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Cooperatives in Westchester County Will Soon Have to Explain Reasons for Denying an Application

Under current law, it is well-settled that a cooperative board may generally decline to approve a purchase application “for any reason or for no reason,” so long as unlawful discrimination or self-dealing is not involved. Boards are also generally free to establish their own procedures for receiving and processing applications and timetable for doing so. Over the years, the New York State Legislature and the New York City Council have considered numerous proposals that would set deadlines within which boards must act on an application before it is deemed approved, and would require boards to provide their reasons for denying an application. Many cooperative boards have expressed concern that imposing these requirements would invite substantially more litigation by rejected applicants. Thus far, these proposals have not been enacted.

The Westchester County Legislature has enacted legislation that will require cooperatives to provide reasons for rejecting an applicant. The county will create a standard form that boards will be required to provide to the Westchester County Human Rights Commission when they reject an applicant, setting forth the reason or reasons for the rejection. Boards will also be required to specify their minimum financial qualifications for buyers, or if they do not have strict minimums, their “preferred” criteria for factors such as income, debt-to-income ratio, total assets, and credit score. The new law takes effect on August 1, 2021.