Do you have a question you would like to have answered?
The following questions were posed to our office and we offer responses from various authorities from the Co-Operative arena. While these opinions are intended to be broadly applicable, each cooperative’s situation is unique. Cooperatives should always consult their own documents, state and local laws, and professionals.
Can condo or co-op owners get the energy efficiency tax credit?
Yes, condo and co-op owners can get the tax credit for energy efficiency improvements. If you own a condominium or are a tenant-stockholder in a cooperative house corporation, you are treated as having paid your proportionate share of any costs. Source: Department of Energy’s, Energy Star Question and Answer Section, August 2009.
All cooperative housing corporations which were originally organized with HUD/FHA model Occupancy Agreements have language restricting renting or subleasing without consent
of the corporation. Violations of this provision can lead to termination and forced sale of the Members’ rights and vacating the dwelling unit.
Members of housing cooperatives own a share or shares of stock or a membership, with their rights and responsibilities spelled out in their occupancy agreement or proprietary
lease. So members cannot rent or sublease their home without getting specific written approval from their cooperative corporation. They have only an ongoing right to live in their home as their primary residence.
Are REAC (Real Estate Assessment Center) inspectors allowed into any unit they choose to enter, even if the shareholder does not give permission for access?
If someone refuses to let the REAC inspector in, the REAC inspector needs to choose an alternate unit. IF they choose a different unit (random selection) – that person can refuse entry and then the inspector will need to choose another unit out of their “alternative file.”
I live in a New York co-op, and I have received a two-year job assignment in Los Angeles. My 18-year-old daughter wants to stay in my apartment while she attends college. My mother would move in and stay with her. I will continue to pay the mortgage and maintenance. Can the board deny this arrangement?
“The answer depends on the precise terms of the proprietary lease and also the borough in which the building is located,” said Stuart M. Saft, a Manhattan lawyer who is chairman
of the Council of New York cooperatives and Condominiums. If the proprietary lease specifically requires the shareholder to remain in residence, then children cannot live in the
apartment without the shareholder.
If the lease is not specific or if it provides that “the shareholder and his children” can occupy the apartment, Mr. Saft said, courts in Manhattan and the Bronx have ruled that the word “and” means that the shareholder has to live in the apartment with the children. On the other hand, for cooperatives in the other three boroughs, the courts have interpreted the
word “and” to mean “or.” So, in Brooklyn, Queens or Staten Island, the daughter could reside in the apartment even though the shareholder is not in residence.
My housing co-operative is located in Brooklyn, New York, and is about to begin a bylaw revision. This has not been done in 15 years. Can you refer us to a resource or recommend some guidelines to follow on updating bylaws. I am particularly interested in bylaws relating to new trends in housing cooperatives.
Each co-operative is different and the Board’s approach is different. Once you have changed your bylaws, your other underlying documents must be looked at to avoid any conflict. They are your Certificate of Incorporation and your lease (Occupancy agreement or proprietary Lease).
For all the reasons stated above we have always advised the co-operative to use an attorney to avoid any trouble down the road and to establish a marketing plan to sell this to the
I’m thinking of purchasing a co-op in Brooklyn, New York. I have an elderly mother who at some point might need some assistance and there’s a possibility I will need to move her with me. Can I do this at a co-op? Are there any rules against moving in family members afterwards?
You should also know that NYC has a roommate law, which also includes cooperatives. Under the roommate law a named lease holder can have a roommate without interference of the co-operative. For instance if there is a single name on the lease or occupancy agreement they can have one roommate. If there are two names, you can have two roommates.
Generally, aside from restrictions in the bylaws, can an LLC or an S-Corp own shares in a co-operative under New York law?
While NYS law does not prohibit such ownership, each co-operative can set its own policy on these issues. Most cooperatives do not like corporate ownership and want the INDIVIDUAL who will live in the apartment to be the owner.
