Board Rejection

Boards generally have unfettered discretion to reject unless they do so for an improper purpose, such a s discrimination or malice. There was a proposal some while ago to enact a law requiring boards to disclose reason(s) for turndown, but i dont kniw if it was enacted

Possibly price was too low and impacted the other apts values....

Your finances are too good to be true for them to deny you for that....

There are "other" reasons, but of course that cant happen in this day and age....

I think its the first thing i said because an all cash deal usually gets you a better price....but takes down the value of everyone's apartment

Sorry to hear - I would lean towards price protection. Do you have any comp data to suggest your contract was seriously low?

Board VP here.

Unless the board wants you to know why you were rejected, there is absolutely no way to find this out. We co-op boards are even more tight-lipped about this stuff than the Masons are about their secret meetings. And a letter from your lawyer won't accomplish anything. We are not bound by any laws to explain ourselves to applicants.

I can't speak for your board, but in our building if you make it to the interview, you've pretty much passed the "paper" test; if your financials were at all an issue, you wouldn't make it to the interview. Same with work history, references, or anything else on paper that you submitted in your board package.

I'd think back very carefully and try to remember every word that was said during the interview. Any awkward moments? Strange body language from any board members when you answered a particular question? Did anyone seem surprised at an answer?

I'm taking a stab in the dark here, but ... do you have another residence, and.or college-aged kids? If you in any way gave the impression that this apartment would be a pied-a-terre, or that it would be used primarily by your college-aged kids, that could have been the deal breaker.

What do you do for a living? Are you a celebrity? Many boards (particularly on Fifth Avenue and Park Avenue) don't like bringing in residents who might attract paparazzi or controversy.

NYCMatt - in your opinion, if contract price was unpalatable to the board would they interview anyway?

We actually had this issue arise recently. The answer is no. If we don't like the contract price, a board interview won't change anything, and would only be a waste of everyone's time.

File suit against the Board. If you meet the financial requirements they have no reason to deny you, INCLUDING if you have children. They can't reject you because they "suspect" how you might use the property. Their power is not as great as they think it is, and it is seriously circumscribed by case law. "Caprice" is not a valid business decision.

"File suit against the Board. If you meet the financial requirements they have no reason to deny you, INCLUDING if you have children. They can't reject you because they "suspect" how you might use the property. Their power is not as great as they think it is, and it is seriously circumscribed by case law. "Caprice" is not a valid business decision."

Go ahead and do this. You'll get nowhere. Just meeting the financial requirements isn't enough to pass approval in a co-op. You might be thinking of a CONDO, in which that is definitely the case.

We can reject an applicant for any reason that we think might disrupt the lives of the other shareholders, or negatively impact their investment in the building. And we don't have to disclose that reason to anyone.

im betting on price. board will never admit this if that indeed was the real reason. they dont have to. unfortunately, it just sucks. if the deal price was near the last asking price, I would watch for the property to re-enter the market at a higher asking price.

letting it go through after all, will adversely affect the board members properties, possible future valuations on bids in the bldg, refinancing valuations, etc.

it takes a board a year or so to realize that if they are rejecting because deal price is 25% below peak levels, it is an issue on THEIR end. Thats what the market is now, generally speaking (20-25% below peak for sub 2M properties). If deal price was way off the mark there, by say 10% or greater, than the board can make an argument that perhaps this was a distress sale gone a bit too far. Who knows. Bad things happen when the board decides to play the role of market. But it takes time to come out. Talk to people around in the early 90s, and they will tell you board turndowns due to price happened a noticeable amount. One long timer in this biz told me that it takes the board 1-2 years until they realize that the market has changed, so some will be in denial or have an agenda upcoming that shields a 'new market rate' deal from revealing itself. For example, if the board president intends to try to refinance or sell their place in very near future, they will have very real reasons to not let a distress sale go through.

The BIG question is, is it really a distress sale or actual market rate sale? Only you know what kind of deal you got, and all cash makes me think you were able to get a little extra discount too. How far off peak was the deal and what price point/neighborhood are we talking about here?

"im betting on price."

I'm not. If the board had an issue with the price, they most likely wouldn't have moved forward with the interivew.

GoodGracious, is there any NEW information you offered to the board during the interview that wasn't in your board package? Your answer could be right there.

NYCMatt is right: the Board has no obligation to explain the rejection, and there's very little chance of them doing so. I also think a letter from your attorney would cement their silence.

One thing you might try - and the chances of it working are slim - is a personal letter thanking the Board for their time and their consideration of your application. You could mention in passing that it would be helpful for your future apartment search to have some indication of why you were rejected; but if you do so, be sure to acknowledge their right to reject you for any reason, or no reason at all.

Sometimes, being nice works. Probably not in this case, but you might elicit a general hint about where the problem lay.

"We can reject an applicant for any reason that we think might disrupt the lives of the other shareholders, or negatively impact their investment in the building. And we don't have to disclose that reason to anyone."

as long as you dont cross discrimination laws that can be somehow proven. its the proven part that is almost impossible though, and gives the board the ultimate power

I'm so sorry.

The answer, which you are getting from other posters on this board, is that you won't find out why you got the turndown. It does seem unlikely that a price protection move would have gotten to the interview stage, so it is more likely that something went amiss during the interview, but I'm just guessing here. If there was a misstep, you clearly weren't aware of it, whatever it was.

