|
NYCooperative.com |
| HOME | ARTICLE LISTING |
Navigating the Bias Minefield
By JAY ROMANO
CHRISTIE BUNNELL, a board member of a six-unit co-op in Chelsea,
became concerned recently when an apartment in her building
was listed for sale. Since all the residents of the building are
middle-aged adults, she said, and since the building has ''acoustically
challenged walls,'' the shareholders wanted a purchaser who was
''childless and middle-aged'' like them. But while friends in
other co-ops advised Ms. Bunnell that co-op boards can reject
a purchaser ''for any reason, as long as the reason isn't stated,''
her fellow board members garnered different advice.
''Some members feel that to reject an applicant could expose us
to a lawsuit for discrimination,'' she said. ''One member even
said we could be held personally liable. It seems like we're in
a whole new ball game.''
In fact, co-op lawyers say, the laws against discrimination
on the federal, state and local levels, along with several court
cases that have applied those laws, have resulted in a sea change
in co-op admissions practices. Among the changes, lawyers and
brokers say, are a hesitancy on the part of boards to reject applicants
they know belong to protected groups, and an increasing number
of rejections based on stricter financial requirements before
the board even meets or interviews the applicant.
''We now get a telephone call before any one of our client boards
rejects anyone,'' said Stuart M. Saft, a Manhattan co-op lawyer
who is also chairman of the Council of New York Cooperatives
and Condominiums.
Mr. Saft explained that until fairly recently, the prevailing
belief was that co-op boards could reject an applicant ''for any
reason or for no reason at all'' -- as long as the ''any reason''
didn't include unlawful discrimination.
Now, however, he said, the operative rule seems to be that boards
that reject applicants for any reason other than one that can
be clearly articulated -- generally, one that relates to the applicant's
finances -- could easily find themselves on the wrong end of an
expensive and time-consuming lawsuit. And such a lawsuit, Mr.
Saft said, could indeed result in members being held personally
liable for damages.
''One reason this is happening is because a lot of boards were
going too far and rejecting too many applicants,'' Mr. Saft said,
referring to the perception that co-op boards, particularly in
Manhattan, were becoming increasingly fussy about whom they would
accept.
''Now the pendulum is swinging too far in the other direction,''
Mr. Saft said. ''And we've been warning boards for years that
this would be the end result.''
While antidiscrimination laws relating to housing have been on
the books for decades -- the New York State Human Rights Law,
for example, was adopted in the mid-1940's -- co-op boards have
generally been insulated from claims of discrimination by virtue
of the fact that they traditionally -- and legally, lawyers say
-- decline to provide a rejected applicant with the reason for
the rejection.
The sense of security provided by that practice, however, was
turned on its head in May 1997 when a Manhattan jury in a federal
race-discrimination case awarded $640,000 in damages to an African-American
man and his wife. The jury found that the couple's application
to sublet an apartment in a co-op was rejected by the co-op's
board for reasons that the jury believed were racial.
The case, filed under the Federal Fair Housing Act by Gregory
and Shannon Broome against the Beekman Hill House Apartment
Corporation, a co-op at 425 East 51st Street, stunned co-op boards
and their lawyers. The shock was not just because the award was
the largest housing discrimination award anyone could remember,
or because the case shattered the notion that a board's admissions
decisions were virtually bulletproof. The stunning part of the
decision was that several board members were held personally liable
for a significant portion of the damages, money that ultimately
came out of the board members' own pockets.
Since then, co-op lawyers say, boards have become increasingly
skittish about skirting the boundaries of antidiscrimination laws
when making decisions about sublets and admissions.
''This is an issue that is constantly being discussed between
co-op boards and their lawyers,'' said Arthur Gussaroff, a Manhattan
co-op lawyer. ''The fact is, fortunately or unfortunately, when
you put together all of the federal, state and municipal antidiscrimination
laws, you end up with a whole bunch of categories of people who
are protected from discrimination in housing.'' Mr. Gussaroff
explained that taking all three levels of antidiscrimination laws
into consideration, it is now illegal to discriminate against
a prospective purchaser -- or renter -- based on the individual's
race, creed, color, national origin, physical or mental disability,
gender, age, sexual orientation, marital status, citizenship,
occupation, and whether children will, or may in the future, reside
in the apartment.
In fact, Mr. Gussaroff said, since everyone alive is arguably
a member of several protected categories, boards have to be extremely
careful about what questions they ask an applicant and how those
questions are asked.
''You can ask applicants if they are 18 or older, but you can't
ask how old they are,'' he said. ''You can't even ask the applicant
to submit any document that reveals the applicant's age -- something
I consider a little nutty.''
In addition, Mr. Gussaroff said, while boards can ask how many
people will be residing in an apartment, they should not
ask the ages of the occupants or whether some are going to be
children.
