Fact or Fiction: Co-op Boards

Staff

Co-op boards have the right to reject any purchase application for any reason.

Boards may not discriminate in their decisions based on race, color, creed, age, national origin, citizenship status, gender, sexual orientation, disability, marital and family status, or lawful source of income and occupation.

Generally, it's easier to prove discrimination by a co-op board if your application is turned down without a request for an interview.

In court, co-op boards must provide nondiscriminatory reasons for a rejection decision. An interview may provide many subjective, nondiscriminatory reasons to reject an applicant.

A single mother of three applying to buy an apartment could be lawfully denied.

Like race and religion, family status is not a lawful reason to deny housing.

Most brokers recommend asking as many questions as possible during a co-op board interview to show preparation and interest.

You're being interviewed, not doing the interviewing. Also, questions about subletting, pets or using the space as a pied-a-terre may run afoul of board members' interests.

It's lawful and expected that co-op boards may ask an applicant personal questions during the interview.

Co-op boards are evaluating not only your financial resources, but also your fit in a community of people who live very close together. Don't be offended if they pry into your personal life.

According to the law, the standard that a co-op board must reach in order to justify a rejection is "business judgment."

Many parallels exist between a co-op board and the board of an incorporated business, so the most important court case governing the duties of co-op boards allows "business judgment" as the standard for actions and decisions.

The vote of a co-op board can require an owner to go above and beyond the duties written in the co-op rules.

Board actions that are incongruent with written rules are some of the most common causes of co-op owner lawsuits.

A co-op board can be sued successfully for making a bad business decision.

The board can be sued, but it depends on how bad the decision is -- the board has a fiduciary duty to be responsible with shareholders' money.

It's not only legal, but also helpful for a buyer's broker to steer the buyer away from neighborhoods and buildings that are notoriously unfriendly to the buyer's race, religion or occupation.

While the usefulness of this action unfortunately remains debatable, its legality is not -- steering clients based on race, religion or occupation is illegally discriminatory.

An owner can be held responsible for a previous owner's lack of renovation permitting.

Unpermitted work in co-ops is frequent, and cases exist of boards requiring current owners to get retroactive permits for previous owners' renovations. Is this board action legal? This is a tricky gray area, but in some cases, yes.

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About This Quiz

Behind every co-op is a shady board of puppet masters pulling the very strings of existence, right? While it may seem that way, it's not always so. Take this fact-or-fiction quiz to test your knowledge of the authority and duties of co-op boards!

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