You mention a "broker friend," so it seems like you weren't working with a buyer's broker, but you might want to for the next attempt just to get someone to look through your package and try to catch any weak spots.

Also, you can reach out to the listing broker and see if he/she can offer you any feedback.

ali r.
{downtown broker}

West 81st, I like your style.

But while that approach might work if you were rejected after a job interview, I don't know of any co-op board that would open itself up to a lawsuit by being nice enough to divulge the reason for rejection.

Co-op boards routinely reject applicants for reasons that could very well run afoul of the Equal Housing laws. But the loophole to avoiding any and all lawsuits in this regard is our legal right to non-disclosure. As long as there's no proof of laws being broken -- no laws have been broken.

Writing the board such a letter is worth a shot -- but don't expect a response.

"as long as you dont cross discrimination laws that can be somehow proven. its the proven part that is almost impossible though, and gives the board the ultimate power"

EXACTLY, Urandigs.

" you might want to for the next attempt just to get someone to look through your package and try to catch any weak spots."

That's a good idea, front_porch, but again, I don't think anything was wrong with their PACKAGE. Their package "passed", and they got to the interivew. What apparently went wrong happened during the interview.

Are your finances very bonus-heavy? Much has been written in recent months about boards being leery of bonus-dependent buyers. Same goes for huge salary swings or fluctuations year over year. I'm (not) surprised none of the brokers above suggested this. Ditto, are your investments very illiquid? People working in PE might be at a disadvantage on the heels of a liquidity crisis.

Less likely - total guesses: Are you a lawyer? I have heard that boards don't like lawyers (insert your own joke here) though I have a few lawyer neighbors. Have you had issues with some neighbor in the past who happens to have some connection to this building/board? Or one of the board members lives next to this apt and hopes to purchase it for him or herself.

another thing it could be is revenge for the seller doing something. this ocurred in my building. one apartment had 3 turndowns. the seller sued and won. unfortunately, it was a lot of time wasted.

Asking the board would be a waste of time, but ask the broker. It's a waste of their time to have a deal scuttled on the last lap, so if you catch them fresh, they might be more candid than wise.

OP, I'm sorry to hear about this. Your dilemma is not uncommon, unfortunately coops are private companies, and as such are only accountable to the shareholders (theoretically, at least). This can present board with opportunities to go against ethical behavior. Like a board member who wants the apt to go to someone else and will make sure to reject good offers. Or another who rejects someone's rennovation plans because they're not using a certain architect/contractor.

I'm not saying this is the reason why you were rejected, as none of use were flies in the wall during your interview. But think of it this way, if it were, would you REALLY want to live in a building run by a board that played these kinds of games?

It's a soft market now, luckily you have more choices.

Thank you all for your comments and interest. I will try to address some of the points and questions you raise, albeit in a somewhat random manner. First, no real new info or disclosures came up in the interview, no awkward moments. One of the board members dwelled a while on the fact that had I served a long time on my own co-op board until 2004. This info was not in the application per se but was certainly contained in several of the reference letters. Questions from the board members were all rather perfunctory; they also seemed a bit inexperienced, as if they were new to the task. Also, all very, very much younger than my wife and I, who are both in our 60's. (She by the way is Latin, born in S.A.) Apartment is on UES. Contact price in lower $600K range, which I estmate is roughly 15-18% off the peak of the bubble years. I believe the price was fair on both ends and not necessarily out of whack with other prices in the building. Honestly can't believe the board rejected the sale because it would undercut apartment values in the building. If anything, judging by recent activity, it would have slightly boosted them. Have other thoughts still, but must run for right now. Do appreciate your time.

I heard of a co-op board rejecting a candidate because someone on the board wanted to buy the place for themselves.

As most people has stated, there is little chance that you will uncover the reason for the rejection. The business judgment rule generally protects coop decisions from scrutiny by the courts.

I have seen and litigated cases where people have sued the board based upon the fact that the decision was made in bad faith or was not made in the legitimate interests of the corporation or treated shareholders disparately or was discriminatory. The problem is two fold in prosecuting these cases: 1. you need to have a valid basis upon why you believe that the board's decision violated one of these tenets of law, and 2. the shareholder needs to be the one to sue, since he is the aggrieved party. The coop board has no fiduciary duty to you - so you need the shareholder to bring this case. Even if you have both of these, it's an uphill battle.

I hear you Matt, but I'm hypothesizing the case -- especially because they're cash buyers -- that their money doesn't look "clean." So the board gets the package, sees the money, butsomeone on the board is concerned about it, and they decide to further investigate in person at the interview.

If that was the case, then OP unknowingly gave the wrong answer -- but this is a concern that should be headed off at the pass in the construction of the package in the first place -- possibly in the cover letter, possibly in the rec letters, possibly in the financial statements -- I'm not sure, because I can't see the application.

ali r.
{downtown broker}

One other possibility - were you going to be using the apartment as a pied-a-terre? A lot of buildings don't like that because they envision part-time owners and many "houseguests"

It's like trying to get into a private club; why were't you approved? They were not impressed or, more to the point, negatively impressed.

"Questions from the board members were all rather perfunctory; they also seemed a bit inexperienced, as if they were new to the task."

Board seats in many buildings last only a year, so theoretically you could have a brand-new co-op board every year. There's a pretty broad learning curve involved, as well.

