S T A T E O F N E W Y O R K
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2734
2009-2010 Regular Sessions
I N A S S E M B L Y
January 21, 2009
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Introduced by M. of A. BENJAMIN -- read once and referred to the Commit-
tee on Judiciary
AN ACT to amend the executive law and the real property law, in relation
to prompt and fair disclosure of consent in the sale of cooperatively
held housing units
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Legislative findings. The legislature hereby finds that
there is wide spread resistance on the part of cooperative corporations
to provide reasons when such corporations withhold consent to the sale
of cooperatively owned apartments. The unwillingness to provide reasons
has frequently served to conceal both arbitrary refusals to consent to
sales and discriminatory refusals to consent to sales. The wide spread
failure to provide reasons for withholding consent has interfered with
economic transactions, limited mobility, exacerbated housing shortages
by impeding the optimal efficiency of the housing market and has rein-
forced economic, racial and other forms of segregation in housing.
Therefore, the legislature finds that it is in the public interest
that the withholding of consent to a sale of apartments on a discrimina-
tory basis be prohibited and to require cooperative corporations to
disclose, in a timely manner, lawful reasons for withholding consent to
the sale of cooperatively owned apartments.
S 2. Subdivision 5 of section 296 of the executive law is amended by
adding a new paragraph (h) to read as follows:
(H) IT SHALL BE AN UNLAWFUL DISCRIMINATORY PRACTICE FOR A COOPERATIVE
CORPORATION BOARD TO: (1) REFUSE TO CONSENT TO THE SALE OF A COOPERA-
TIVELY OWNED APARTMENT TO ANY PERSON OR GROUP OF PERSONS BECAUSE OF THE
RACE, CREED, COLOR, NATIONAL ORIGIN, SEXUAL ORIENTATION, MILITARY
STATUS, SEX, AGE, DISABILITY, MARITAL STATUS, OR FAMILIAL STATUS OF SUCH
PERSON OR PERSONS, OR (2) REPRESENT THAT ANY SUCH APARTMENT IS NOT
AVAILABLE FOR INSPECTION OR SALE, WHEN IN FACT SUCH APARTMENT IS SO
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD05345-01-9
A. 2734 2
AVAILABLE; OR (3) FAIL TO PROVIDE A NON-DISCRIMINATORY REASON FOR WITH-
HOLDING CONSENT TO THE SALE OF A COOPERATIVELY HELD HOUSING UNIT, AS
PROVIDED IN SECTION TWO HUNDRED SEVENTY-EIGHT-B OF THE REAL PROPERTY
LAW.
S 3. The real property law is amended by adding a new section 278-b to
read as follows:
S 278-B. COOPERATIVE CORPORATIONS; WITHHOLDING CONSENT TO SALE. 1.
(A) WHENEVER A COOPERATIVE CORPORATION WITHHOLDS CONSENT TO THE SALE OR
PROPOSED SALE OF STOCK IN THE COOPERATIVELY HELD HOUSING UNIT, SUCH
CORPORATION SHALL PROVIDE THE PROSPECTIVE BUYER WITH A WRITTEN STATEMENT
OF EACH AND EVERY REASON FOR WITHHOLDING CONSENT NO LATER THAN FIVE
BUSINESS DAYS AFTER SUCH CORPORATION HAS MADE SUCH DECISION TO WITHHOLD
CONSENT. A SINGLE EXTENSION OF SUCH TIME OF NOT LONGER THAN TWENTY BUSI-
NESS DAYS MAY BE REQUESTED IN WRITING.
(B) THE STATEMENT REQUIRED BY THIS SECTION MUST SET FORTH EACH REASON
FOR WITHHOLDING CONSENT WITH SPECIFICITY. SUCH SPECIFICITY REQUIRES THAT
EACH ELEMENT OF SUCH BUYER'S APPLICATION THAT FAILED TO MEET A SPECIFIC
POLICY, STANDARD OR REQUIREMENT OF THE COOPERATIVE CORPORATION MUST BE
SET FORTH, WITH THE SOURCE OF THE DEFICIENCY. THE STATEMENT SHALL
PROVIDE THE PROSPECTIVE BUYER WITH ENOUGH INFORMATION TO REMEDY SUCH
DEFICIENCY IN SUCH BUYER'S APPLICATION.
(C) THE STATEMENT SHALL SET FORTH THE TOTAL NUMBER OF APPLICATIONS
THAT HAVE BEEN RECEIVED BY THE COOPERATIVE CORPORATION WITHIN THE THREE
YEARS IMMEDIATELY PRECEDING THE DATE OF THE SUBJECT APPLICATION AND THE
NUMBER OF SUCH APPLICATIONS WHERE CONSENT WAS WITHHELD.
(D) THE STATEMENT SHALL INCLUDE A CERTIFICATION BY AN OFFICER OF THE
COOPERATIVE CORPORATION, SWORN TO OR AFFIRMED UNDER PENALTY OF PERJURY,
THAT:
(I) THE STATEMENT CONTAINS TRUE, COMPLETE AND SPECIFIC REASONS FOR
WITHHOLDING CONSENT;
(II) EACH DIRECTOR WHO PARTICIPATED IN THE DECISION TO WITHHOLD
CONSENT HAS STATED TO THE CERTIFYING OFFICER THAT HE OR SHE HAD NO
UNLAWFUL REASONS, AS PROVIDED IN PARAGRAPH (H) OF SUBDIVISION FIVE OF
SECTION TWO HUNDRED NINETY-SIX OF THE EXECUTIVE LAW, FOR WITHHOLDING
CONSENT; AND
(III) THE STATEMENT CONTAINS TRUE AND ACCURATE DATA AS REQUIRED BY
PARAGRAPH (C) OF THIS SUBDIVISION.
