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I think I was turned down by a co-op based on my race. What do I do?

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Question:

I think I was turned down by a co-op board because of my race. What are my options?

Answer:

If you think you have a discrimination case on your hands, the key to success will be proving that the board rejected you for discriminatory reasons, says Steven Wagner, a co-op and condo attorney with Wagner Berkow LLP and a longtime board member of his own 420-unit Manhattan co-op. 

"There's a three-step process that involves shifting of the burden of proof," Wagner explains. "The level of proof to start the case is very low. All you have to do is say, 'I'm a member of a protected class and they turned me down.' Then the burden shifts to the co-op to show that they turned you down based on a non-discriminatory reason, such as inadequate finances."

After the co-op responds, it's then on you (and your attorney) to prove that the co-op or condo's given reason is a pretext, or an excuse, and that they did indeed discriminate against you.  

"For instance," says Wagner, "if I said 'the board rejected me because I'm Jewish,' I could point to the fact that there are no Jewish people in the entire 3,000-apartment complex, or that they're all in one building."

In one instance, Wagner cites an African American client who was initially rejected from a West Village co-op in spite of excellent finances and glowing references. "One of his references mentioned that he had received an NAACP award for something, and later, the co-op board president saw him when he came to the building with his decorator to look at the apartment," says Wagner. "So they had seen his finances, and heard from his references that he was a great guy, but when it became unmistakably clear that he was African American, they turned him down without an interview." On top of that, Wagner says, after rejecting his application, the board still sent it to an accountant for review of his finances, creating the appearance of scrambling for a legitimate excuse for his rejection.

Additionally, there were no African American residents in the building, so between that, their 11th-hour dig into his finances, and the fact that they rejected the buyer after learning his race, says Wagner, "Even if they weren't discriminating, they handled the situation so poorly that I could prove that they did." Ultimately, the co-op board reconsidered the buyer's application, welcomed him into the building, and covered his legal fees. "We demonstrated that their reasons were pretext, and that was enough—we didn't have to go to court," Wagner says.

On the flip side, Wagner cites a Mitchell-Lama building that faced accusations from a buyer who claimed that he'd been rejected based on race, when in fact he'd been turned down due to poor finances. "This was an incredibly diverse building, and the board itself was a mix of Black, White, Hispanic, and Asian shareholders," says Wagner. "But when the buyer was rejected without an interview, he filed a complaint with the Human Rights Commission alleging that he'd been turned down based on race." 

"I had to go down to the Human Rights Commission and explain to them that yes, he was a person of color, and yes, he had been rejected, but that he genuinely didn't qualify financially," says Wagner. "We demonstrated that there were bonafide reasons for rejecting him, and that there was no history or evidence to suggest that there had been a history of racial discrimination in the building, based on the diversity of its residents." 

Bottom line: while courts do recognize that discrimination can be very hard to prove, says Wagner, "There has to be some evidence. Something more than just 'I had a bad feeling.'"


New York City real estate attorney Steven Wagner is a founding partner of Wagner | Berkow with more than 30 years of experience representing numerous co-ops, condos, and individual owners and shareholders.  To submit a question for this column, click here. To ask about a legal consultation, send an email or call 646-791-2083.

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