Ah, yes. Now more and more of that interview comes back to me. I noted in my previous comment that I had been on the board in my own building and that this was briefly discussed at the interview. And there was also this: I manage buildings that I own (this btw was certainly in the board package in a number of places). Nothing very extravagant. A small property owner in Manhattan, but in a very sought after neighborhood. I do not draw a big salary for this work but there are distributions from the partnership. There were several questions about the buildings, though nothing very probing. Is it possible that being a landlord and former board member put them off? I always thought that boards might welcome someone with this type of experience. Maybe I'm wrong. And no, I am not a lawyer.

LMAO. another reason to wait out this downturn... the Board did you a favor. Rent and when the board is tired of funding 10% of the co-op that is in arrears and everyone is screaming they'll come around and the infamous $1 co-op will re-appear... I swear I've seen this movie before.

they may be concerned that you were on the board for a long time and would

1 - run against them or
2 - ask them questions that they do not want to answer

Who knows what kind of small thing or appearance could have twisted the mind of a simpleton on a co-op board?

goodgracious, take it as sign, you probably don't want to live in a building managed by people like this anwyay -

Now, can I interest you in a 1BR CONDO in the same price range on the UES? email me, miscusenyapple@yahoo.com (no I am not a broker).

"the shareholder needs to be the one to sue, since he is the aggrieved party"

Not true.

"We can reject an applicant for any reason that we think might disrupt the lives of the other shareholders, or negatively impact their investment in the building. And we don't have to disclose that reason to anyone."

Not true, either. Regarding the first sentence, this "business judgment rule" has been significantly whittled down by court decisions. Regarding the second sentence, in court you have to disclose EVERYTHING. "I didn't like them" is not a reasonable basis to reject applicants anymore.

Is it possible that being a landlord and former board member put them off?

Absolutely - my old building had a board that was literally visceral to the thought of anyone ever running against them. They are literally only dropping off that board as they die.

Goodgracious - sorry you went through that. I hope you find an even better apartment with reasonable neighbors.

Having read the whole thread, I have 4 ideas: They were discriminating because of age, certainly common in the workplace &, if they're that young, they "don't want to be living with my parents; they're old fogeys"; OR They're discriminating against someone from Latin America. In this country, Europe is grand but Latin America, not; PLUS there's the narco thing; LASTLY they envision the apartment as a home away from home for all the Latin relatives. I'd say that you can conjecture forever & may never know but your best bet for any info is through the seller's broker. Suerte.

"I noted in my previous comment that I had been on the board in my own building and that this was briefly discussed at the interview. And there was also this: I manage buildings that I own (this btw was certainly in the board package in a number of places). Nothing very extravagant. A small property owner in Manhattan, but in a very sought after neighborhood. I do not draw a big salary for this work but there are distributions from the partnership. There were several questions about the buildings, though nothing very probing. Is it possible that being a landlord and former board member put them off?"

Hmm. If anything this would have been a plus.

Seriously, do you have college-aged kids?

"in court you have to disclose EVERYTHING."

This is why we put nothing in writing, regarding our discussion or decision to reject an applicant.

Stevejhx, we can -- and DO -- reject on just about any basis we want, and we don't have to disclose. If you don't like it, there are plenty of CONDOS out there.

GoodGracious, I'm curious ... just HOW young were these board members?

"we can -- and DO -- reject on just about any basis we want, and we don't have to disclose."

So, you don't record things like this in your board minutes? Do you have an obligation to the shareholder/seller to disclose the reason? I guess this freedom of non-disclosure allows boards to do whatever they want, legal or not, as long as they are willing to say a rejection was for "another reason".

This is why I hate coops. Sure, protect us and so forth, but good luck selling your apartment!

Some legal pointers:

1. in the mid 1990's the Second Appellate Department, the appeals court for brooklwn, queens and
staten island, ruled that it is illegal for a coop board to reject a sale because thr price is
too low

2. the appeals court for manhattan adht bronx, the 1st department, has ruled at least 2x - once in
Strauss v, ,,, 73rd ... and poissble also in Post v. 120 East ... Owners Corp, that coop boards
can lawfully condition consent for purchases upon a buyer's agreement not to let their children
use the apartment sas a residence ... or to live there

3. as a general rule, Business Corporations Law section 501(c) requires coop boards to give every
shareholder identical rights, In practice, that means coops cant have separate but unequal pet
policies for resident owners, investors, and sub-tenants

"So, you don't record things like this in your board minutes? Do you have an obligation to the shareholder/seller to disclose the reason? I guess this freedom of non-disclosure allows boards to do whatever they want, legal or not, as long as they are willing to say a rejection was for "another reason"."

Absolutely not. Reasons for rejection are never put in writing, especially in the minutes.

No, we do not have an obligation to the seller to disclose the reason for rejection.

Believe it or not, we don't look for reasons to reject applicants, especially once they've reached the interview stage. At that point, we've invested a lot of time in these applicants, and to turn them down would mean repeating the process!

Trust us, we're owners just like the rest of you, and eventually we'll want a quick sale of our apartments, as well. But that doesn't mean we're going to fast-track unqualified applicants.

"PLUS there's the narco thing" ...
Apropos of nothing, I've been told that in Jackson Heights, some coops won't accept all-cash buyers; presumably because the source of their cash is assumed to be from las drogas.

goodgracious, could your investment partnership financing have anything to do with anything?

