Page 14 - CooperatorNews New Jersey Summer 2021

14 COOPERATORNEWS NEW JERSEY
—SUMMER 2021
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raising funds to operate their properties, so
without being able to adjust carrying charg-
es to meet rising costs, many co-ops will be
hard pressed to meet their expenses if this
bill passes.
Weinstein adds that the bill also per-
tains to renewal leases and subleases, which
might have consequences for individual
condo owners who rent out their units. “You
can’t recapture individual units, except for
quote-unquote ‘good cause,’” she adds. “So
let’s say you lease your unit out. You may not
be able to take it back.” In short, she says,
“this bill could severely restrict the board in
maintaining its building, and will prevent
individual unit owners as well from renting
their apartments on a short-term basis and
getting those apartments back. So I think it
has detrimental potential on multiple levels
to affect the housing supply and the ways in
which a co-op or a condominium currently
operates.”
Reason for Rejection
Another swath of legislation getting
a lot of attention in New York are Senate
bills 1449, 2846, and 2874, which deal with
boards disclosing a reason for rejecting a
co-op or condo purchase applicant, and
the timing for doing so. Weinstein says that
these types of bills have reached the legisla-
ture every couple of years for the last decade
or so, “and they usually just don’t go any-
where. … [but] this year, there are three of
these bills in the Senate that seem to show
some movement.”
With the ostensible purpose of providing
transparency and eliminating the potential
for discrimination, the bills would require
boards of co-ops to provide a written expla-
nation for their rejection of a prospective
buyer, rather than the current leeway boards
have to reject an applicant “for any reason,
or for no reason.”
But Philip Simpson, an attorney with
Robinson Brog, a firm also based in New
York, points out that “New York City pres-
ently has the broadest scope of protection
for groups of people against whom co-op
boards might discriminate. If a prospec-
tive purchaser in a protected class is turned
down and sues, the co-op board may well
have to articulate a reason in response to the
lawsuit.”
Aside from that apparent redundancy of
the bill, boards have the fiduciary responsi-
bility to protect the assets of their commu-
nity and the investments of their individual
shareholders. In fact, attorneys representing
both co-op corporations and prospective
shareholders advise that the most common
reason for denial is the financial position of
the applicant. Since cooperators in a hous-
ing corporation share financial responsi-
bility for the operation and upkeep of the
property, it is particularly important for
incoming shareholders to be able to con-
tribute proportionally now and for the fore-
seeable future. Similarly, Simpson also says
that he has “seen denials, or issues raised,
when the board views the purchase price
as too low. A low purchase price will affect
values throughout the building, because
it will become a comparable sale the next
time an apartment comes on the market,
or someone wants to refinance their unit’s
“This bill could
severely restrict the
board in maintaining
its building.”
—Margery Weinstein
LEGAL...
continued from page 13
mortgage.”
One of these bills that Weinstein sees as
particularly problematic says that if the board
doesn’t act within a certain period of time,
the board is deemed to have consented to the
applicant. She points to the effect this would
have on financing, questioning whether
mortgage lenders would accept such tacit
consent without seeing it in writing. Simi-
larly for the issuance of a cooperative’s title
insurance. “Yeah,” says Weinstein, “I think
both title policies and lenders are going to
want the affirmative consent. And the board
might refuse to issue that affirmative con-
sent. So then where are we?”
Kill Bill
Out in Nevada, a number of bills of con-
cern to community and homeowners as-
sociations “died” before reaching Governor
Steve Sisolak’s desk. This is good news for
unit owners and boards who feared the fi-
nancial ramifications of the proposed laws,
suggests Barbara Holland, certified property
manager and columnist for the
Las Vegas
Review-Journal.
Among these are Senate
Bill 144, which would have eliminated non-
judicial foreclosure, required assessment
increases to be approved by the state, and
mandated that every homeowners associa-
tion have a website that it maintains. Other
killed bills include Assembly Bill 295, on the
availability of records; Senate Bill 257, which
would have eliminated the requirement that
the association maintain property insurance
for certain condos/townhomes; and Senate
Bill 339, which would have allowed an HOA
to lease abandoned properties.
Holland attributes the bills’ “deaths” to
emails and calls from association constitu-
ents in the state. So keep contacting your
local, state, and federal legislators to voice
your support for or opposition to proposed
legislation that affects you as a co-op share-
holder, condo unit owner, or association
homeowner! As laws related to co-ops, con-
dos, and HOAs continue their way through
legislatures and judiciaries,
CooperatorNews
will continue to keep you informed.
n
Darcey Gerstein is Associate Editor and
Staff Writer for CooperatorNews.