On Thursday, February 2, 2023, Public Advocate Jumaane Williams and Bronx Councilwoman Pierina Sanchez introduced three new bills which would require New York City Co-Op boards to provide a rationale for denying a purchaser’s application, to make financial disclosures to prospective purchasers, and to provide standardized applications.
These bills are the first to be introduced at the city level addressing these issues. On April 11, 2021, New York State Senator Brian Kavanagh proposed similar legislation at the state level (Senate Bill S2874). Similar to the bills introduced by the City Council, Senate Bill S2874 would have require Co-Op corporations to create procedures for a uniform application process, to provide written copies of those procedures to purchasers and sellers upon request, and to notify purchasers within twenty-one days of receipt that applications have been received, what additional documentation is needed, if any, and when the Co-Op board will complete its review. Under this law, boards would have been required to approve or deny applications within ninety days, and if they issued a denial, they would have been required to provide a reason in writing. If a board failed to issue a timely determination, the consent would have been considered granted. This legislation, however, never made it to a floor vote.
BILL 915
Under City Council Bill 915, if any prospective purchaser is disapproved, Co-Op boards of buildings containing 10 or more apartments would be required to issue, within five business days, a “mandatory statement” with all of the reasons for withholding its consent, together with a certification by an officer of the corporation, sworn or affirmed under penalties of perjury, that the statement is true and complete. The statement must set forth each reason for withholding consent with specificity, including identifying each element of the purchaser’s application found to be deficient; any specific ways the application failed to meet specific policies, standards, or requirements of the corporation; and the source of any negative information relied upon by the corporation. The statements must convey sufficient information to enable purchasers to remedy deficiencies in their applications and must set forth the number of applications in the last three (3) years received by the corporation, for which the corporation withheld consent, and for which the corporation did not make a decision.
If a corporation provides an untimely statement, amendment, or supplement, it must be accompanied by a statement of reasons for such untimeliness. Failure to comply with any of these requirements would incur statutory damages from $1,000 to $25,000 to each purchaser and seller who commences or joins in an action. The amount of the damages would depend on the scope of non-compliance and the resources of the corporation. The New York City Commission on Human Rights may also initiate investigations in connection with a failure to comply with the requirements and may award additional civil penalties from $1,000 to $25,000.
BILL 917
Under City Council Bill 917, after any offer to purchase an ownership interest in a cooperative corporation has been accepted by a seller, the corporation must provide disclosure of its finances to the purchaser within fourteen (14) days of request. The disclosure must include the following:
- Assets and liabilities, including current cash flow, debt, and operating expenses;
- The cost of any capital improvements planned or underway;
- The amount in the reserve fund, if any; and
- The most recent budget or a statement that the corporation does not prepare a budget.
Any corporation that fails to provide financial disclosure in accordance with this law would be liable for a civil penalty of $500.
BILL 914
Under City Council Bill 914, Co-Op boards of buildings containing 10 or more apartments which do not have transfers subject to approval by a state or city agencies under private housing finance laws must maintain a standardized application and list of requirements for all apartments subject to the by-laws or proprietary lease of the corporation. The board or managing agent must provide the standardized application, list of requirements, and instructions for where and how to submit the required materials to any prospective purchaser and seller promptly upon request.
Within ten (10) days of receiving materials, the corporation must provide a written acknowledgement of receipt, and within forty-five (45) days after the corporation first receives any of the required information or documents, the corporation must inform the purchaser whether its consent is granted unconditionally, granted conditionally, or denied.
The time for determination may be extended with the consent of the purchaser at any time for no more than fourteen (14) days after a completed application is submitted. Additionally, if a purchaser receives written notice from a corporation that sets out with specificity the ways in which the purchaser’s submission did not comply with the list of requirements or a prior notice provided by the corporation, the time will be tolled until the corporation receives additional materials from the purchaser. However, the time period may not be tolled more than three times.
A purchaser may treat a failure to comply with this law as a denial. Either a purchaser or seller may commence an action in a court of competent jurisdiction to determine whether a violation has occurred. For each violation the court shall assess statutory damages of $1,000 for failure to provide the corporation’s standardized application or acknowledge receipt of the materials; $5,000 for failure to maintain a standardized application; and $10,000 for failure to provide notice of consent or denial within forty-five (45) days.
The court may award compensatory damages and attorney’s fees to the purchaser, and may order appropriate equitable relief, but cannot require a corporation to consent to a sale. The New York City Commission on Human Rights may also initiate investigations in connection with a violation, and may award additional civil penalties from $1,000 to $25,000.
The foregoing is not intended to be comprehensive nor constitute legal advice. If you would like to discuss your specific circumstances or would like more information, feel free to contact us at (212) 625-8505.