GG - that stinks. As a poster said here months ago ....why isn't it that I interview the board to determine if I want to invest my money and live in the bldg, not the other way around. and i'll second ab_112 - perhaps a ? or 22 that they do not want to answer....

GG:

Alanhart makes a good point. What is the status of mortgages on your real estate. Rolling over commmercial real estate debt is extremely difficult now. Perhaps someone feared that your properties
would end up in foreclosure because of an inability to refi their mortgages.

And this all sucks for the SELLER as well...who knows how long the apt was on the market for...they then finally get a buyer and the apt goes off the market...they pay an attorney, etc....and then their own board rejects them and they have to start from scratch...and no one compensates them for the money they spent or time spent....PLUS what if they purchased another apartment or house.....I believe that COOPS should be more regulated in terms of this board process.....Lastly...makes me wonder...if i went ahead with that 1 bed apt last week for 490k in PRIME MURRAY HILL....sounds like it would have been rejected completely, no?

"Trust us, we're owners just like the rest of you, and eventually we'll want a quick sale of our apartments, as well. But that doesn't mean we're going to fast-track unqualified applicants. "

And you will be in a better position to do so, being on the board :)

NYCMatt, don't get mad, I'm just playing around...

Seriously, when I lived in a coop, the sale of my apartment to a neighbor was delayed due to irrational concerns over finances/financing, with a dash of interpersonal issues between buyer and board. Really made me wonder what % or valid deals are rejected because of a board member's improper judgement. No thanks! I'm with condos from now on.

"No thanks! I'm with condos from now on."

That's what they all say. Until that lovely middle-aged couple who was supposed to move in next door instead hands the keys over to their 19-year-old NYU student, who proceeds to turn the unit into a frat house.

What's that? Your 18-month-old shares a bedroom wall with the NYU freshman's living room? Wow. Tough break. Those parties DO get loud, don't they? Yes, it's 2:30 AM and she's screaming because the noise woke her up. BUT ... you wanted free and unfettered access into this building!

A co-op board would be really nice about now, wouldn't it?

NYCMatt, yeah, I'll take my chances with that.

You act as if a condo does not have enforced house rules.

"You act as if a condo does not have enforced house rules."

They have house rules, none of which can really be ENFORCED.

"my old building had a board that was literally visceral to the thought of anyone ever running against them"

Ditto. It's a red flag to them. They like their power.

To wit: "we can -- and DO -- reject on just about any basis we want, and we don't have to disclose. If you don't like it, there are plenty of CONDOS out there."

Why would anybody want to live under conditions where psychotics like this run the building? I've seen co-ops lose millions on frivolous lawsuits, change the bylaws to keep everything secret, tell shareholders one thing and then do the exact opposite. I've owned two co-ops in my life, and NEVER AGAIN.

I've even heard a co-op lawyer stand before the membership and say that the Board WAS the co-op.

No they're not. They're REPRESENTATIVES of the shareholders.

Co-op boards just trust that no one will ever sue and they do what they want. They're peopled with nutcases. Often when they're sued - luckily - they lose. Sue them - claim discrimination b/c your wife is a foreigner, b/c you are over 62, b/c you are self-employed, and make THEM prove otherwise. File your suit and put a lien on the apartment you want. Then it CAN'T be sold.

Make them sweat.

Also, established condos try to act like coops - requiring all the same financial info, letters of recommendation, the whole nine yards, even though they can't really turn the buyer down, unless the building buys the unit - they can, however, make it unpleasant. AND, they start imposing very high fees on owners who try to rent out their units in an attempt to make it difficult to rent (and this sometimes does work).

Foreclosures, though I haven't really tracked this yet, I believe, would definitely be more of a problem in condos (especially the newer ones) - along with the unpaid maintenance fees.

Steve, I'm sorry you couldn't afford to get into a GOOD co-op. But you can't judge all co-ops by your limited experience.

"Also, established condos try to act like coops - requiring all the same financial info, letters of recommendation, the whole nine yards"

Actually, LEGALLY all a condo association can REQUIRE of you is your name and current address. That's it. It's illegal for them to force you to provide any additional information.

it seems as though whether or not a coop is GOOD would at least partially depend on things potentially very difficult or impossible to discern. such as whether a whacked out nut job will be on the board next year.

i've lived in both. i'll take the condo, although not the new development, at least until all of this has been played out.

NYCMatt - tell that to the board at 160 West 66th - helped someone out with a reference letter - May 2008 - they required a total package, financials and all. I also found it hard to believe, but it's considered a very desirable building.

"tell that to the board at 160 West 66th - helped someone out with a reference letter - May 2008 - they required a total package, financials and all. I also found it hard to believe, but it's considered a very desirable building."

First of all, it's not a "board", it's an "association", regardless of what they choose to call themselves. That's a major legal distinction.

Second, just because they ask for the moon and applicants don't question it and give them what they want doesn't mean it's not ILLEGAL.

NYCMatt: Thanks for your comments; they have been very helpful. We have one son in his 30's who lives on the West Side and probably would never consider the "dull and staid" UES. Board members: two of them in the 33-36 year old range; the other, who conducted, maybe 27-30. But he looked even younger. They were three of a seven person board. As far as narco angle goes, my Latin American wife is in her late 60's, hardly fits the profile.

rb345: Doubt it's got anything to do with the commercial mortgage. Runs until the 2020's and is small compared to the value of the property. But even so, if they had such concerns why not put a few questions to me about it? I'd certainly have answered them.

