What are valid reasons for denying a prospective coop owner?

Financial considerations - are the buyers steadily employed? Will they be able to afford the maintenance (and any increases over the next few years), their mortgage, and any likely costs that may arise in the near future?

Lifestyle considerations - do the buyers play musical instruments? Will they practice loudly day and night? Are they heavy smokers, thus presenting risks of both fire and smelly smoke throughout the building? Do they have loud parties with hundreds of people late at night?

Do they seem to have flexible personalities, i.e. likely to make whatever compromises in behavior may be necessary to get along with the other residents of the building?

If the prospective purchasers fall into a protected category (such as racial minorities), and if you have a permissible reason (such as financial) for denying approval, then you would be inviting a lawsuit by not stating your reason... they will assume you rejected them out of racial prejudice.

Of course, if the building already has numerous minority members, the rejected applicants are less likely to sue, or to prevail if they do sue.

Yes, racism, sexism. lifestyle in terms of how you're born or choosing a preference, religion, I'm not sure about political idealism...all of those and the like are no-nos when denying someone membership.

...do not state a reason.

All good advice!

You do not have to state a reason and you shouldn't try too It opens you up as a board.
If the seller- who you know gets upset and demands a reason you can still say no. It might make it hard in the building because you know the people - it is a small building and expect some hate from the sellers.
And add in yelpy animals- are their pets well behaved, bark all the time, etc....
good luck

according to the existing Federal Fair Housing Law, applicants cannot be discriminated against based on race, creed, color, national origin, gender, age, disability, military status, alien/citizenship status, sexual orientation, partnership status, marital status, citizenship status or children.

http://www.cooperator.com/articles/1395/1/Was-it-Something-I-Said/Page1.html


You should not, and are not required by law to do so, disclose any reasons.


you should have any any and all questions you have answered before you even schedule a meeting. If there is something unclear about the financials, like where the down payment is coming from, like the loan commitment says they are putting $100,000 down and there checking statesman only shows a balance of $15,000 and no check for the good faith deposit has cleared. If they say they arw making $100,000 per year but there 1040s for the last 2 year only show them making $75,000 I'd like an explanation. If they are getting an ARM you might want to know how long they plan to stay.

LongTimeSloper wrote: Just a curiosity question. If a prospective coop owner is denied by the board, i assume there is a stipulation in their contract pertaining to that? I would assume they would get their deposit back.

Does your coop ask for a copy of the contract as part of the application packege. It should say but there usually is a Board approval see section 6 of the standard contract

There are articles on www.cooperator.com and www.habitatmag.com about the board approval process. Some boards request that the managing agent submit the application in a form that does not identify whether or not the applicant/s belong to a protected class, that way the board, if it's so inclined can deny an application based on the paperwork. The general consensus from what I've read is that boards only interview those candidates that satisfy the board's financial criteria. So if an applicant has too much debt, a lousy credit score and five personal bankruptcies on their record, bypass them. If the financials on their application don't pass the smell test, bypass them.

If the applicant/s satisfy the criteria, then you interview them to make sure they'll be a good fit for the building community. If after the interview, the board doesn't think they'll fit, don't give a reason.

Boards will reject applicants who lie on their applications. If someone says they're buying it to live in, but the board surmises from the financial data that the applicant is buying for a child, the board might reject the applicant. There are lots of stories on the internet, try googling "coop board reject" and see what comes up.

Consider taking http://www.cnyc.coop/ class on self management 101

SELF-MANAGEMENT 101: A 3-Session Program for Small Buildings
Thurs., March 5, April 2, April 30, 2009
7 to 9 PM
Location to be Announced

they should get their deposit back- or they have a crappy lawyer.
I lived in a self managed co-op for years- I did a lot of the managing and it can be difficult. Or it can be easy, depending on the involvement of the people in the building.
The possible new person should be told that they will have to participate (or not, depending on how involved you all are)