What You Need To Know If Your Client Is Buying A Cooperative Apartment In Rockland County – Local Law No. 4 of 2022 Amending the “Timely Co-op Application Decision Law”

On March 3, 2022, County Executive Ed Day signed into law Local Law No. 4 of 2022 amending the County’s existing Timely Co-op Application Decision Law to require, among other things, Co-op Boards to disclose the reason or reasons for denial of a prospective purchaser’s application to purchase a cooperative apartment in Rockland County. The law became effective on June 10, 2022.

By passing this legislation, the Rockland County Legislature sought to prevent discrimination in the cooperative housing application process by requiring that all cooperative housing applications must disclose in a clear and concise manner the following: all application- related timelines and any minimum financial qualification that a prospective applicant needs to meet to qualify. If the Cooperative does not have any mandatory financial qualifications, they must provide to a prospective purchaser, at a minimum, the Co-op’s preferred minimum income, total assets, credit score, debt-to-income ratio and percentage of purchase price being financed. The Co-op Board may exercise its discretion in weighing factors when making its final determination on an application.

Under the existing law prior to this Amendment, it provided that within ten (10) days of receipt of a completed purchase application, the Cooperative shall provide an applicant with written acknowledgement of receipt of the purchase application. After initial or subsequent review, if the purchase application is determined to be incomplete or completed incorrectly, the cooperative must notify the applicant in writing within ten (10) days of such determination of the deficiencies to be corrected and what is required to render the purchase application complete.

Within forty-five (45) days of receipt of a fully completed purchase application, the cooperative board shall either reject or approve the application and provide the applicant with written notice.

Failure of the Co-op Board to act on a duly completed purchase application within forty- five (45) days of receipt of the application, shall result in the application automatically being deemed approved1. Delays due solely to the applicant’s unavailability to appear for an interview shall not be counted in the forty-five (45) day period.

The Amendment to the existing “Timely Co-Op Application Decision Law” has added a new Section 289-14 to Chapter 289, Article 2 of the laws of Rockland County entitled “Rejections”. In the case of a rejection of an application by a Cooperative Board, written notice is to be provided by the Board to the applicant(s) and it must include sufficient detail to fully inform the applicant of the reason or reasons for the rejection of their application, including, but not limited to, the reason or reasons the application did not meet the minimum financial qualifications and/or any other determinative factors.

Back in October 2015, my committee was asked by the Rockland County Bar Association then President, Robert Marcus, Esq., to contact the then Chairperson of the Rockland County Legislator, Alden Wolf, Esq., regarding potential legislation to be taken up by the Rockland County Legislature relating to Cooperative Board procedures for sales/purchases of coop shares of stock. The Rockland County Bar Association Condominium and Co-op Committee was asked to review and comment on an existing local law adopted by the NYS Village of Hempstead in October 2009. While the Committee was generally in favor of the Hempstead time frames for acknowledging receipt of the Co-op application and the approval/rejection of the application, the Committee was generally not in favor of providing grounds for any rejection of the Co-op purchase application. Hence, I wrote to Mr. Wolf telling him that the part of the Hempstead local law requiring the co-op to provide reasons for rejection of a purchaser’s application is not something the Committee would endorse. The Committee believed that such requirement would have a chilling effect on the Boards’ deliberation process and could give rise to potential lawsuits filed by purchasers who were rejected by a Co-op board. This would have the unintended consequence of driving shareholders away from participating as Board members in a cooperative.

Our committee was also not in favor of the part of the Hempstead law relating to sanctions against the Cooperative for its failure to act within the time frame set forth in the legislation. The Committee’s suggestion at that time was that the failure of the Co-op board to provide their rejection within a forty-five (45) day period of receipt of the completed application should be akin to the right of first refusal that exists for condominiums. Instead of placing sanctions against the co-op for failing to act within the prescribed time from when the completed application was received, the application should be considered automatically approved if they do not act within that prescribed timeframe. This suggestion was included in the legislation that was adopted on February 6, 2018 and can be found in Rockland County’s Housing Act Section 289-13, Subdivision C.

Rejection of an applicant based on discrimination, as defined in Section 261-2 of the Rockland County Fair Housing Law is prohibited and any aggrieved person may file a claim with the Rockland County Commission on Human Rights pursuant to the Rockland County Fair Housing Law.

Rejection of an application after failing to provide required disclosures required by Local Law No. 4 (Chapter 289 Article II of the Laws of Rockland County) may constitute prima facie evidence of discrimination in a claim filed under the Fair Housing Law of Rockland County.

Finally, Chapter 289 Article II of the Rockland County Law states that, if there is any statewide or federal legislation that goes into effect that incorporates either the same or substantially the same provisions as are contained in Article II Chapter 289 of the Housing Code of Rockland County, or in the event that the appropriate state or federal administrative agencies issues or promulgates regulations preempting such action by the County of Rockland, Article II shall be rendered null and void on the date that the legislation or regulations are effective.