We have previously written about the cooperative board approval process. So long as the purchaser was not rejected due to illegal discriminatory reasons, a rejection is considered to be legally tenable. Further, the reasons for the declination need not be disclosed. Applicants are legally protected from discrimination if the reason that they are rejected is due to characteristics such as their race, religion, sexual orientation and the like.
Dunne’s proposed purchase was purportedly an all cash purchase, with no bank loan. Her board application would have included proof of funds and other financial details. Ironically enough, some boards prefer to approve a purchaser who is using a bank loan for the purchase, since the lender has professionally evaluated the creditworthiness of the proposed purchaser. Dunne’s livelihood as a social media influencer may have been seen as without substance and fleeting by the board. Should she “go out of style”, her income may become depleted and her ability to maintain financial obligations to the building may not be met in the future.
Further, a cooperative board is clearly within its rights to decline an applicant that it simply finds distasteful or would be perceived as a bad neighbor. Dunne could perform as many cartwheels as she likes to try to impress the board, but it is undeniable that the party girl seeks publicity and attention and shares her daily activities with millions of followers. The board was rightfully concerned that she would constantly post about her life in the building, invade the privacy of fellow residents, and scare residents when Pirates visit. Her oversharing of her personal life online , perceived sense of entitlement (by hiring an interior designer before being approved) and arrogance may have been off-putting. She reinforced the board’s concerns by posting the disappointing news online.
Cooperative boards should lean in on legal advice from their attorneys. If an applicant does not appear appealing to a board based on the application, due to financial or other reasons, it is best to decline the applicant without an interview. That way, the board may not know if the proposed purchaser happens to be a member of a protected class should an in-person meeting never occur.
Once Ms. Dunne’s transaction went through all of the possible twists and turns, it became clear that a closing would not occur. The seller’s attorney was required to dismount and complete the process of breaking up the transaction so that the apartment could be offered to another slugger.
So that a potential transaction can be successfully executed and not subject to another flip-flop, public figures will be more likely to hit a home run if they purchase a condominium rather than a cooperative apartment. That way, the proposed purchaser will not strike out for seemingly arbitrary reasons related to her fame and will proceed to closing once the condominium board waives its right of first refusal to purchase the unit under the same terms.
Our attorneys are available to discuss the legal issues raised by this post.