the receipt of a complete application to disclose any decision about accepting or rejecting an application. There are certain extensions granted for these timeframes. A failure of a co-op board to meet the timeframe and fail to respond to the applicant within 10 days of a request for a response following 45 days (and any extensions granted) would result in the application being granted.

REBNY understands that many parties to co-op transactions would value a timeframe for decision making and that surrounding jurisdictions have standards similar to Intro 1120. To make this operational, the legislation should clarify who communicates what to whom—for instance, whether the board notifies the managing agent, who then informs the buyer’s attorney or broker. This is especially important for self-managed buildings or those with limited broker involvement. Additionally, for all the above, timeline requirements should also allow for legitimate extensions and clarity (e.g., holidays or board schedules) to minimize administrative strain and confusion.

Any timeframe must be mindful of the fact that co-op board members serve on a voluntary basis. To that end, we would request 15 days for the acknowledgement of an application, with reasonable extensions as needed. In addition, acknowledgement of receipt of summer applications should be required by September 30, not September 10, again with reasonable extensions as needed. In addition, automatic approval of applications is not appropriate except in the most extreme cases, especially if applications are incomplete.

Thank you once again for allowing REBNY to submit testimony on these important proposed bills. We look forward to working with the Councill on these matters.