Hearing testimony divided on merits of co-op bill

Approximately 70 individuals attended the SRO hearing on a bill to add consumer protections to the co-op board application process.

Approximately 70 individuals attended the SRO hearing on a bill to add consumer protections to the co-op board application process.

A City Council measure intended to provide consumer protection to co-op buyers was alternately praised and vilified at hearing of the Committee on Housing and Buildings across the street from City Hall on Tuesday.  More than two dozen witnesses testified.

A handful of shareholders and representatives of the brokerage community who spoke focused on deadlines and transparent purchase requirements in the bill, Intro 188.  Opposing the legislation were real estate lawyers and co-op boards, which denounced its provisions aimed at unlawful discrimination against applicants and at speeding up board responses.

Among those in favor of the bill were the Real Estate Board of New York (REBNY); Pamela Liebman, Corcoran’s president and CEO; and Frederick Peters, president of Warburg.  Said Liebman, reading from a prepared statement:

The provisions of Intro 188 requiring co-op boards to provide a clearly defined list of purchase requirements and a timeline for board response to an applicant’s submitted purchase package are fair, reasonable and highly worthwhile. . .

They will save time and stress by bringing certainty, transparency and timeliness to all co-op sales and move the process forward at a pace that is reasonable.

Opponents savaged the bill, using the words “chaos,” “havoc” and “onerous.”  They said that it benefited mainly the broker community and would cause a vast number of board vacancies.

Prominent real estate lawyer Stuart Saft, chairman of the Council of New York Cooperatives and Condominiums, contended that the bill is intended “to solve a problem that does not exist.”  He continued:

What this bill does do is assume that the boards and owners, who elect the boards, are somehow involved in a scheme to discriminate. . .

[T]he City council is going to create more paperwork and more of an opportunity for lawyers to sue co-ops for missing deadlines and failing to act the right way. . .

In a summary of the bill, Habitat magazine noted in part last week that:

  • Requires every coop to provide a standardized application and list of requirements to any applicant upon request and to the Human Rights Commission;
  • Requires the board or managing agent to provide written acknowledgment of receipt within 10 business days or provide a notice of any deficiencies in the application;
  • Within 45 calendar days of a completed application, the board or managing agent must provide a written determination of whether the application has been approved or disapproved;
  • If disapproved, the board must provide written certification of non-discrimination to be signed by each member of the board who participated in the decision to disapprove the applicant
  • If the board fails to provide the written documentation within 45 calendar days, the board must refund any application fees;
  • Each cooperative must  maintain all records for at least five years;
  • Penalties for missing deadlines could be up to three times the application fee and actual costs incurred by the applicant in preparing and submitting the application up to $,5000, as well as attorney’s fees and costs. These penalties can be determined by the court or through the Human Rights Commission;
  • Violations can be issued between $250 and $2,000 for the first instance of non-compliance, between $500 and $5,000 for the second, between $2,000 and $15,000 for the third.

The financial penalties were particularly irksome to the bill’s opponents.  They cited court decisions approximately eight years ago in which the president of a board found guilty of racial discrimination was fined $250,000, other members were fined $25,000 each and they had to pay the fines personally.

At the outset, Councilman Lewis Fidler acknowledged that the bill he has sponsored “is not perfect” and that certain unspecified technical issues had to be resolved.  At the same time, he insisted, to the vocal approbation of many attending the proceedings, that boards frequently reject applicants without owning up to their unlawful reasons.

“I know it happens,” he declared, saying he was aware of buildings that will admit only members of their nationality and those who will reject the same nationality.

When committee Chair Erik Mark Dilan pressed Liebman and Peters whether they categorically knew of any cases of disrimination, they conceded that they could not “definitely” report any.

Yet another witness, Barbara Ford, representing the New York State Association of Realtors, detailed what she described as four examples of discrimination against buyers she had represented in the outer boroughs and on Long Island.  “It happens all the time,” she related.