I am in the process of calling all of the 213 co-op’s in Michigan to find out how each one conducts their Board Elections. I am very disturbed about the way our elections are handled and after already speaking with several officers and property managers from the other complexes I see ours is the only one who does certain things. We are told we legally have to sign all mail in ballots. We have 700 units here and people are encouraged to do mail in. So of course all counters can see how we voted. No privacy for members at all. So I want to know if there is a legal process that has to be followed for all 213’s. Such as: -Do we legally have to have proxy votes?
Your bylaws allow proxies. Unless amended, married couples may designate one another as the proxy. If single, a member may designate another member of the co-op as a proxy.
Do we legally have to sign mail-in ballots on the ballot form?
Proxies must be signed and dated. Even General Motors shareholders must do this.
Can we substitute absentee voting for proxies or vice versa?
Absentee voting is not authorized by your bylaws or by the MI non stock corporation act.
Is it ethical for a Board member to be a challenger in the counting room though he is not running that year? Especially knowing he can also see the votes.
A good practice is to allow each candidate to appoint one observer. I do not know what a challenger is. People who are not representing a candidate’s interest or who are not a member of the election committee should make no comment.
Many of us have lots of concerns in here but really don’t know where to go for the answers. Can you advise us of some where we could go for these types of questions or would that be you?
One procedure is to use an envelope within an envelope. Outside envelope has the address on it. Addresses are then checked off. Inside is the ballot envelope. After checking all outside envelope off, all inside envelopes are opened at once and the ballots stacked for counting. Signatures are still visible, but if signers are smart, they will sign illegibly. The ballot cannot be challenged because it was accepted with the outside envelope screening.
Is there some way to find out the last sale price of a co-op unit? I can do it on a city website for condos, but can’t find one for cooperatives…
Only in California and only for market rate cooperatives. The sale of a co-op is a personal property transaction, so there is no deed or transfer tax. Share loans are recorded wherever Uniform Commercial Code liens are recorded in the state and searching that record place will at least reveal how much financing previous owners had.
And Realtors who are active in the co-op market tend to know what previous sales in the building have gone for.
In our co-op we are trying to update our by-laws and house rules. At a recent meeting, a shareholder suggested that the corporation should be responsible for the repair of damage on walls and ceilings of a share holders unit caused by building defects, but that the shareholder should use his/her own property insurance to cover damage caused by building defects to repair or replace carpets, furniture and the like. It seems to me that the shareholder shouldn’t be expected to use his/her personal insurance to replace/repair items damaged due to a building or roof defect. We have newly written into our rules that the owners are supposed to have HO-6 insurance. It seems to me that filing with one’s insurance makes ones rates go up. Any advice you can offer is truly appreciated.
Congratulations on the rule about HO-6’s. It is estimated that about 50% of shareholders and condo unit owners do not have a policy. And when shareholders do not have a policy, they look for the co-op to pay for things that the HO-6 would have otherwise paid for.
Claims for damaged carpet and other things under the control of the shareholder should be made under the HO-6. The HO-6 carrier will determine if the co-op should bear responsibility and if so it will subrogate (sue) to the co-op. Often that will depend on whether the co-op was negligent. I am not sure what you are referring to as defects. If the bldg is new, then the builder is responsible for defects. If the building is older, then a repair contractor or the co-op may be responsible. For the co-op to be liable there may need to be a showing that the co-op knew of the defect and did nothing about it. Where the co-op knows of the defect and informs the shareholders (don’t put your Persian rug near the window because it leaks), then responsibility shifts to the shareholder to avoid possible damage to the shareholder’s property.
Will premiums go up? Sure, but this is a zero sum game. If the co-op paid for everything, then monthly maintenance would go up.
I’ve been doing research on cooperatives and I haven’t been able to understand one thing: Are cooperatives not-for-profit 501c3s, or are they organized under another part of 501c? Or, are they taxed like any standard corporation? I read how some cooperatives give money back to the members at the end of the year so they stay non-profits and members pay taxes on the checks they receive. But what if a co-op wants to place money in reserves? Do they have to pay taxes on those rents?