GoodGracious ... if your kids are in their 30s, then the college-kids-turning-the-apartment-into-a-frathouse fear wouldn't be a concern.

LOL -- when you said "very very young" I thought you meant mid-20s. Guess it's all about perspective. ;)

Frankly, I think your commercial real estate partnership went entirely over the heards.

Other than that, I'm just as in the dark about it as you are.

"But you can't judge all co-ops by your limited experience."

It's the universal opinion of anyone I've ever met.

GG, I don't think from what you've said that this was a discrimination problem.

Sounds like, from the way the interview went, you need a major cover letter rewrite. If you had been a co-op board member yourself, that should have been pretty prominent in the application.

And, distributions from a real estate partnership, see what I meant about the money not being clean. This is an objection that the agent(s) should have anticipated and blunted before you walked in the room.

People wonder what brokers do to earn our money, it's stuff like this.

ali r.
[downtown broker}

What stings most is that we really liked this apartment and had conducted a long and careful search, on SE, NYT and in person, before choosing it. We also know that we would have made excellent tenants and neighbors. Maybe our dog. But it's a dog friendly building, and they knew about her going into the interview. Perhaps, as some on this thread have said, we should just accept that we'll never really know and just move on. So, should we be rooting for further market decline this fall or go out immediately and start hunting again?

i want to say that board will get their due--but they wont---they hurt the seller and the buyer, and they will go on without any recourse--ive owned both condos and coops, had good experiences with both, but se the risk of irrational coop boards to be a huge concern

Yeah -- at the end of the day, you have to believe that they did you a favor. Remember that you'd have to live with these people, and when it came time to sell...well, they've already shown that they turn down good buyers.

This is why we never even looked at co-ops. We have enough money to be financially attractive to a board -- but the idea of sitting in front of a group of people who are going to decide if we're "good enough"...just not my scene.

So I'm sorry to hear about your experience -- but I hope you find a better place with a better board. In my opinion (for what little it's worth), I see no harm in looking now. You could wait forever trying to time the market -- but why not go ahead and see what's out there? If you love something immediately...great. If you don't love anything, then wait and see if something you do love comes along, or if prices come down.

I once purchased a coop that had a no dog rule -- and my mother said that any group of people who do not like dogs are not people i would want to live with... I bought the apartment and my mother was right -- the building was full of nosy, cranky, nasty people.... If you and your spouse are lovely, and they don't want you, the problem is with THEM! I am hopeful that you will find a more lovely place with nicer folks. Best of luck to you.

Co-ops are for losers. I'm sure you could find a nicer building or a townhome.

joepa "the shareholder needs to be the one to sue, since he is the aggrieved party"

stevejhx "Not true."

joepa - it is true. See Woo v. Irving Tenants 714 NYS2d 276 (1st Dept 2000); GSG v. Multi Boro Realty 658 NYS2d 271 (1st Dept 1997).

joepa, yet again, you know not of what you speak:

"Members of a board of directors who act in good faith and in the honest exercise of business judgment are protected by the business judgment rule (Levandusky v One Fifth Avenue, 75 NY2d 530 [1990]). The business judgment rule has been applied to cooperative sales (Woo v Irving Tenants Corp., 276 AD2d 380 [1st Dept 2000]). However, the rule does not apply where the directors acted in bad faith or were motivated by factors other than the interest of the cooperative corporation (Woo v Irving Tenants Corp., supra). Moreover, the rule does not protect the board from liability for discrimination (Jones v Surrey Cooperative Apartments, 263 AD2d 33 [1st Dept 1999][board action upheld in the absence of bad faith or discrimination])."

http://www.courts.state.ny.us/comdiv/Law%20Report%20Files/January%202002/axelrod.htm

We're discussing bad faith here - a Board's self-righteous assumption that they can do anything they want, as NYCMatt claims - and/or discrimination. The Board is NOT protected.

Each of these cases involves suing under the terms of the proprietary lease, not under the terms of the law. It is clear that non-shareholders cannot sue under the proprietary lease as they are are not lessees. However, if consent is denied for a reason that is illegal, the Board is not protected and the injured party need not be a shareholder.

did you use the "n" word during the interview. My wife once said "they always try to jew you down" during an interview, my heart dropped, but no one said anything. We got the coop. I later asked my wife and she said it slipped out and didn't mean anything bad.

ick

goodgracious: Are you a "protected party"....green, handicapped, disabled, buddhist, ex-gay, etc..etc..

"this "business judgment rule" has been significantly whittled down by court decisions"

Sure.... like Pullman.

"1. in the mid 1990's the Second Appellate Department, the appeals court for brooklwn, queens and
staten island, ruled that it is illegal for a coop board to reject a sale because thr price is
too low"

2nd Dept case, check 1st Dept cases........

The Pullman case is immaterial to the discussion:

http://www.cooperator.com/articles/920/1/Pullman-Six-Months-Out/Page1.html

It's about a nuisance SHAREHOLDER violating a proprietary lease, not about bad faith decisions by a Board.

stevejhx; do you know what the decision was in Woo v Irving Tenants? From the way you are using it, I don't think you do.

