Mandatory Co-Op Rejection Transparency - NYS Senate Bill S2874

While Local Law 58 of 2026 sets strict 45-day decision deadlines for co-op applications, LL58 stops short of forcing boards to disclose why an applicant was turned down. State Bill S2874 closes that gap by requiring co-op boards statewide to provide a written, detailed explanation of specific reasons within 15 days of rejecting a prospective buyer. Boards would lose the historical protection of unconditional rejection granted by traditional proprietary leases. Every rejection would generate a formal written record, forcing board members to meticulously document financial or operational red flags to withstand legal scrutiny.

Pros & Cons

Housing advocates and civil rights organizations argue that allowing boards absolute secrecy when it comes to accepting or rejecting prospective buyers can easily mask systemic discrimination based on race, income source, family status, or sexual orientation. Backers of S2874 also note that unexplained rejections harm sellers, depress property values, and scare off qualified buyers who fear losing contract deposits without recourse.

On the other hand, industry groups like the Council of New York Cooperatives & Condominiums (CNYC) warn that forcing boards to state reasons for rejecting buyers will trigger a flood of unsubstantiated lawsuits from disgruntled applicants.

Critics of the bill also argue that rather than face personal liability and legal depositions over routine discretionary decisions made in an unpaid, volunteer capacity, board members will resign, and more shareholders and unit owners will refuse to serve, further compounding the already difficult challenge of filling board seats.

Mandatory Capital Reserve Studies - NYS Assembly Bill A8945/S8945

Bill A8945 mandates that every condo and co-op association in New York with over $25,000 in capital assets complete a professional 30-year capital reserve study. Studies must be prepared or overseen by a licensed engineer, architect, or credentialed Reserve Specialist, updated annually, and filed with the State Comptroller within 60 days of completion. Associations that have not completed a study in the last five years must commission one within one year of the bill's passage. 

Crucially, the bill removes board discretion regarding underfunded reserves. If curing a reserve deficit requires an assessment increase of under 10%, the board must fully fund it within three fiscal years; If curing the deficit requires an increase of over 10%, the board has 10 fiscal years to reach full funding via mandatory, equal annual line-item increases.

Pros & Cons

Proponents of the bill point to tragedies such as the infamous Surfside condo collapse in 2021 and the nation’s aging regional housing stock in general, arguing that forced reserve planning helps prevent the structural degradation that can lead to catastrophic losses of both property and human life. Backers also argue that standardized 30-year funding plans align with Fannie Mae/Freddie Mac underwriting requirements, protecting buyers and lenders alike by ensuring that buildings remain insurable and buyers can secure conventional mortgages.

By contrast, opponents of A8945/S8945 warn that older or mid-tier buildings facing sudden, mandatory 10-year line-item increases will be forced to steeply increase monthly dues and/or levy hefty special assessments on fixed-income residents already stretched thin by inflation and health care costs. They also argue that hiring credentialed engineers for complex urban high-rises can cost tens of thousands of dollars, adding an ongoing financial and administrative burden to smaller associations.

Be Prepared

As both S2874 and A8945 move through committee review, co-op and condo boards should work closely with their management and legal counsel to be ready if/when the bills pass. That means reviewing existing co-op applications to ensure that your board’s administrative records can support articulated decisions if rejection transparency becomes law—and if you’ve deferred any long-term capital projects, now’s the time to commission a professional reserve study so you can plan ahead and avoid facing compressed, mandatory funding timelines if state mandates take effect.