Housing cooperatives outside New York are usually incorporated under non-profit corporate law. In New York, they are usually incorporated under the general business law. They do not qualify for 501c3 exemption, since the beneficiaries are the members themselves.
Housing cooperatives file Form 1120 like any other corporation. They usually do not have taxable income because they are entitled to take a deduction for depreciation. They are also allowed to return a patronage dividend to members under subchapter T of the Revenue code. Subchapter T requires the recipient to declare the dividend as income, if the recipient is a business.
If a co-op wants to establish reserves, it should add that amount to the monthly fees. The interest earned on reserves is called patronage income and will not be taxed if a co-op has a net operating loss (due to depreciation.)
How would I find out if washer and dryers are allowed in my co-op unit?
Read the house rules and proprietary lease. If they are not prohibited, then they are allowed. If they are allowed, the co-op still has the right to approve alternations necessary for hook-up.
Our co-op is looking to purchase the land lease that we currently still have (50 years of a 99 year lease.) Would this be beneficial to all the tenants? And, is there a list of pros and cons to cooperatives that want to own their land lease?
It depends on your state law. Some states, like MD and HI, are very specific on lease rights. Otherwise it depends on the terms of the lease. The worst case is that when the lease expires, the landowner owns the building. In that situation, absolutely find a way to buy the land or you will lose everything. If the lease is renewable at your discretion (not at the discretion of the landlord), then there is no worry.
There is some market impact of leaseholds due to the uncertainty described above. And, there is some caution among lenders in dealing with leaseholds, unless they are common in your area.
I am a shareholder tenant of a co-operative in Manhattan. One employee refuses to provide help to me but he does help other shareholder tenants. I feel discriminated against. I complained to the Board of the Co-operative but the employee said that he would call his Union. I will not pay my maintenance for that employee to help other shareholder tenants and not help me. Can I initiate a lawsuit against the employee for discrimination? I was told that I can ask for an arbitration regarding my co-operative. Where does one apply for arbitration?
First, never withhold maintenance. You are not a renter, and even if you were a renter, the conditions cited are health and safety conditions. Withholding maintenance will lead to loss of your apartment.
Most cooperatives have rules about what employees can and cannot do for residents, and how requests should be made (in writing for example.)
You cannot sue employees. The employee is an agent of the employer, so you can sue the employer, which in this case is both the Union and the Co-op, or you can bring a complaint to the local fair housing office. If you allege discrimination, you must cite a protected class, such as race, family status, ethnicity, etc. It would be helpful to have witnesses.
There are arbitration offices, but both parties must agree to arbitration and share the costs, which can be nearly as much as litigation. Contact the local office of the American Arbitration Association. There is an arbitration office affiliated with NYU that specializes in cooperatives.
Are there legal limits on rent increases in publicly assisted cooperatives?
Your occupancy agreement covers the Board’s ability to increase monthly charges. If there is assistance, then HUD must approve the co-op budget and monthly charges.
What is our board up to? I’ve been a shareholder in my co-op for over 20 years. Recently I’ve become suspicious about what the board has been doing. All of their meetings are closed meetings. Based on some rumors that I’ve heard, it seems they may be talking about some big changes. I’ve asked to review the minutes from some of the recent meetings, but the board has refused my request. As a shareholder, shouldn’t I have the right to at least see minutes of board meetings, especially if I’m not actually allowed to attend the meetings?
Answer provided by Sylvia Shapiro, Lawyer, board president, and author of The Co-op Bible, New York, New York :
There is not necessarily anything sinister about the board holding closed-door meetings. In New York, where I call home, the law does not require that shareholders be allowed to attend, and honestly, I don’t know any buildings where the board voluntarily lets owners in. Other states are more democratic. Hawaii lets shareholders show up and participate. Florida not only mandates that board meetings be open to all owners, but allows them to speak their mind on agenda items-even videotape or record the session for posterity.