''You can ask about criminal convictions, but you can't ask about
arrests,'' he said. ''And you can ask a convicted applicant about
drug use, but you better be careful because drug use can be regarded
as a disability. And here's a good one: you can't ask a person
if he's a citizen, or even if he has a legal right to remain permanently
in the United States, because that can be used as the basis for
a claim for discrimination based on national origin.''
MR. GUSSAROFF said that the only information a board can inquire
about with confidence -- both on the written application and during
a board interview -- relates to the individual's financial status,
creditworthiness and history as a tenant or shareholder.
''Questions about an applicant's financial condition are safe,''
he said. ''But ask one stupid question about something you shouldn't
ask about, and it will blow you right out of the water.''
Even boards that ask all the right questions, Mr. Gussaroff said,
are vulnerable to charges of discrimination.
''It seems that every time a board turns somebody down, if the
person who was rejected is a member of a protected class, there's
a good chance the co-op is going to end up getting hit with a
discrimination complaint,'' he said. ''And the minute someone
files a discrimination complaint, the burden shifts to the board
to prove that the reason the person was turned down was not discriminatory.''
Edward T. Braverman, a Manhattan co-op lawyer, said that because
of the difficulty involved in establishing proof of discrimination
-- which essentially involves proving what is in someone else's
mind -- state and federal courts have adopted a rule that reduces
the burden on the part of the person bringing the suit. He explained
that under what is known as the ''discriminatory effect'' standard,
a complainant need only show that he is a member of a protected
class, that he applied for and was qualified to rent or buy the
housing, that he was denied the opportunity to do so, and that
the housing remained available thereafter.
''A person is considered qualified if he is financially able to
rent or buy the unit,'' Mr. Braverman said, adding that once that
hurdle is surmounted, the burden shifts to the co-op, or the rental
landlord, to prove that the reason for the rejection was not discriminatory.
''It should be indelibly noted by every board member that subjective
explanations will be viewed by the courts with considerable skepticism,''
he said, explaining that rejecting an applicant for subjective
reasons such as ''being confrontational'' or ''being litigious''
could be deemed a pretext for discrimination, thereby exposing
the board and individual members to liability.
Arthur I. Weinstein, a lawyer who is vice president of the Council
of New York Cooperatives and Condominiums, said that a
similar ''shifting of the burden of proof'' occurs with complaints
filed with the New York City Commission on Human Rights.
Mr. Weinstein added that since New York City's human rights law
affords even broader protection than its state and federal counterparts
-- prohibiting, for example, discrimination based on an individual's
occupation -- and since an individual does not need to hire a
lawyer to file such a complaint, the possibility of being subject
to such complaints presents the most immediate concern to boards
in the city.
And while the commission is required to investigate all complaints
it receives before determining whether ''probable cause'' exists
for the filing of a formal complaint, Mr. Weinstein said, there
is a perception among co-op lawyers that the commission finds
probable cause even in cases that do not warrant such a finding.
''Some of the findings of probable cause have been absurd,'' Mr.
Weinstein said, citing as an example a case he was involved with
in which the New York City Commission on Human Rights found that
probable cause existed in the case of an individual who believed
he was rejected because of his national origin.
''The turndown was clearly financial in nature,'' Mr. Weinstein
said, explaining that the applicant -- who intended to purchase
the apartment for cash -- could produce no financial records
or proof of employment documenting his ability to pay monthly
maintenance charges. Notwithstanding that, Mr. Weinstein said,
the commission found that a casual remark made by one of the board
members constituted probable cause for the issuance of the complaint.
The remark?
''She said, 'What a lovely accent you have,' '' Mr. Weinstein
said. '' 'Is it Scottish or Irish?' ''
And while the complaint was ultimately dismissed, he said, the
encounter cost the co-op several thousand dollars in legal expenses.
''The lesson here,'' he said, ''is that every interaction between
a board and an applicant is potentially dangerous.''
Randolph Wills, deputy commissioner of the law enforcement bureau
of the New York City Commission on Human Rights, acknowledged
that under current law, many individuals are covered under the
umbrella of protection provided by antidiscrimination laws. He
added, however, that the commission finds probable cause for only
a small percentage of the complaints it receives.
FOR example, he said, during the 12-month period between July
1, 1998, and June 30, 1999, the commission received a total of
160 housing discrimination complaints. Of that number, he said,
the commission found that probable cause existed in only 8 percent
of the complaints that were filed. The remaining cases, he said,
were either dismissed, withdrawn or settled as a result of mediation
conducted by the commission.
''There's a delicate balancing act that goes along with making
these kinds of determinations,'' Mr. Wills said. ''And rejecting
an applicant who happens to be in a protected class could very
well result in a lawsuit.''
