I’m OK, You’re OK…Or AreYou?

How do co-op Boards manage the purchaser approval process, and are they acting in an appropriate manner when doing so? These questions are the driving forces behind a contentious new bill which is currently before the New York City Council. The bill has been proposed to end hidden discrimination in the co-op selection process; it would require that all Board members sign an affidavit every time they reject an applicant confirming that they have not discriminated based on the New York City Fair Housing guidelines, which are among the most stringent in the nation. The bill would also create some parameters around Board response time: Boards would be given a certain number of weeks to request more information, a certain number of weeks within which to meet or reject an applicant without a meeting, and a final number of weeks within which to render a decision after a meeting.

Last week at The Real Estate Board of New York, members of the Residential Brokerage and Residential Management Divisions met together to discuss the bill and how REBNY should best respond to it. All were in agreement that, as long as they are reasonable and leave the Boards some latitude, time limits make sense. It is simply not fair to punish prospective purchasers, who only want to buy a new home, and prospective sellers, who only want to sell the home they have, by forcing them to waits months for a decision, or by issuing a seemingly endless series of requests for additional information. And of course these delays are particularly dispiriting when the ultimate answer from the Board is a “no”.

The other part of the bill requires a more nuanced response. First, those of us who have been in the industry for many years must acknowledge that co-op Boards do occasionally indulge in  discrimination. It is not the norm, but it happens. Many protected categories, including  race, children and family, sexual orientation, marital status, and religious faith, have been known to lead to turndowns in certain buildings. That said, the vast majority of co-op Boards act with the utmost integrity in pursuing the greater good of the buildings they manage. Evaluating prospective purchasers occupies a small percentage of their time; most of their work as a group is devoted to overseeing the staff and physical plant of the buildings for which they are responsible. And let’s not forget that this often thankless and time consuming task is done on a volunteer basis.

So the question is: is this bill the most effective way to guarantee that Boards do not illegally discriminate in their choices? I would argue that the answer is no, for several reasons. First and foremost, the proposed law is simply an invitation to litigation. Even if it does not cut back on discrimination, it will certainly discourage any well-informed person from wanting to expose themselves to lawsuits by serving on a co-op Board. Insurance costs for co-op buildings would almost certainly skyrocket. And who would be in charge of all those affidavits? And affidavit or no affidavit, who will admit to discriminating? Often Board members are not even aware that questions they ask are illegal or inappropriate. And some believe that because a co-op Board  is a private corporation, these laws do not apply to them.

At the REBNY meeting I attended, Hall Willkie, the President of Brown Harris Stevens, had a terrific suggestion: Board education. Real estate agents are required to complete Fair Housing training. Why not do the same for Board members? One hour each year, why not require that an attorney come in and school the Boards on what they can and cannot ask, or consider, when evaluating a candidate? Before the law is punitive, it should be didactic. I am certain that Board education would substantially reduce discrimination of all sorts in the co-op world.  And that would be a win/win outcome for buyers, sellers, Board members, and brokers.