Assuming you live in an open-door policy state, and are being denied access, I’d first ask one of my friendly directors why. If no satisfactory answer is forthcoming, take your complaint to the managing agent or (while it may be unorthodox), the co-op’s general counsel. If they have any sense, they will urge their client boards to obey the law. Be aware that executive sessions or meetings between the board and the building’s counsel may be off limits.
Even if you aren’t legally entitled to attend, state corporate law, generally, allows owners to inspect board minutes. Here in New York, that means you can go to the office of the managing agent and read what your directors have (or haven’t) done. It doesn’t mean that the board has to leave copies at the doorman’s station or send you your own every month, as one of our shareholders demanded. If the board stonewalls your legitimate request, the remedy is a court order for inspection, though I’d first try some peaceful overtures. One logical (though not legally required) solution-which provides shareholders ease of access while addressing board concerns about confidentiality-might be to ask directors to “post” minutes on a secure building website.
Answer provided by Willard J. Stievater. Law Firm of McCullough, Stievater & Polvere, LLP, Charlestown, Massachusetts :
A housing cooperative is first of all a corporation. By law it becomes a “legal person”-a creature of statute. It can own property, borrow money, sue and be sued, pay taxes, etc. Its powers-and limitations-are defined by statute, its articles of organization (i.e., its corporate charter), and its bylaws. In turn, the cooperative is owned by shareholders who reside at the cooperative. As shareholders the residents are entitled to vote for a board of directors who are responsible for the day to day operations of the cooperative. In carrying out these responsibilities the board members owe the shareholders a duty of loyalty and reasonable care. The duty of loyalty means that a board member must subordinate his personal interests to that of the residents. He or she should be asking himself or herself-is my vote or action in the best interest of the residents at the cooperative?
In most states the board has the choice to hold closed meetings. Without this prerogative, shareholders could disrupt or interfere with the board responsibilities to supervise the day-to-day operations of the cooperative. After all, that is why the board members were elected-to act on behalf of the residents in dealing with these responsibilities.
There may be provisions in the co-op bylaws that state whether open meetings are always required or whether the board has the right to hold closed meetings. Notwithstanding the closed sessions of the board, residents as shareholders have a right to have access to the written minutes of the board meetings. This is also usually provided for in the bylaws of the cooperative.
But, if there are no minutes-there are other steps that the shareholder may take against a secretive board. For example, petition a special meeting of the shareholders to demand from the board an accounting regarding actions taken, financing, or some other matter that concerns the residents. The bylaws require a certain number of shareholders to sign a petition for special meetings. This is to avoid the petty complaints of one or two shareholders who contest just about everything and anything that comes to mind.
A shareholder could also run for board membership and, if elected, bring about reforms from the “inside.” In addition, a shareholder could seek to change matters by proposing amendments to the cooperative’s rules and regulations, or its bylaws.
What amendments would I suggest to deal with the question that prompted this article? Limit the terms of board members, require board or professionals to prepare periodic reports for distribution to the residents, have more frequent shareholder meetings, and reduce the number of residents required to maintain a quorum at shareholder meetings, to suggest a few. The strategy behind these changes would be to make it easier and more effective for the shareholders to make their board of directors more responsive to their concerns without interfering with the board’s responsibility to manage the day-to-day operations of the cooperative.
Q. Will we still be a co-op when our mortgage is paid off? What happens to a Section 213 cooperative when it pays off its mortgage and when HUD is no longer involved as the insurer? Does the cooperative simply go on as before, or is it possible that shareholders each own their apartment or townhouse at the time of the mortgage“ payoff. If neither of these apply, then what does happen? Our mortgage will be paid off in about three years and there is a lot of speculation as to the future. Any information you could provide would be appreciated.