2. AMENDMENTS OR SUPPLEMENTS TO STATEMENTS SHALL BE CONSIDERED TIMELY
IF SUCH AMENDMENTS OR SUPPLEMENTS ARE PROVIDED TO THE CORPORATION BY THE
PROSPECTIVE BUYER WITHIN TEN DAYS AFTER RECEIPT OF THE COOPERATIVE
CORPORATION'S STATEMENT WITHHOLDING CONSENT, AS REQUIRED BY SUBDIVISION
ONE OF THIS SECTION.
3. IN LIEU OF COMMENCING AN ACTION AS PROVIDED IN THIS SECTION, ANY
PARTY MAY COMMENCE A PROCEEDING AS PROVIDED IN ARTICLE FIFTEEN OF THE
EXECUTIVE LAW.
4. ANY PARTY MAY COMMENCE AN ACTION IN ANY COURT OF COMPETENT JURIS-
DICTION ALLEGING A FAILURE TO COMPLY WITH THE REQUIREMENTS OF SUBDIVI-
SION ONE OF THIS SECTION. SUCH ACTION MUST BE COMMENCED WITHIN ONE YEAR
OF WHEN SUCH COMPLIANCE WAS REQUIRED. THE PREVAILING PARTY MAY BE
AWARDED COSTS AND REASONABLE ATTORNEY'S FEES AND SHALL BE AWARDED APPRO-
PRIATE EQUITABLE RELIEF. A COURT SHALL CONSIDER THE SCOPE OF NON-COMPLI-
ANCE AND MAY IMPOSE PUNITIVE DAMAGES FOR A FINDING OF WILLFUL NON-COM-
PLIANCE. THE COURT SHALL ALSO CONSIDER THE RESOURCES OF THE COOPERATIVE
CORPORATION IN DETERMINING THE APPROPRIATE SANCTION TO BE IMPOSED, AS
PROVIDED IN SUBDIVISION FIVE OF THIS SECTION.
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5. IN ANY ACTION COMMENCED AGAINST A COOPERATIVE CORPORATION WHICH
SETS FORTH ALLEGATIONS THAT THE CORPORATION ENGAGED IN UNLAWFUL DISCRI-
MINATORY PRACTICE, AS DEFINED IN PARAGRAPH (H) OF SUBDIVISION FIVE OF
SECTION TWO HUNDRED NINETY-SIX OF THE EXECUTIVE LAW, NEITHER THE COOPER-
ATIVE CORPORATION NOR ANY OF ITS DIRECTORS SHALL BE PERMITTED TO INTRO-
DUCE EVIDENCE OF NON-DISCRIMINATORY REASONS FOR WITHHOLDING CONSENT THAT
WERE NOT SET FORTH WITH SPECIFICITY IN THE CORPORATIONS STATEMENT.
6. IN ADDITION TO ANY OTHER PENALTIES OR SANCTION WHICH MAY BE IMPOSED
BY THIS SECTION OR ANY OTHER LAW, ANY COOPERATIVE CORPORATION THAT FAILS
TO COMPLY WITH THE REQUIREMENTS OF SUBDIVISION ONE OF THIS SECTION SHALL
BE LIABLE TO EACH PARTY WHO COMMENCES OR JOINS IN AN ACTION OR PROCEED-
ING ALLEGING A FAILURE TO HAVE TIMELY COMPLIED WITH SUCH REQUIREMENTS IN
THE AMOUNT OF:
(A) NOT LESS THAN ONE THOUSAND DOLLARS NOR MORE THAN FIFTEEN THOUSAND
DOLLARS FOR AN INITIAL VIOLATION;
(B) NOT LESS THAN FIVE THOUSAND DOLLARS NOR MORE THAN TWENTY THOUSAND
DOLLARS FOR A SECOND VIOLATION; AND
(C) NOT LESS THAN TEN THOUSAND DOLLARS NOR MORE THAN TWENTY-FIVE THOU-
SAND DOLLARS FOR A THIRD OR SUBSEQUENT VIOLATION.
7. A JUDGMENT OBTAINED UNDER THIS SECTION SHALL NOT BE DEEMED AN ADJU-
DICATION OF ANY FACT AT ISSUE OR FOUND THEREIN IN ANY OTHER ACTION OR
COURT; EXCEPT THAT A SUBSEQUENT JUDGMENT OBTAINED IN ANOTHER ACTION OR
COURT INVOLVING THE SAME FACTS, ISSUES AND PARTIES SHALL BE REDUCED BY
THE AMOUNT OF A JUDGMENT AWARDED UNDER THIS ARTICLE.
8. THE PROVISIONS OF THIS SECTION SHALL BE CONSTRUED IN A MANNER TO
ENSURE THAT A PROSPECTIVE PURCHASER HAS BEEN PROVIDED WITH LAWFUL
REASONS FOR THE WITHHOLDING OF CONSENT TO SUCH SALE AND TO DETER
ATTEMPTS TO EVADE THE REQUIREMENTS OF SUBDIVISION ONE OF THIS SECTION.
NO PROVISION OF THIS SECTION SHALL BE CONSTRUED OR INTERPRETED TO
RESTRICT OR EXPAND THE LAWFUL REASONS FOR WHICH A COOPERATIVE CORPO-
RATION MAY WITHHOLD CONSENT TO A SALE OF STOCK.
S 4. This act shall take effect on the thirtieth day after it shall
have become a law and apply to all applications for purchase of coopera-
tively held housing units filed on or after such effective date.