Comprehending New York’s Co-ops:

The Hudson Gateway Association of Realtors, Inc. (HGAR) and OneKey® MLS hosted a virtual panel last week featuring real estate experts who discussed New York’s cooperative building sector and shared intel for agents to better understand the rules and how boards of directors operate, and to help prospective buyers navigate the complex application and approval processes to get deals done.

“What we all have to focus on, and I’ve lived in co-ops for about 40 years, is everybody who is a shareholder in a co-op wants to maintain or increase the value of the co-op. The whole (purchase) process needs to be updated and streamlined if co-ops are going to maintain their value. If we don’t do it, the politicians are going to step in,” said Richard Haggerty, CEO of OneKey® MLS, the regional multiple listing service that covers nearly a dozen counties in the greater NYC area from Manhattan, to Suffolk, Westchester and Sullivan.

“Comprehending New York’s Co-ops” featured Jim Brune, CEO of BoardPackager, an online platform for residential real estate transactions; Rob Frankel, managing partner of Cohen and Frankel, LLP, a New York City law firm specializing in residential and commercial real estate; and Cathy Taub, senior global real estate advisor and associate broker at Sotheby’s International Realty. The July 27 event was moderated by Brian D. Tormey, NTP, president of TitleVest, a leading NYC-based provider of title insurance and related real estate services.

The panel kicked off the conversation with the “intense” co-op application process.

“Co-ops can be as invasive as they want, so long as they’re not violating federal, state or city laws,” said Taub. “The process is cumbersome and time-consuming, so it’s really very helpful to have an experienced agent at the helm. Every single number, particularly with the financial documentation – assets, liabilities, net worth – needs to be verified. The application also requires submission of tax returns and references … then it is vetted by the transfer agent before it even gets to the board.”

Frankel cited some of the limitations – what can and cannot be asked – in the application or the board of directors’ interviews.

“A co-op is an apartment corporation, so it is a private corporation,” Frankel said. “The board of the co-op has to abide by federal civil rights laws – they can’t decide an application based on race, religion, color of skin, sex (and sexual orientation), age, disability or national origin. All other factors are basically OK. In fact, co-ops have been able to price protect their units and turn down an applicant based on the price of the contract (the seller’s price) – that’s legal.”

Frankel added there’s been “a tremendous amount of litigation” involving board turndowns, as well as the financial disclosure requirements. “The board is allowed to ask for document after document to get explanations … and the boards have won most of these cases. It’s a private country club and it depends on how they’re going to filter their applicants.”

The panel discussed the “wait and see” approval process of co-op transactions and some boards’ slow response times in getting back to prospective buyers, which often result in interest-rate locks expiring, the need to re-evaluate documents, and sellers carrying maintenance costs longer than planned.

“It’s been one of the most difficult things to harness – all of the different stakeholders, all of these different considerations,” said Brune, adding he founded BoardPackager with the goal of streamlining the purchase process.

Brune noted Westchester and Rockland counties have passed laws requiring co-ops to make timely decisions on buyer applications. “BoardPackager, because we do have buildings in those counties, has that timer built within our platform,” Brune said. “Upon receipt of an application, the transfer agent has 10 days to respond in writing to the applicant regarding what is required to render the application complete. Once the completed application is received by the board, the board then has 45 days to respond with a decision; if the board fails to meet that deadline, the application is considered approved.”

The panel discussed a similar piece of legislation, S2964A, proposed for New York City that would require a co-op board to approve or reject an applicant within 45 days and disclose the reason for a rejection.

“Everyone has got to step up to the plate and recognize that co-op boards do have a place in this process, but it’s a limited place and it’s got to be structured so everybody understands the bottom line is maintaining the value of the co-op and making sure the co-op functions effectively and efficiently,” said Haggerty.

The webinar is part of the “Be Your Best” series created by HGAR and OneKey® MLS, to help Realtors and agents navigate a changing landscape.

About OneKey® MLS

OneKey® MLS is one of the nation’s leading multiple listing services, serving more than 48,000 Realtor subscribers and 4,500 participating offices throughout Manhattan, Westchester, Putnam, Rockland, Sullivan, Orange, Nassau, Suffolk, Queens, Brooklyn, and the Bronx. It was formed in 2018 by the Hudson Gateway Association of Realtors and the Long Island Board of Realtors.

About Hudson Gateway Association of Realtors®

The Hudson Gateway Association of Realtors (www.hgar.com) is a not-for-profit trade association representing more than 14,000 real estate professionals in Manhattan, the Bronx, Westchester, Putnam, Rockland and Orange counties. It is the second-largest Realtor association in New York, and one of the largest in the U.S.