I know of several cases where purchaser's cases were dismissed because of lack of privity because they sued under clauses in the Proprietary Lease and were not Shareholders/leaseholders . Unfortunately I know this from personal experience.

"The Pullman case is immaterial to the discussion"

it is material when someone is making the claim that in general the courts are whittling away the power of Boards, and there is a case which HUGELY expands their powers. And especially where the case hinged on whether of not a Court could even LOOK TO SEE whether the Board acted properly or not (have you read the whole decision on Pullman? I have. There have been tons of Pullman cases since, including one's where the Board brought them simple because "they didn't like the shareholder anymore".

goodgracious, bottom line is that it sucks. and yes do move on. and i'd say start looking, too. but why not look for a condo and limit yourself to one that meets the standards of that coop? as condos are more expensive (and often not so attractive at that price range) you might find yourself buying at a great time when you find one.

Regarding the Board granting an interview after seeing the Board Package: there are many Coops who interview everyone, regardless of the strength of their package, and especially since we are hearing they seemed inexperienced, you CAN'T rule out that it was something in the package simply because they got an interview.

Secondly: from what it sounds like, there is first a step where three of 7 directors handle the process, and then it is tossed to the full 7. There easily could have been something in the package which got by the 3, but someone of the other 4 didn't like and convinced a majority to reject.

Thirdly, you may have seemed "overqualified". They may have wondered why you were purchasing this unit because "people like you" wouldn't live in such a unit. So they think you have SOME ulterior motive: like you're an investor and flipping it or renting it out - which is only heightened by telling them you ARE a real estate investor.

Fourthly, it could be age discrimination for another reason: some boards worry that if you are close to retirement, your financial picture will change drastically.

Fifthly, one of the Board members may live in an adjacent apartment and likes to play his stereo, match movies, etc and is worried about noise complaints from an "older couple". Even if it's not that a Board member lives adjacent, they may have had some noise complaints in teh past and are worried about an older couple being more sensitive and getting more complaints.

Sixthly, they don't want people you age in the building period.

Seventhly, regarding the letter, I might write something different at this point:
"We are saddened by not being allowed to purchase unit X. We looked at apartments in over 50 buildings in this neighborhood, and this was the building we chose as to where we wanted to make our home. The hallways were clean, the staff was friendly, even the people we passed in the lobby and elevator seemed nice and happy. We're not sure we are going to be able to find another building we like as much because other Coops don't seem to take as good care of their buildings as you do this one.

Perhaps we did not properly explain what our situation was, either financially or otherwise. We have not purchased a Coop before, so we are not experienced in going through the process. But we still would very much like to live in this building. If there are any particular concerns regar4ding us or this purchase, we would be willing to do what we can to cure whatever the issues are. If the Board would like us to put some maintenance in escrow, we have no problem doing that. All we need to know is what the Boards concerns are and we will be happy to address them and do whatever we need to do to fit in with the shareholders in this fine building. As we've said, we really like it and really would love to live there"

OPH, and BTW, Ali's point about "you need a major cover letter rewrite"........

Why do you need a Buyer's Broker? All they do is collect a commission for doing nothing.......

I guy hears a knocking noise in his car's engine compartment. So he brings it to the dealer, and they can not find the problem. He brings it to the dealer in teh next town and they can't find the problem either. After going through ever dealer withing a 50 mile radius, the guy is at a party telling his story and someone says "You should go to Old Fred on Peachtree Street". the guy asks "You mean that run down junkyard place with the 100 year old guy in the rocking chair out front?". The person says "That's the one".

Well, the guy is so frustrated he figures he's got nothing to lose. He drives over to Old Fred's and the place is even worse than he'd remembered. He doesn't even feel like getting out of the car and putting his feet down on the oil stained floor... but he does. Old Fred walks over and without the guy saying a word, Old Fred says "So I guess you came here for me to fic that knocking sound in your engine compartment?". The guy says "I've been to every...." and Old Fred cuts him off "yeah, yeah, yeah you've been to every dealer and none of them has any idea what's wrong. You want me to fix it or not?" of course the says he wants it fixed.

So Old Fred slowly walks over to his bench and picks up a mallet with a rubber head. He goes over to the car and hits the hood with the rubber mallet. The knocking noise immediately stops. Old Fred says "that'll be $150".

The guy is incensed. All he did is bang the car with a rubber mallet and he wants $150 for it? So the guy says "Can I have an itemized bill, please?"". Old Fred is obviously not please, but he pulls a greasy pencil from behind his ear and pulls a ratty old dirty pad out of his shirt pocket and writes something down and hands it to the guy.

It reads:

"Thumping hood with rubber mallet: 50 cents
knowing where to thump $149.50"

There's no rason to assume that age discimination did not play a part in this board rejection. One way to find out (or rule it out) is to file a complaint with the NYS Division of Human Rights. One might not choose to do that until another apartment was safely in the bag, but OP does have a year to file, starting from the time he was given notice of the rejection. I am not advocating this approach, merely reminding those of you on coop boards that every potential buyer has that option.

A while back, I worked for an agency that is analogous to the State Division. It was astonishing to see how otherwise "normal" people began to believe they were invincible and above the law once they became members of a coop board. It was equally astonishing to see the amount and types of illegal discrimination rampant among these boards, and how some of them considered it simply to be business as usual or even a way to protect the shareholders.