Answer provided by Terry Lewis, Esq., Vice President Cooperative Development, National Cooperative Bank, Washington, D.C :
Essentially, the cooperative simply goes on as before. It just gets to make choices about its operations and its structure without needing to answer to HUD.
The cooperative corporation is an ownership structure that exists quite independently from HUD or any relationship to HUD. Housing cooperatives existed long before there even was a U.S. Department of Housing and Urban Development.
When your cooperative corporation borrowed money to buy the land and construct the buildings you call home, it obtained mortgage insurance from HUD, which allowed it to get better loan terms and a lower interest rate. In return, it entered into a Regulatory Agreement with HUD and gave its lender a mortgage whose terms were written by HUD. The Regulatory Agreement and the HUD mortgage form gave HUD certain rights to regulate the cooperative’s operations and the right to approve or disapprove any amendments to the cooperative’s bylaws. Those rights will go away as soon as the mortgage is paid off. Nothing else will change unless the cooperative acts to make changes pursuant to the board and member democratic processes set forth in its bylaws and articles of incorporation and the state corporations law under which it was incorporated.
Examples of things your cooperative routinely does because it is required to under the Regulatory Agreement include: making deposits into a Replacement Reserve held by its lender and into an operating reserve under its own control; escrowing money on a monthly basis to pay property taxes and insurance; paying no more than a HUD-regulated maximum for property management services and using certain terms in its property management contract; and completing its annual budget (and submitting it for HUD approval) at a certain time each year.
Answer provided by Stanley B. Dreyer, Esq., Partner, Gallet, Dreyer & Berkey, LLP, New York, New York :
Upon the satisfaction or refinancing of a previously FHA-insured mortgage by a Section 213 cooperative, other than the fact that the cooperative is no longer under the supervision of FHA/HUD, the corporation continues to function as a cooperative, e.g. the corporation is the owner of the property and the shareholders continue in occupancy of their apartment under the provisions of the existing occupancy agreement without any change in legal status or proprietary interest.
I recommend that each “former” Section 213 cooperative to completely revise, not amend, the existing Certificate of Incorporation (“Charter”), bylaws, and occupancy agreement in order that the documents reflect current legal, financial, and social conditions as opposed to those which existed at the inception of the cooperative. As an example, the original “standard” occupancy agreement was designated as being subject and subordinate to the bylaws of the corporation and did not contain any provisions for amendment or modification unless consented to and approved by each and every shareholder of the corporation. The replacement of the occupancy agreement with a current form of proprietary lease which may be modified or amended by a super majority of the shareholders provides flexibility in order to meet changes in the concept and philosophy of cooperative housing.
From a practical standpoint, the cooperative may opt to refinance the prior FHA-insured mortgage in a lesser amount in order to maintain adequate reserves for a long-range capital improvement program, upgrading the present condition of the property, addition of new facilities, etc. This is a matter for an in-depth discussion by the board of directors in conjunction with management and the corporate accountant. Assuming that adequate reserves presently exist and the property has been maintained to meet current standards, the sole windfall to the shareholders will be a substantial reduction in carrying charges upon the elimination of debt service payments and a substantial increase in the value of the shares of stock in the resale market.
Q. Can My Cooperative’s Board Force Members to Get Insurance? Does the board of directors have the power to require members and shareholders to get renter’s insurance?
Answer provided by Alex N. Miller, Cornerstone Cooperatives, Atlanta, Georgia :
Let’s begin by taking a look at the occupancy agreement between the cooperative and each of its members. The occupancy agreement is the document that describes the legal relationship between the cooperative and its members, and it is binding upon the cooperative as well as each member.
To find the answer to this question, I suggest you consult the insurance clauses of the occupancy agreement to determine whether there are any requirements or restrictions related to homeowner’s or renter’s insurance (known as form HO-6).
Many occupancy agreements grant the board of directors broad powers to establish and enforce house rules. If there are no restrictions in the occupancy agreement, the board may create a rule that requires members to carry their own personal insurance.
