Yet for all the complaining New Yorkers do about co-op boards, this power grab could be their death rattle. Two bills are in the works at the City Council that would greatly curtail their authority. Intro 188, the “Fair Cooperative Procedure Law,” which seeks to regulate the application process and require a yay-or-nay decision within 45 days, has members and representatives of the all-volunteer army up in arms.
“I have heard boards say that they don’t have enough time to review the package and meet the buyers and deal with all of the building issues and still work their day jobs and spend time with their families, so they are just going to require that the brokers make certain that the buyers are qualified,” Stuart Saft, president of the Council of New York Cooperatives and Condominiums, wrote in an email. “It will be very interesting to see this play itself out. The boards seem to think that is the least the brokers should do considering that they are getting a $150,000 commission on $2,500,000 apartments.” (And not only work and family, but those summers in the Hamptons and the holidays throughout!)
The Real Estate Board of New York, under pressure from its large broker membership, has recently flipped on the legislation. “There is the issue of the lack of a response, and I don’t know if it’s a big issue that happens very often, but if you get enough brokers together, it starts to sound like it,” said Michael Slattery, senior vice president at the board. “If you’ve provided the information and gone through the interview, there is a sense you should be told up or down.”
The board’s support could finally push the bill, which has been kicking around the Council for a few years, out into the open for some debate–though it is not clear whether it would pass, and there is still a good deal of work to be done on it. As the bill’s sponsor, Lew Fidler of Brooklyn, put it, “The bill needs to be tightened up in some areas and loosened in others.”
The legislation that is far more controversial, and has only mixed support in the real estate community, is the “Fair and Prompt Co-op Disclosure Law,” Intro 326. It requires co-ops to do the unthinkable: provide a written response outlining a board rejection.
“Does every corporation have to do this?” Corcoran broker Eileen Roberts said. “I would be in favor of that only if every business had to disclose every decision it made. Why should a housing corporation be treated any different?”
The bill surfaced before, in 2006, but never got very far amid widespread opposition. It has been taken up now by Brownstone Belt City Councilman Brad Lander, after he was notified by a cadre of civil rights groups. They argue that discrimination is still rampant in the city’s co-ops. By forcing boards to spell out their decision, Mr. Lander hopes they might think more deeply about why they are rejecting a prospective neighbor. “It’s a very simple bill,” Mr. Lander said. “We’re not changing the standards. It is still illegal to discriminate–just now you would have to discriminate and lie if you wanted to do it.” He acknowledged that he only has the support of “a large group of civil rights groups” and a smattering of boards. “But I think they can be very persuasive on this issue.”
Still, what if it were not about equal rights but really all part of some grand conspiracy by the brokers, to disembowel the co-op system simply so they can sell more apartments and make more money?
“It would make a huge difference,” Mr. De Niro, the Douglas Elliman broker, said. “First, they wouldn’t be able to turn down so many deals. And it would provide more information on what to put in front of them and what not to. You assume you have a slam dunk, and the next thing you know, everyone’s wasted six months of their lives.”
Some brokers blame their colleagues and not the boards. “Only a dodo would show everyone every single apartment,” Mr. Kaiser, one of the city’s most veteran co-op brokers, said. “You have to know where to take your client.” Another broker said that a “silly bill” is not going to make anyone a better broker.
Others are ambivalent, so long as the bill does not hurt the cachet of the co-ops themselves. “I tell everyone we should embrace the co-op system, love it,” Warburg’s Richard Steinberg said. “It is the one thing, more than any other, that saved us from turning into Miami, because there were far fewer speculators.”
mchaban [at] observer.com | @mc_nyo