Part of my job at that time was to oversee investigations of civil rights claims. Lack of written documentation was never a slick way to avoid disclosure. I think it's better to document than to give the impression that you are a prime candidate for a thorough investigation. I remember one coop board that was particularly resistant, with suspiciously sketchy records. The investigators in that case were forced to interview not just all the board members, but also shareholders and employees of the coop. I had boxes and boxes of their records from the year of the flood in the storage closet for a long time. I thought at the time, and still do, that they had failed in their fiduciary responsibility to the shareholders by adopting those tactics.

The Supreme Court told us in McDonnell Douglas (in the employment context), and has repeated in housing discrimination cases since then, that no smoking gun is required to prove a discrimination case. All you need is enough circumstantial evidence to overcome the "legitimate business" defense. That kind of evidence can and will be gathered and coop boards are not immune from investigation.

Just as an aside, I am thinking right now of an entertaining case in Westchester where the buyer was more than financially qualified and otherwise completely unexceptionable. The Board asked the buyer to bring her minor child to be interviewed and then torpedoed the sale. The buyer sued for discirmination based on familial status. It turned out that the subject apartment was over the apartment of one of the board members. The board member didn't want a child living overhead and -- hey presto! -- no sale. Although there was nothing definitive, the investigators were able to gather enough evidence to make the coop's attorney very uncomfortable about proceeding. In the end, there was a settlement and consent decree. The coop had to pay the buyer about $100,000, the board was required to change many of its practices in interviewing and decision-making, and it was monitored by the Justice Dept for a long time afterwards for compliance. There's many a discrimination litigation story out there right now, such as the current cases in Queens in which one coop board is being sued for rejecting an Asian buyer and another board is being sued for alleged GLBT discrimination.

The State Division under its new commissioner seems to be investigating almost every claim that comes into the agency. Complainants don't need to have an attorney, all they have to do is fill out a complaint form on the internet. The complaint will be reviewed and investigated, and if found adequate, the complainant will be represented by the agency for free.

It seems to me that coop boards ought to be aware of all this and take it into account when deciding how they intend to operate. I guess you can play the odds and hope you never get sued, but I wouldn't count on it.

As for the "jew you down" poster -- I think you got very lucky. Once, an attorney made an argument before me in which he argued that his client had been "jewed down" by the other side. The attorney's remark was not relevant to the merits of the case or my eventual decision, so I said nothing. In fact, the guy won the case. However, I did have a chat later on with his corporate client. I hope your wife has left that phrase back in the past, where it belongs.

Finally, my deep sympathy to the OP, who went through a grueling process and has been inspected, detected, neglected and rejected without even knowing why. Perhaps the seller's broker is the one who has some explaining to do? I will leave that question to all you experts in real estate law, from whom I am learning on this board.

Thanks generalogoun! Let's hope you come across Matt someday and knock him off of his power trip.

generalogoun: very serious question: if an existing shareholder had what they considered to be a discrimination claim (NOT an illegal discrimination for race, age, etc.; but for being singled out for punitive actions and having his shares treated differently, unfairly, etc.), where would be the best place for them to file a complaint with the State?

pab77777, My wife once said "they always try to jew you down" during an interview,

Did you beat her? Hard?

And why do you think it is ok to write Jew in lowercase?

Nazi bastard

pab77777, prepare yourself for someone to PIECE-OF-SHIT you down. Hard.
Two turds, you and your redneck cow.

this sounds like definite ageism and that is not cool at all. and obviously they did you a favor. these people sound like total assholes

Wonderboy, there's no such thing as a "townhome." You could buy a townHOUSE. Then when you move into it, it becomes your home.

Lofty, sweetie, shut up.

There is a bill up in Albany which has been languishing for years asking for a requirement that coop boards disclose the reasons they reject a buyer. It is opposed by REBNY! It is backed by NYSAR/NAR/MANAR (National Assoc. of Realtors, NYState Assoc., Manhattan Assoc.) There was also a bill in the city for such a disclosure I don't know what happened to that. At the moment coop boards are allowed to turn down anyone for any reason other than discrimination & they do not have to give a reason . This should be changed but unless people write their state & city politicos and demand it it isn't going to happen (I am .a Realtor and have been to Albany to lobby for passage of this bill only to hear that it is not important and REBNY is against it!)

If you think you were rejected unfairly then
WRITE A NICE LETTER TO THE BOARD ASKING TO BE RECONSIDERED..

It worked for a friend of mine.

"stevejhx; do you know what the decision was in Woo v Irving Tenants?"

The case was dismissed.

GG, it's as others have aptly pointed out, it's extremely unlikely you'll discover the true reason for this rejection.

A couple of things to consider--it's possible the board somehow felt threatened by your previous experience as a board member and building manager/landlord. Did you make any suggestions about improvements to the building? Or ask any questions about, for example, when the lobby might be renovated, or whether a roof deck/gym/bike room/whatever might be built? Boards get very ouchy if the feel someone may come in and 'rock the boat', even if that person would actually be a great addition to the building.