There are two approaches to doing this. The first is that the member gets the insurance. If the board adopts a rule requiring that members provide their own homeowner’s insurance, the rule needs to contain guidance to members and their insurance carriers describing minimum coverage and minimum amounts to be insured. Finally, the co-op should back up its requirement with a mechanism by which members provide proof of insurance to management.
The co-op also will want to review the pro’s and con’s of such a rule with its management team to resolve issues of enforcement that need to be examined from a management perspective. Once you decide that the co-op should have such a requirement, consult your attorney for proper language in which to frame your rule.
cooperatives also may have the option to include basic HO-6 coverage in the monthly carrying charges. This broad coverage insures that each member is covered without the burden of management enforcement. NAHC has been active on this issue for several years. In 1998, HUD issued a letter at the request of NAHC that allows FHA insured cooperatives to include basic homeowner’s insurance coverage in the monthly carrying charges.
Answer provided by Albert F. Pennisi, Pennisi, Daniels & Norelli LLP, Rego Park, New York :
The board may, as part of their general corporate powers pursuant to the certificate of incorporation, bylaws, and proprietary lease, adopt a rule that requires tenant stockholders to purchase renter’s or tenant dweller’s insurance, insuring each tenant shareholders apartment for bodily liability, including property damage, fire, and extended coverage and charge the cost to the general operating budget. In federal or state subsidized cooperatives, this can be done in most cases only with the permission of the oversight state or federal agency’s approval.
In cases where the cooperative seeks to mandate by rule that the tenant shareholder purchase a tenant or renter’s policy using their own funds, then in that instance, the cooperative must do the following:
Look at its corporate documents, e.g., the certificate of incorporation, proprietary lease, bylaws, and oversight state or regulatory authority with administrative rule-making power over a cooperative and determine if there is any prohibition in the corporate documents and/or in the rules of the federal or state oversight authority. If there is no prohibition in the corporate documents or the federal or state oversight authority regulations, then the cooperative’s board in considering such a rule will have to perform the steps listed below.
Determine pursuant to the corporate documents that:
- a. It is the tenant shareholder’s responsibility for repairs to the building, common areas, and his or her dwelling unit caused by any act of neglect, carelessness, or negligence of the tenant/shareholder family, guests, employees, or other occupants.
- b. The cooperative corporation has an obligation if the building or dwelling units are damaged by fire or other multi-peril to repair the damage or replace the damaged portions of the said building. In addition, if the said repairs are not completed and ready for occupancy, rent or maintenance fees shall abate until the apartment is rendered tenantable.
If, in fact, the above-mentioned rights and responsibilities of the cooperative and/or tenant shareholder are contained in the corporate documents, it would seem that the board could enact a rule requiring each tenant shareholder to maintain tenant dweller’s or apartment dweller’s insurance. This rule would be subject, of course, to the law in individual states and/or regulatory authority barring the same by regulation, case law, or statutory law.
How do I produce a history book for my co-op?
Reprinted with permission from the 2000 Cooperative Communicator Association Handbook, Copyright 1995 by Robert Duke, Lubbock, Texas :
Cooperative history books are as varied as the cooperatives they document, and as publishing projects go, they are more complex than their nearest rivals, annual reports. Every history book project, however, requires the same skills and methods, but in different degrees according to the co-op and the type of history to be produced. The basic steps in a history publishing project include:
- Defining the type of history—things, people, combination.
- Broadly determining the type and source of history information available.
- Defining the history book in terms of number of pages, pieces of art, dimensions, and quantity required.
- Identifying cooperative history experts and reviewers, and defining the approval process.
- Establishing a budget and schedule.
- Writing a broad or conceptual outline, and from it, preparing a detailed outline of the book.
- Assembling, sorting, and cataloging source material from which to write the manuscript, and ultimately, produce the book.
