I have written before on the positive impact co-ops have had on the Westchester housing market, due in large part to their affordability. However, not all that glitters is gold. There is a battle being fought in Albany that is hinged on the approach that some co-op boards take, due to their unusual form of ownership, with the approval of new applicants for ownership.
Because co-op ownership is essentially that of a shareholder of a corporation and not holding a deed to true real estate, co-op boards have historically required that they approve prospective owners after their financing is secured. This is unusual- with homes or condos if you can afford it, you get the keys. Not so with co-ops. The law will not permit boards to discriminate illegally, but it also does not require them to disclose their reasons for rejecting an applicant. This has resulted in cases where people have felt that they were victims of bias but could not prove it.
Legislation supported by the NY State Association of REALTORS is on the table to require that boards disclose the specifics for the rejection of an applicant. It is opposed by many boards, mostly based in Manhattan but also aligned with local interests, and an interesting exchange was witnessed by area REALTORS when each side was presenting their case in Albany. A lawyer for the co-op board interests said that their clients should be able to choose their neighbors. This was a poor choice of words. Moreover, it is a less than compelling argument against what should be a transparent process.
Housing is among our most important needs, and with the 1,449 co-ops currently for sale in Westchester alone at a median list price of $149,000, they are among the most affordable options for those on a budget. However, if boards are not held accountable for their decisions against applicants, a perception can grow from an already skeptical public that dissuades commerce. This is bad for the local housing market that is already bleeding people to surrounding counties, but also bad for the consumer, whose protections should be of paramount importance to that of the corporations.
All of us should support the proposed legislation that mandates a clear explanation from co-op boards for their decisions on applicants. It is more in the spirit of fair housing, but it is also better for the financial health of the corporations.
For more real estate commentary, log onto Westchester Real Estate Blog, authored by J. Philip Faranda, broker and owner of J. Philip Real Estate.
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