Also, you mention the average age of the board as 20s-30s--it could also be a simple case of age discrimination. Perhaps they were either intimidated or turned off by the idea of having 'senior citizens' living in what they may perceive as a hip, young building. If that's it, they're a-holes and you don't need 'em, no matter how great the apartment.

yeah if you still want in, or are just curious, write a letter. you have nothing to lose at this point by confronting them. and if that doesn't work, file a complaint! ageism is a crime and you should call'em on the carpet.

stevejhx - from my long tenure on this board, I've learned that there is no way that I will convince you that you are wrong when you are so entrenched in a position. But you are and I will give it one last try.

If a board breaches the business judgment rule by acting in bad faith or disparately, etc., it is breaching its duty of fidelity and loyalty to the shareholders of the corporation -- not to third parties. A board's powers are derived from the proprietary lease, by-laws, etc. If a board oversteps its authority (by improperly rejecting a purchaser), it is breaching the proprietary lease and by-laws -- not statutory or common law. Only a shareholder, who is a party to those agreements, can sue for the board overstepping its contractual authority. The causes of action would be breach of contract, breach of fiduciary duty, perhaps breach of Business Corporation Law 501 -- all claims that could only be brought by shareholders. Perhaps the vendee has a claim for tortious intereference with contract - but that's a long-shot and I don't see them getting specific performance on that and proving damages would be difficult from the purchaser's prospective.

There is a reason it is illegal to practice law without a license. Stevejhx's posts here are an example of why. Advising the OP to "Sue 'em!" in this situation, without knowing more is irresponsible. Steve's understanding of precenden and the extent to which one court's decision binds others is muddled, as is his understanding of the legal concept of "standing" to sue.

No one should any sooner rely upon legal opinions spouted by steve than they would rely upon my translations of Italian instruction manuals or whatever it is Steve does for a living as he works from his rented apartment or while sitting on the LIRR to Fire Island since he no longer owns a car.

Seeking advice is wise, but keep the source of any advise in mind.

The only other thing I would suggest is to talk to the seller and have them try to convince the managing agent to have the board take another look, reconsider, or request more information if any clarifications are required. Minds can change.

I refuse to join any club that would have me as a member.
Groucho Marx

why bother with a club that doesn't want you in the first place?

Oh, kylewest, that is so nice of you.

"If a board oversteps its authority (by improperly rejecting a purchaser), it is breaching the proprietary lease and by-laws -- not statutory or common law."

Not always. Discrimination laws - which is what we're talking about - are enforceable by the person discriminated against. To wit:

"It is unlawful for landlords, superintendents, building managers, condominium owners, cooperative owners and boards to discriminate in the sale, rental or lease of a housing accommodation or in the provision of services and facilities because of a person’s actual or perceived race, color, national origin, gender (including gender identity), disability, sexual orientation, creed, marital status, partnership status, alienage or citizenship status, any lawful source of income, age, lawful occupation, or because children are or may be residing with the person."

http://www.nyc.gov/html/cchr/html/housing.html

If I have children and am denied the right to purchase a co-op because of it, I have the cause of action, not the shareholder in question. There are likewise federal and state laws - age discrimination, for example - that protect purchasers. These are independent of a shareholder's right to sue under the proprietary lease.

I have also been a Board member and am familiar with what the obligations are. If you think that you can deny an applicant because of his race and that only the SHAREHOLDER can sue you, you're crazy, and misinformed. In that case the shareholder might have a cause of action, but the injured party is the applicant, whose rights under the law were violated.

If this were not the case, who could sue if a tenancy were denied in a rental building? No one.

goodgracious: I'm so sorry for you. It's dispiriting to spend so much time, effort & $$ to find a home and be rejected by a co-op board. Imho suing is useless as you will spend liquid assets, the process goes on for years, and the emotional toll is horrid. Lots of sage advice above, but no one can figure out the permutation of possibilities that led to the turn-down. It would be best to move on. If you have a friend who is a broker have them look over your application to see if anything looks amiss. My guess is that you are a victim of naivete, but that doesn't make it less painful. Best of luck to you.

Steve, if you read what I wrote, I think you'll find I didn't say anything about a rejected buyer not being able to initiate a lawsuit. Anyone can technically sue anyone else. But there is a reason that the courts are not full of suits by rejected purchasers. Suing is hugely expensive. It will take forever. It will be more aggravation and trouble than it is worth and in the meantime you will likely have have somewhere else to live. Even if you win, which is not going to be easy given the many legitimate reasons a board may establish for your rejection, what do you get? The right to live in a building that didn't want you and where now the shareholders hate you because you cost the coop a zillion dollars in legal fees.

So telling the OP here to sue, is pretty irresponsible. You don't know his/her financial means to mount such a suit or if they understand the onerous financial and time commitment the suit would involve. You don't know all the facts based on the limited info here and there may be no legitimate claim at all--you haven't seen the OP's application, etc. Even the idea that the Board in question is made up of 20 year olds sounds suspect to me. I don't know many 20 year olds who can afford to buy a place let alone who want to serve on a board.

Your legal "advice" is fairly facile and you draw detailed conclusions from broad statements of general law. That's a risky thing to do. Again, without being a lawyer, I think you are on shaky ground. I think you've crossed the line from sharing your opinion to making statements containing legal advice.

Maybe the owner of the apartment had issues with the board and they rejected you just to hurt his sale or maybe someone on the board wants this apartment for much less than what you were willing to pay. By rejecting you they will force the owner to sell to them at lower price just to assure that the buyer passes the board.