By Dan Murphy
The County Board of Legislators is moving through its committee process a bill which would regulate how co-op boards review applications and how they would also be required to divulge, in writing, the reasons for any rejections of applicants.
Opposition to publicly releasing the reasons for a rejected application to purchase a co-op have many co-op associations and boards in Westchester, in opposition to the legislation because they believe it will add to their legal costs and make volunteer members of co-op board less likely to serve.
Kathleen Jensen-Graham, Vice Chair of the Cooperative and Condominium Advisory Council, a part of The Building & Realty Institute of Westchester & the Mid-Hudson Region, wrote the following OP-ED. “I am the Treasurer and member of the application screening committee for a self-managed cooperative.
“The bill proposed by the Westchester County Legislature to regulate how co-ops decide which applicants to accept into our community is not only potentially costly to existing cooperators, but could affect the chance of admission for otherwise viable candidates.
“Co-op boards are composed entirely of volunteers who dedicate our time and efforts to our board duties. Many of my fellow shareholders are either first-time homeowners or senior citizens, including those who have exhausted much of their life savings to live a modest yet comfortable life. Those of us who own shares in the cooperative corporation are both neighbors and each other’s business partners, and anyone we welcome to our community has to assume both roles as well.
“As a shareholder, I myself have gone through the admissions process. Questions on the written application and during the interview focused only on the financial ability to afford the proprietary lease and the willingness to adhere to the house rules which benefit the entire community. Our admissions committee and our not-for-profit board of directors have to conduct an extremely thorough check of a person’s financials to ensure they can commit financially to the preservation of our complex in the long-term. Anyone who can’t reliably pay the monthly maintenance charges or who will otherwise create financial liability for the co-op will impose a budgetary shortfall that will have to be made up for by the rest of us. I sincerely doubt that the County will be offering a bailout in such an instance.
“I am proud to be a shareholder in a cooperative community that respects diversification in all aspects of fair housing, but I am strongly opposed to the further encumbrance of unsubstantiated regulatory interference. In seeking to root out a few bad actors who reject applicants for unfair and biased reasons, they’re also laying substantial burdens and threats of liability on my co-op, who has only rejected 2 applicants in the 16 years I’ve been on the board. Although this bill may be well-intended, it will undoubtedly do more damage than good,” writes Jensen-Graham.
Tim Foley, CEO of The Builders Institute of Westchester and The Mid-Hudson Region, said that while the bill has many good parts to it, “Co-ops are concerned about the liability costs. Currently, 90% of applicatns get accepted and the County Human Rights Commission receives those denials. The major reason for denials is that applicants don’t complete the application or are denied for financial reasons, like bad credit or other debts. Co-op boards do perform rigorous financial reviews, but the concern is that if they have to put the reasons for their denial in writing, it will increase liability costs for the entire co-op and shareholders. One of our members had a lawsuit brought against the board because the applicant was denied a mortgage. He sued the board and the insurance company settled for $30,000. We are asking someone on the BOL to submit an amendment and change this one piece of the bill,” said Foley.
A public hearing on the legislation will be held on May 24. Visit westchesterlegislators.com for more information.