- Assembling and captioning photographs, line art, and other illustrations.
- Researching publishing material and conducting personal interviews to write rough draft of manuscript.
- Reviewing and revising the rough into the first draft.
- Conducting a formal review of draft and reconciling and incorporating changes and corrections.
- Beginning graphic design of history book.
- Writing a final draft and assembling selected art for final review and approval.
- Setting type and preparing mechanics for printing of book.
- Selecting a printer. Printing and delivering books. Distributing books.
Of course, writing and publishing a co-op history book is vastly more complicated than the basic steps above suggest. If you simply divide these 15 steps into a recommended 36 months for such a project, you can see that you have only 2.4 months in which to accomplish even the most rudimentary activities.
If your co-op has an historical anniversary coming up in three years, you could already be behind schedule for publishing your history if you have not started by now.
Answer provided by Cathy Merlo, Merlo Company, Bakersfield, California :
Here are eight important points for successfully completing a cooperative history:
- Form a committee with a good cross section of people to help advise and brainstorm. Include someone from your communications committee (who understands writing, printing, and is capable of creativity). Other possible committee members include a board member, someone from management, and a longtime cooperative employee.
- Understand why your co-op is doing a history. Is it to celebrate an anniversary? Honor an aging member or director? A retiring manager? Did you just finish a rehab or beautification project? Knowing why will keep you on track. This also will help you decide if your history should be told through a book, a brochure, a video, or a display.
- Determine who will:
-Research and write.
-Review and proofread.
-Be the “point” person or designated approval person.
- Set your budget—and consider spreading out the book’s costs over two fiscal years. Include these expenses:
-Printing (Number of copies? Number of pages? Hard or soft cover? Four color or one? Coffee-table quality?)
-Travel and phone budget (for interviews, etc. )
-Book distribution (postage, mailing covers, etc.)
- Set a schedule. Allow plenty of time for each step of the process. You’ll want to start at least two years in advance, depending on the scope of the project. Once the book’s completion date has been determined, you’ll want to set a date for the first draft of the manuscript to be delivered to your in-house reviewers. Allow several months for the writing. Once the first draft is delivered, you’ll need weeks to review it. Then you’ll need several months more for other tasks such as revisions, design, writing photo captions, and printing.
- Find out where historical material is located. Develop a list of people who should be interviewed. Start gathering material such as old minutes, historical photos, old films and videos, news clippings, letters, in-house publications, and annual reports.
- Decide when, where, and how the book will debut. You’ll want to publicize this special project with a special occasion. The book can make its first appearance at an event such as the annual meeting or at a special dinner. Have the author present for book signings. Invite your members, board members, employees, retirees, and members of the media. A cooperative history spawns a lot of goodwill and favorable publicity. Take advantage of it.
- Determine (well in advance) how the book will be distributed. Will you mail it to members? Will it be sold in museums or bookstores? Will it be donated to schools and special organizations? How many copies should be saved to give to new members and employees as part of orientation? You’ll also need to budget for mailings (including the mailing envelopes for the book). You may be able to recoup some costs by selling the book.
Can a Co-op Ban Smoking Inside the Home?
The New York Times carried a story about a co-op deciding to ban smoking inside the apartment by new shareholders and requiring new applicants to declare that they are non-smokers. Stuart Saft represents the co-op. This has prompted some typical questions that we can help you answer.
Is this the first instance?
Yes, to the best of our knowledge.
Is it a national trend?
No. One case does not make a trend.
Will other cooperatives do this (ban smoking inside the unit)?
Other cooperatives should do as this one did; listen to members, determine if there is a problem, consult professionals, and act in the best interest of the members.
Can condos and rental apartments do this?
cooperatives have the same application and enforcement processes as rental apartments. Condos do not.
If cooperatives can ban smokers, who else will they ban?
cooperatives must comply with all fair housing laws.