Mr. Wills explained that there are two types of discrimination:
lawful discrimination and unlawful discrimination. A clear example
of lawful discrimination, he said, might be a situation in which
a co-op board rejects an applicant who does not meet the building's
financial requirements. A less-clear example, he said, might be
a board that rejects applicants that the board believes will make
excessive noise.
In such a case, he said, it might be lawful for a board to discriminate
against a drummer who insists that he or she must practice in
the apartment for several hours a day -- even though it
would be unlawful to discriminate against a person solely because
of occupation.
At the same time, Mr. Wills said, it would be unlawful for a co-op
board to assume that just because an applicant has children, those
children will be a source of excessive noise in the building.
''Discrimination is all about making choices,'' he said. ''And
the wrong choices are what society has deemed to be unlawful.''
Notwithstanding the relatively small number of complaints that
resulted in formal charges being filed by the city's Human Rights
Commission, co-op lawyers and real estate agents said that the
mere possibility that a co-op board could be named in such a complaint
has resulted in changes in the way boards handle admissions requests.
''There is absolute paranoia on the part of some boards in the
city,'' said Mr. Weinstein, the lawyer. ''And ironically, it may
result in more turndowns by boards rather than less.''
Mr. Weinstein explained that since boards are precluded from discriminating
against applicants on the basis of age, there is a likelihood
that some boards will compensate for their inability to make informed
decisions regarding whether an individual will be a responsible
or troublesome neighbor by adopting more rigid objective criteria.
For example, he said, it is possible that boards that would rather
not have young college students living in an apartment
purchased by the students' parents could impose a requirement
that every shareholder must be a full-time occupant of the apartment
and a financially responsible individual in his or her own right.
Such a requirement, he said, would permit a board to reject an
applicant in cases where a parent is purchasing an apartment
for a college-age child, where a child is purchasing an apartment
for an elderly parent, and when anyone is purchasing an apartment
for use as a pied-a-terre.
Mr. Saft of the Council of New York Cooperatives and Condominiums
said that the ''paranoia'' referred to by Mr. Weinstein could
also result in some boards accepting applicants with borderline
financials if the board learns that the applicant is a member
of a protected class.
In fact, he said, the likelihood of that happening increases with
the filing of a complaint with the Human Rights Commission, because
the prospect of being put in the position of having to prove that
a board is not discriminating is itself distasteful.
''Boards will bend over backward to avoid a confrontation with
the commission,'' he said.
Frederick W. Peters, president of Ashforth Warburg Associates,
a Manhattan brokerage company, said he had noticed another change
in co-op admissions practices in the last couple of years. ''It's
certainly true that we've seen an increase in pre-interview rejections,''
Mr. Peters said. ''And an increase in rejections at any time makes
our job harder.''
Mr. Peters acknowledged that boards also appear to be increasingly
skittish about rejecting an applicant who is a member of a protected
class when the board is aware of such information.
''Boards are clearly pretty sensitive now about being sued,''
he said. ''So any time I have a member of a protected group come
in as a customer, I'm happy.''
HOWARD SCHECHTER, a Manhattan lawyer who conducts seminars for
board members on the issue of discrimination, said that while
boards still have the ability to reject ''unsuitable'' applicants,
they must make sure that their definition of what is considered
suitable is not really a concealed basis for engaging in unlawful
discrimination.
''From a practical perspective, if a rejected applicant asserts
a claim of discrimination, the board is probably going to have
to articulate the reason for turning him down,'' Mr. Schechter
said. ''That's why I advise boards to deal with objective characteristics
-- like finances -- rather than with subjective feelings.''
Mr. Gussaroff, who is the lawyer for the Coordinating Council
of Cooperatives, an organization of Mitchell-Lama and other
government-assisted co-ops, said that he actually provides training
to boards he represents, to ensure that they will make as few
mistakes as possible.
Bruce Cholst, a Manhattan co-op lawyer, said that while it is
impossible to prevent a rejected applicant from bringing a discrimination
lawsuit, there are steps that can be taken by boards to discourage
such suits.
For example, Mr. Cholst said, boards should conduct extensive
background screening of an applicant before interviewing the person.
Such pre-interview screening, he said, should include inquiries
about the applicant's finances, creditworthiness and history as
a tenant or shareholder -- including investigations into whether
the person has a propensity for violence, for flouting the rules,
or has a history of initiating vexatious litigation. To the extent
possible and legal, Mr. Cholst said, a criminal background check
should also be conducted.
If the screening and investigation produce legitimate reasons
for rejecting the applicant, he said, the applicant should be
rejected before an interview is even conducted.
''It's much more difficult for a person to prove discriminatory
conduct when he has never met the board members and they have
never met him,'' Mr. Cholst said.