Despite former Mayor Adams’ veto of Intro. 1120-B, New York City’s Council recently voted to override that decision and add a new chapter to the City’s Administrative Code: “Sales of Cooperative Apartments.” Enacted as L.L. 2026/058 and known as the Cooperative Application Timeline Law, this well-intended addition to the Code establishes strict deadlines for Cooperative Boards within the Five Boroughs by which they must acknowledge applications and approve or deny applications for the purchase and sale of apartments in their buildings. The new law also creates civil penalties upon a Board’s failure to adhere to these timelines. From a practical perspective, New York City Boards of Directors, if not already well-organized with a standard application and set of policies and procedures for sales within their building, will now need to invest extra time and effort to minimize exposure to fines and possibly increased litigation. 

The new law takes effect in July, and it will govern purchase applications made on or after July 28, 2026.

Legislative Intent

The Law’s sponsor cites a lack of structure in the purchasing process that leaves buyers in a state of uncertainty, creates confusion for sellers and brokers, and exposes Boards to claims of selective enforcement, bias, and discrimination. The law’s sponsor further indicates that the system, prior to passage of the law, provides opportunities for bad actors to discriminate against purchasers without reprieve. (New York City Council, Committee on Housing and Buildings, Hearing, December 2, 2025.)
Whether the new law will actually reduce discrimination claims remains to be seen. What is clear, though, is that Boards and their managing agents should determine how they will process requests and applications to ensure compliance with the new law.

The Rights of Boards to Determine Transfers

Many, if not most, proprietary leases governing relationships between shareholders and cooperatives state that consent of transfers may be withheld for “any reason and no reason,”  a decision that is broadly protected by the business judgment rule as long as the Board makes its determination for legitimate corporate purposes absent discrimination, bad faith, self-dealing, or fraud. (See, Fletcher v. Dakota, Inc., 99 AD3d 43 [1st Dept 2012].)  

For example, a purchaser’s apparent inability to afford monthly carrying charges is a legitimate reason to deny a purchase application. (Gleckel v. 49 W. 12 Tenants Corp., 52 AD3d 469 [2d Dept 2008].)  Other protected grounds for rejecting an application include celebrity status of a purchaser (e.g., Yer Out! Bid to Buy Babe Ruth's Apartment Nixed Over Instagram Post, Habitat Magazine, July 2025) and a sales price that is too low considering the market at the time of the offer (Singh v. Turtle Bay Towers Corp., 74 AD3d 568 [1st Dept 2010].)

However, Courts have made it clear that the proprietary lease provision seemingly providing this broad discretion to withhold consent is “not without limits.” (E.g., Graham v. 420 E. 72nd Tenants Corp., 2020 NY Slip Op 30880[U], *1 [Sup Ct, NY County 2020].)   There are, of course, the federal, state, and local anti-discrimination laws that protect prospective purchasers across the City. There is also decisional law that is instructive. For example, animus against the selling shareholder cannot dictate a Board’s decision. (Smolinsky v. 46 Rampasture Owners, 230 AD2d 620 [1st Dept 1996].)  As observed by the Courts, this animus – and according to lawmakers, discrimination – presents itself in the form of extensive delays in the review, interview, and approval processes.

What the Timeline Law Now Requires

Two notable requirements of the Cooperative Application Timeline Law are the short timeframes now permitted when processing a purchase application. 

First, within 15 days of receipt, the Board will need to either accept the purchase application as submitted or notify the purchaser that additional information is needed. If no notice of deficiency is provided within those 15 days, the application is deemed complete. A Board’s permitted requests for clarification or for additional documents appears to extend this 15-day rule, but to what extent will be determined when parties begin to litigate the provision.

Similarly, the Board has 45 days from the date the application is complete or deemed complete to finalize the review process and provide a response to the applicant. Here, however – and despite that prior versions of the bill including an auto-consent mechanism – there is no provision in the new law that deems an application “approved” for failure to adhere to the 45-day rule. Instead, civil penalties will be imposed: $1,000 for a first violation, $1,500 for a second violation, and $2,000 for a third or subsequent violation.

The law provides several extension provisions to the 45-day rule. Boards are entitled to one 14-day extension as of right, and the applicant may consent to additional extensions of time. Just as with the 15-day period to review for completeness, the Board may request "any additional materials for clarification or completion of previously submitted materials” during the 45-day review period. The Board may also take advantage of the “summer recess” period, which provides a two-month hiatus if the Board has formally adopted such a policy.

What the Timeline Law Does Not Require

The new Cooperative Application Timeline Law does not require a Board to state the reason for a denial. Prior versions of the law also did not impose such a mandate. The so-dubbed Reason Law, Intro-407, is a separate bill that the City Council did not submit for a vote. As written, that proposed law sought to compel a certified statement by an officer of the Cooperative as to why the purchaser was denied. 

