BILL NUMBER: S2098A
SPONSOR: KAVANAGH
 
TITLE OF BILL:
An act to amend the business corporation law and the not-for-profit
corporation law, in relation to requiring the board of directors of a
residential cooperative apartment corporation to notify applicants seek-
ing to purchase shares of the corporation of the reason or reasons the
board of directors has refused such request
 
PURPOSE OR GENERAL IDEA OF BILL:
This bill aims to ensure transparency and fairness in the process of
purchasing shares in cooperative apartment corporations by requiring the
board of directors to provide specific reasons for the denial of appli-
cations to purchase shares.
 
SUMMARY OF PROVISIONS:
Section 1 amends the business corporation law by adding a new section
728, which requires cooperative corporation boards to provide a written
explanation to applicants detailing the reasons for the denial of their
share purchase requests within thirty days of the decision.
Section 2 amends the not-for-profit corporation law by adding a new
section 519-b, which requires cooperative corporation boards to provide
a written explanation to applicants detailing the reasons for the denial
of their share purchase requests within thirty days of the decision.
Section 3 establishes the effective date of the act.
 
JUSTIFICATION:
Current laws do not obligate cooperative boards to disclose reasons for
denying share purchase applications, often leaving rejected applicants
without a clear understanding of the decision, which can sometimes stem
from discrimination or personal biases. By requiring boards to provide
reasons, this bill promotes accountability and prevents arbitrary or
discriminatory rejections. The need for such transparency was high-
lighted in the case of 40 West 67th Street v. Pullman, which underscored
the unique legal position of cooperative corporations and their ability
to act without the same procedural checks required in traditional land-
lord-tenant relationships.
Enhancing transparency in cooperative share transactions ensures fair
treatment of potential buyers and supports a more inclusive housing
market. This measure could lead to a decrease in discrimination and
increase the diversity of cooperative communities.
 
PRIOR LEGISLATIVE HISTORY:
2024: S9426 (Kavanagh) - REFERRED TO HOUSING, CONSTRUCTION AND COMMUNITY
DEVELOPMENT /A1064 (Bichotte Hermelyn) - referred to housing
2023: A1064 (Bichotte Hermelyn) - referred to housing
2022: A7773 (Bichotte Hermelyn) - referred to housing
2021: A7773 (Bichotte Hermelyn) - referred to housing
2020: A7512 (Bichotte Hermelyn) - referred to housing
2019: A7773 (Bichotte Hermelyn) - referred to housing
 
FISCAL IMPLICATIONS:
None.
 
EFFECTIVE DATE:
This act shall take effect immediately.