City Council wants to force NYC co-ops to disclose reasons for sale denials
New York City lawmakers are advancing legislation aimed at increasing transparency in the often opaque process of co-op apartment sales, targeting practices that officials say may mask discrimination behind closed doors.
Public Advocate Jumaane Williams is sponsoring Intro. 0407, a bill that would require co-op boards in New York City to provide written explanations to prospective buyers who are denied the opportunity to purchase a unit. The measure, he said, would bring “clarity and accountability” to a process that currently allows boards significant discretion with limited oversight or required disclosure.
If passed, the bill would compel co-op boards to explain their decision within five days of denying a sale. Williams argued that the lack of transparency enables discriminatory practices, giving boards unchecked power to reject qualified buyers with no justification.
“The extent of discrimination is difficult to quantify but it is estimated to be a factor in almost a fifth of board decisions with broker agents reporting common code words like ‘NOK’ or ‘NQ’ to indicate ‘not our kind’ or ‘not quite,’” Williams said during a recent New York City Council hearing on housing and buildings. “Because a potential buyer can wait lengthy periods only to be denied with no explanation, it can be difficult to improve a subsequent application to access co-op ownership after a denial.”
Williams, who was re-elected in November, emphasized that Intro. 0407 would address these concerns by shining a light on a process long shrouded in secrecy. He said the legislation would “mitigate discrimination as secrecy,” and that “eliminating this closed-door system would have a tremendous impact on efforts to make homeownership more equitable and accessible, setting an important precedent.”
New York City is home to over 6,800 co-op buildings, more than any other metropolitan area in the United States. In a co-op, an individual buys shares in a corporation, which are then assigned to a specific apartment. In exchange, the buyer receives a long-term proprietary lease for the unit. Unlike typical real estate transactions, buyers must be approved by the building’s co-op board, which can reject applications without providing a reason under current regulations.
The New York State Attorney General’s Office mandates that co-op boards must exercise “prudent business judgment” when making decisions, following internal governance rules outlined in the bylaws, proprietary lease, certificate of incorporation, and house rules. Though they cannot legally base decisions on discriminatory criteria, such as race or criminal history, Williams and supporters of the bill argue that the lack of required disclosure allows unlawful screening to go unchecked.
New York law prohibits co-ops from denying sales or rentals based on an applicant’s criminal history. However, boards are permitted to conduct post-sale reviews to determine if a buyer appears on the state’s sex offense registry. Nonetheless, critics say the current system leaves too much room for bias, especially when buyers are turned away without a clear reason.
Alongside Intro. 0407, another proposed law, Intro. 0438, seeks to increase financial transparency for successful co-op buyers. Sponsored by Council Member Pierina Sanchez, this bill would require co-ops to disclose their financial status to new owners. Williams voiced his support for the bill, stating that both pieces of legislation would “combat a history” of discrimination within co-op board practices.
While both bills have been laid over in committee following a Council hearing on December 2, they mark a significant push by city officials to reform housing practices that they argue limit access to homeownership. It remains unlikely that either measure will be passed by the end of the year, but supporters view the proposals as meaningful steps toward transparency and equity in New York’s co-op housing market.