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Long Island REALTORS® Fight Discrimination in Cooperative Housing

By HOM Editorial Team
July 2015

The Long Island Board of REALTORS® is working hard to ensure fair housing for all, and to eliminate the last bastion of institutional discrimination: cooperative housing.

Federal law prohibits housing discrimination based on race, color, national original, religion, sex, familial status or disability. After the fair housing laws were enacted, the federal government took action against people who were discriminating against renters and homebuyers of these protected classes. Federal agents would send in a member of a protected class as a “tester” to identify whether a seller or landlord was using discriminatory practices in renting or selling housing.

However, identifying discrimination in housing cooperatives has been a more difficult challenge.

With a housing cooperative, the power to accept or reject an application for residency lies with a group not involved in the buying and selling process — the cooperative’s board of directors. According to the bylaws of most cooperatives, the board of directors may deny an application for residency for “any or no reason.” And, unlike a bank that’s required to disclose the reason for denying a person’s mortgage application, the cooperative’s board is generally not required to disclose the reason for denial.

Because there is no duty to disclose the reason for the denial, discriminatory practices have flourished. This lack of transparency makes discriminatory practices difficult to prove, and a buyer is left with only speculation about the board’s true reason for the denial. In addition, the application for residency takes place after the contract for the sale has been consummated. By this time, the buyer has already made a commitment and spent money on legal fees, title costs, and other expenses involved in the transaction. These large, up-front expenditures eliminate the ability of the federal or state government to use “testers” to find discriminatory conduct.

Another way that a cooperative’s board of directors will discriminate is by delaying action on a buyer’s application. The board’s inaction usually results in the buyer abandoning the application and seeking housing elsewhere.

REALTOR® associations across the nation have lobbied unsuccessfully at the state and federal levels for legislation to end discriminatory practices in cooperative housing. The Long Island Board of REALTORS®, however, has realized this goal through its local lobbying efforts.

In Suffolk County and in the Village of Hempstead, a cooperative board must take action on a buyer’s application for residency within 45 days; if it denies the application, it must provide the buyer with the reason for its denial. These laws protect the rights of all applicants for cooperative housing and ensure transparency in the application process, because the board of directors must now provide a non-discriminatory reason for rejecting the buyer’s application.

The Long Island Board of REALTORS® continues its efforts to ensure fair housing by sponsoring fair-housing seminars, speaking in favor of fair housing, and lobbying for legislation to end discriminatory practices in cooperative housing.

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