If cooperatives can ban smoking in the apartment, what other behavior can they regulate?
cooperatives can regulate behavior, through the occupancy agreement, that needs to be regulated for the well-being of the building and residents.
Q. How can we avoid threats of discrimination? We like to be very selective when we screen potential members to be sure we get responsible people moving into our co-op. However, recently a disgruntled person whose application we rejected has threatened to sue under the Fair Housing Law. Can you explain how the Fair Housing Law relates to cooperatives and how can we continue to be selective while avoiding the threat of lawsuits?
Answer provided by Phyllis H. Weisberg, Esq., Kurzman Karelsen & Frank, LLP, New York, New York :
The Fair Housing Act generally prohibits discrimination in the sale or rental of housing or in the provision of services and facilities in connection with housing, because of race, color, religion, sex, familial status, national origin, or disability. This law applies to cooperatives as well as rental housing.
Typically, in a discrimination case, the disappointed applicant must establish only that he or she was financially capable of purchasing (or leasing) and maintaining the housing in question; the burden then shifts to the cooperative to establish that other reasons exist to justify a rejection of the application.
It is not unusual for a disappointed applicant to claim he or she was discriminated against. This possibility should not deter boards from fulfilling their fiduciary obligation to evaluate prospective purchasers or renters, but it should be a reminder that the board should exercise sensitivity in evaluating applications and interviewing applicants. Neither the application nor the interview should include inquiry into sensitive areas, as those relating to race, color, religion, sex, familial status, national origin or disability.
Moreover, the board’s rules concerning applications and interviews should be applied evenhandedly, that is, the board should not apply different sets of rules to different applicants. For example, one New York cooperative, which typically did not require a board interview for a sublet applicant, recently found itself in serious hot water for, among other things, requiring a board interview when it learned the applicants were an interracial couple. Boards should also act promptly upon applications. Many applicants are put off by a delay in processing their application, in scheduling an interview or in issuing a determination on the application. In the face of delay, applicants become suspicious that the board is not acting in good faith.
No guarantee exists that a board will be able to avoid all discrimination claims; being sensitive, applying application procedures evenhandedly, and acting promptly should, however, help discourage claims and, when those claims do come, help the board to defend successfully against them.
Answer provided by Thomas H. Randolph, Jr., Executive Director, Kansas City Fair Housing Center, Kansas City, Missouri :
When screening potential members, one must remember that as long as the screening process is utilized and implemented without regard to race or color, national origin, sex, familial status, religion, and disability, it is okay to rent that unit to the individual selected. The qualifications and application requirements are set forth by the owners/management of a complex. The same selection criteria must be utilized for everyone making application and should be based on the individual’s ability to meet the application requirements.
Cooperatives operating on the premise that they can be “selective” in conducting business may find themselves having a fair housing complaint filed against them. If someone makes application and meets the requirements, the unit should be made available to them. Not making units available to all qualified individuals is still a common problem across the country. If someone has threatened to sue under the fair housing law, in many cases more than not, it means that person was rejected and is unhappy. If a complaint has been filed, the investigative entity will request that you provide information pertaining to the merits for the rejection. Providing them with the information utilized for the rejection of an application should suffice, if there are no other variables involved. Rejection is part of the process and if the person does not meet your requirements it is okay to reject an application.
cooperatives are bound by the same fair housing law as all other housing operations where units are bought, sold, or rented. The fair housing law states it is illegal to refuse to rent, sell, or deal with an individual because of his or her race or color, national origin, sex, familial status, religion, and disability. It is also unlawful to discriminate in terms or conditions of sales, rental, or services based on the same reasons. Records, applications, references, and other information obtained by your company to select applications should be a standard understood process throughout your organization. The application process should be discussed at staff meetings, board meetings, training programs, and during orientations.
It is key to remember that if you are consistent with your screening process giving everyone the same opportunity, a threat of discrimination becomes a non-issue, because your organization has a process in place that is being implemented consistently with everyone seeking a unit.
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