One example was of a board that explicitly wanted to reject a prospective buyer because of her race.  Told that she would resign as the building’s property manager if they took that unlawful action, the board relented.

That, said Fidler, was the “best point” of the day.

He made the statement in the face of criticism that buyers who face discrimination already have city, state and federal agencies to which they can complain and find redress.  If so, he asked, why does the city’s Commission on Human Rights have only 22 such complaints on file?

“Twenty-two! That’s a sin,” remarked John Doyle, senior vice president of REBNY.

Barbara Ford said she had unsuccessfully urged her clients to go to the U.S. Department of Housing and Urban Development, which hears complaints about violations of the Fair Housing Act.  One problem is that it is not the seller who is accused of discrimination; it is the board, a third party not covered by any anti-discrimination laws.

“They can come up with any cockamamie reason they want,” she said of boards who want to mask discriminatory actions.

Among Council members who attended the hearing was Mark Weprin, who expressed doubt about the need for the discrimination component of the bill, and Brad Lander, who said it didn’t go far enough.  Lander is sponsor of Intro 126, which requires boards to give a reason for any rejection.

The requirement to certify the absence of discrimination proved to be a sticking point for the bill’s foes.  “How can an individual know what other board members are thinking when they must certify for the entire board?” Stuart Saft asked.  “You’re opening the door to more litigation,” he went on.  “Every rejection is going to be followed by a lawsuit.”

Perhaps the certification language is not as clear as it should be, Councilman Fidler allowed, saying it is meant to deal with “overt discrimination” such as, in his words, “I’m not going to let a Jew into this building.”

To the contention of those who argued that the timeframes would unduly burden buildings both large and small, especially those without property managers, Fidler implied that the bill would need to be fine-tuned to permit a range of standards.

As for deadlines, Warburg’s Peters got a smattering of applause from, it seemed, shareholders, when he said that “everyone benefits from those timeline considerations.”  The current “lengthy, lengthy process,” Peters added, always is an economic disaster to someone.

But Saft and others maintained that rather than risk failure to meet the deadlines, boards may well just reject applicants who might have been accepted with enough time for additional research.

“The last thing they want to do is let a sale fall through for no good reason at all,” Saft said.

Aside from other lawyers — for example, Andrew Brucker, whose firm is general counsel to 200 co-ops and condos, and Geoffrey Mazel, whose firm represents Coop Board and its more than 9,000 units of housing — testimony also was given by the Council of New York Cooperatives and Condominiums, Federation of New York Housing Cooperatives and Condominiums, and the Alliance of Condo & Co-op Owners.

The hearing lasted for close to four hours.

Tomorrow: Titles talk

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Malcolm Carter
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Charles Rutenberg Realty
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Fair Housing Act can trip up unwary co-op boards

Part 1 of 2

Grossman, 210 E. 36th St., and Thandrayen. (Source: The Real Deal)

It is up to the courts to decide whether a prospective buyer’s claim of discrimination is valid in a $1 million lawsuit.

But the case brought by an African whose application to a seven-member co-op board was rejected highlights the treacherous terrain of anti-discrimination laws.

According to the Real Deal last week, Goldwyn Thandrayen, a native of Mauritius, contended in a complaint amended two weeks ago that the board of 210 E. 36th St. in the Murray Hill neighborhood discriminated against him on the basis of national origin. Continue reading

Perfect pitch may hit the wrong chord of law

(Source: the U.S. National Archives)

The headline went like this:

“Can I Buy Your House, Pretty Please?”

In the Wall Street Journal, the article by Joann S. Lublin noted that the housing market has changed in some areas.  As the subheading observed:

With inventory tight and prices rising, buyers in competitive markets like Silicon Valley and Seattle are returning to a boom-era tactic: writing heartfelt letters to sellers explaining why they should win the house. Signing with a paw print.

The piece is accurate in pointing out that an emotionally charged letter from a buyer can sway a seller who is considering more than one offer.

