A decades-in-the-making change to Westchester”™s Co-Op Disclosure Law should have a significant impact on that real estate sector ”” and could ultimately result in major ramifications for New York City and the entire state, according to one attorney.
“This addresses two opposing tensions that have been facing co-ops for years,” said Steven Ebert, a partner at Purchase”™s Cassin & Cassin LLP. “On one side you”™ve got the fact that a co-op is a private corporation under New York”™s Business Corporation Law, and therefore they have certain obligations to their shareholders. They can keep all sorts of information about their decisions and actions private.
“But residential housing has a public element to it,” Ebert continued. “That”™s where you get into fair housing, discrimination. And that leads to those sides clashing with each other.”
The Westchester County Board of Legislators voted 15-2 on June 28 to pass the amendment ”” Minority Leader Margaret Cunzio (Conservative-3rd) and Terry Clements (D-11th) opposed it. County Executive George Latimer signed it into law later that day.
Effective immediately, the amendment requires co-op boards to provide a notice of rejection to the Westchester County Human Rights Commission within 15 days of notifying prospective buyers of a denial. It also orders the boards to clearly state the minimum financial requirements to potential buyers before they apply to buy a unit, and to provide a reason for a denial.
Groups, including the Hudson Gateway Association of Realtors and the New York State Association of Realtors have been pushing for such an amendment in Westchester since it was first introduced in 1990.
Opponents included the Cooperative and Condominium Advisory Council, part of The Building & Realty Institute of Westchester & the Mid-Hudson Region, and the Council of New York Cooperatives & Condominiums (CNYC).
“We feel co-ops have functioned very, very nicely for a very, very long time without this sort of government imposition,” CNYC Executive Director Mary Ann Rothman said prior to the legislation”™s passage.
After the amendment”™s approval, Catherine Borgia (D-9th), the legislation”™s chief sponsor, said, “This measure increases transparency and fairness in the co-op buying process. Buyers will know in advance what the financial requirements are ”” before they spend money on application fees ”” and they”™ll know after the fact, if they”™re rejected, exactly why.
“Furthermore,” she added, “the Human Rights Commission will have the information it needs to protect Westchester residents if discrimination is taking place. That”™s been a missing tool in the fair housing tool kit to date. With private home and condo sales, testers can pose as buyers and ferret out discrimination in lending or discriminatory steering in ways that cannot really be done with co-op sales.”
“Co-ops are often the first and most affordable way for people to become homeowners in Westchester County,” said Majority Whip Christopher Johnson (D-16th), one of the measure”™s co-sponsors.
“Buying one shouldn”™t be a mystery, with no clear idea of what the financial requirements are and no clear idea of the reason if a buyer is rejected. It also shouldn”™t be a mystery to the Human Rights Commission whether or not a co-op is violating fair housing laws. This law will take away the mystery on both counts.”
Damon Maher (D-10th), chair of the board”™s Labor & Housing Committee, noted that the measure is similar to one that has been in effect in Suffolk County since 2009.
Despite fears voiced by opponents that the law would increase litigation or insurance costs, he said, “There”™s really no evidence that this will have a negative impact on any co-ops that are behaving properly. In fact, having a reason for rejection in writing, and having co-op board members get fair housing training will probably protect co-op boards from possible litigation.”
“My caveat” to that, Ebert said, “is that Westchester County has significantly more co-op properties” than does Suffolk. “It”™s a little bit of a different market and New York City is even more different.”
Ebert said he was encouraged that the new Westchester law includes a requirement for co-op board members to undergo fair housing training for two hours every two years.
“Co-op boards are comprised of people who own apartments, all of whom have different backgrounds and experiences,” he said. “Having them undertake fair housing continued education is a positive.”
While there is no similar legislation under consideration in Connecticut, a like-minded bill has been introduced in the New York state Senate; sponsored by Housing Committee Chair Brian Kavanagh (D-26th), remains in committee. The New York City Council has discussed such legislation as well, though its future is uncertain for now.
“There”™s no bill on the governor”™s or the mayor”™s desk,” Ebert said. “But I suspect over the next year or two, once we see how the situation evolves in Westchester County ”” particularly in the lower part of the county ”” will drive New York City and New York state to examine the issue more carefully.”