The new law is silent on interviews and how the interview process correlates with the time restrictions. Boards should be prepared to organize and conduct interviews as part of the 45-day requirement.

The new law is also silent on sublet procedures. This new chapter to the City’s Administrative Code is entitled "Sales of Cooperative Apartments," which defines an "Application" as one "that a cooperative corporation requires to be submitted in connection with a sale requiring board approval." How, if at all, this new Law will be expanded by the City Council or the courts to include subletting remains to be seen.

It is also not clear how the Department of Housing Preservation and Development will adjudicate claims on violations. 

Best Practices for Co-op Boards Going Forward

The new Cooperative Application Timeline Law will no doubt have Boards and management companies on their toes – procedurally and substantively.

Boards should be reviewing their purchase applications and procedures to determine if they comport with this law and others, and to avoid claims of discrimination and selective enforcement. The law mandates Cooperatives to “maintain an application and transfer requirements for any sale,” and defines an application as “the standardized written application package, including all forms, authorizations, questionnaires, and supporting documents, that a cooperative corporation requires to be submitted in connection with a sale requiring board approval.”  Taken together, Boards without one already would be prudent in creating a policy of purchase requirements. For example, if a Board expects a purchaser to have two years of carrying costs in liquid assets after closing, that requirement should be part of the policy. Co-purchasing or guarantor policies should also be stated in the policy. Other policies should be considered and incorporated into the application, such as sublet and down-payment policies. 

For those Boards with a current application and set of procedures, Boards should consider updates to reflect a more clear and concise set of questions, supporting documents, reference letters, and other material needed in order to make an informed decision as to the applicant. The new law speaks mostly of timelines and failure to adhere to them, leaving Boards to continue to consider how their applications, internal procedures, and external communications with sellers and purchasers comport with anti-discrimination laws.

Certain considerations should also be given to policies and procedures applicable to purchases by current shareholders seeking to purchase an adjoining unit to create a combined unit. Boards should consider a standard questionnaire seeking as much information as possible about the likely alterations that will be requested. For example, will the shareholder request to enclose a portion of the hallway or other common area for their use? While the City Council may not have considered this nuanced event, such a purchase clearly falls within the ambit of the new Cooperative Application Timeline Law.

All Boards should consider requiring email addresses from the purchaser and seller, together with a signed acknowledgment that the parties will accept notices to those email addresses. This is significant since the new law requires certain notices to be provided by email. Those notices include the 15-day notice of acknowledgment, the 45-day decision notice, as well as Board requests for additional time or information.

Boards should also remain cognizant of how denials or conditional approvals are delivered so as to withstand scrutiny under City, State, and Federal housing discrimination laws. Best practice is to avoid interviews if the Board made its final decision to reject the application based on information in the application and supporting documentation that shows that the purchaser does not qualify financially for the unit. 

Lastly, the new law considers that a Board will either approve or deny an application, or perhaps offer conditional approvals, and expressly refers to a Board’s right to withhold any of the aforementioned, subject to lawful conditions. If Boards require background checks, it should ensure compliance with the Fair Chance for Housing Act. The Fair Chance for Housing Act, which took effect in 2025, restricts a Cooperative from asking an applicant about or running a background check for criminal conviction history until a tenant or purchaser is otherwise approved or conditionally approved, subject to receipt of a favorable report. Individuals with felony convictions older than 5 years and misdemeanor convictions older than 3 years are a protected class pursuant to the City’s discrimination laws. (Sex offense convictions requiring registration do not have time restrictions.)  

Exemptions

The Cooperative Application Timeline Law does not apply to all types of Cooperatives. Those with fewer than 10 dwelling units, HDFC cooperatives, and other cooperative housing, subject to the approval of a governmental housing agency, such as Mitchell-Lama developments, are exempt from the law.

Other Similar Laws and Bills

This new law governing a Cooperative’s response to purchase applications is not unique. Suffolk County enacted its Cooperative Law in 2009. There, Boards must adhere to a timeline and provide the reason for a denial. Westchester County’s law goes further, mandating the use of a County-provided form letter of rejection with a list of reasons for rejection to be used by the Cooperative, and further requires that the Board notify the Westchester County Human Rights Commission of the denial with the rejected applicant’s contact information. Since at least 2017, the New York Legislature has unsuccessfully sought to enact a law containing provisions found in the Cooperative Application Timeline Law. (See, New York State Senate, Senate Bill S1452, Versions Introduced in Other Legislative Sessions.)  As of now, the most recent Senate and Assembly versions of the State Bill remain in their respective committees.

Conclusion

Boards should begin considering this law well before it takes effect, with special consideration given to adopting a summer recess policy.