Referring to the missives as “pitch letters” or “love letters,” Lublin correctly reported that Continue reading

The High Road: Love letters skate on thin ice

(Flickr photo by Patrick Mayon)

A recent article in the New York Times went on about the virtues of sending a “love letter” to the owners of properties that sellers would like to purchase.

Such a letter would extol the apartment or house, describe how the prospective buyers are passionate to make it their home and otherwise provide information meant to personalize the potential transaction.

Back when I was selling real estate in Washington, D.C., when that market was white-hot, I’d advise buyers and even help them draft such letters in an effort to best the competition during frequent bidding wars.

That was a mistake then, and it is a mistake now.  Actually, it is more than a mistake: Continue reading

The High Road: Some secrets shouldn’t be kept

Brooklyn street in 1974, photographed by Danny Lyon

During a recent tour of open houses for brokers, two of us who hadn’t known each other found ourselves walking together between the new developments on our schedule.

The other broker, a seemingly competent and professional one I’ll call Carrie, asked me which building I liked best.

When I told her, she agreed that the condos were very nice but that she was concerned about the block, which is more appealing that the one in the photo.  Continue reading

Out and About: How does your garden grow?

One of the houses with virtues that Barbara Corcoran extolled recently on the Today Show.

The one-bedroom, two-bath duplex I was checking out during a Sunday open house recently has two assets and many liabilities.

On the minus side are its entry almost directly into the small kitchen (in which an ancient dishwasher caught my eye), cramped living room, a spiral staircase so narrow that I had to hunch my shoulders, its bedroom (albeit one that fits the legal definition) in the basement and baths that I’d classify as ordinary.

On the plus side is its location in a Central Park block of the high 60s, a stone’s throw from Lincoln Center.  (To digress, when you see “steps from” in a listing, consider the Fair Housing Act, which bars discrimination against persons with disabilities.)

Also on the plus side — and the only conceivable explanation for the co-op’s inflated asking price of Continue reading

Some brokers don’t like me raining on our parade

(Flickr photo by Mr. Jincks)

I get it, really I do.

Brokers receive enough bad press that the last thing we need is criticism from within.  So goes the conventional wisdom.

I respectfully disagree. Continue reading

The Big Apple: Developers under gun and ground

Important housekeeping announcement:  There will be reduced frequency of posts until after Labor Day, but you can look forward until then to Out and About, some typically critical posts taken on The High Road, perspectives on sellers and buyers, and other information meant to be both illuminating and, occasionally, even entertaining.  This regular Friday feature will return on September 9, when it will be combined with Weekly Roundup.

Fair Housing Law settlement points to many more in thousands of other buildings

The developer and architect of an Upper West Side luxury rental apartment complex, The Melar, have settled with the federal government on charges that their new residential building violated federal law because it is inaccessible to the disabled, according to U.S. Attorney Preet Bharark.

The settlement may have an impact on more than 100,000 residential properties across the city. Continue reading

Perfect for families? Fishermen? Uh uh!

Christine Haughney hits that proverbial nail on the head in her latest column in the New York Times.  In it, she takes on words and phrases that evoke discrimination under the Fair Housing Act.

One commonly encountered phrase portrays a property as “perfect for “empty nesters.” That’s like saying children are a no-no.  And that’s against the law. “Fisherman’s retreat” — the Lincoln Tunnel? — also is questionable.  Women need not apply?

Other words and phrases Haughney that flags include “bachelor pad,” “near churches” and “play area.”

The column omits Continue reading

There’s a chance you’ll be disabled someday too

Avalon Morningside Park

When most of us think of the Fair Housing Act, what occurs first is its prohibition against discrimination on the basis of race, color, national origin, religion, sex or familial status.

Perhaps we  overlook the additional requirement to treat fairly someone with a handicap.

Although I hope no one who reads this post is or will be disabled, chances are pretty good you at least know someone who fits the federal definition as articulated in the Americans with Disabilities Act.  According to the Department of Housing and Urban Development,  it says:

An individual with a handicap is a person who Continue reading