Faced with the increasing cost of housing, many people see housing cooperatives as an alternative to traditional home ownership, and as housing cooperatives see an increase in membership applications, they need to ensure that these applications follow state and federal guidelines. Having attorneys who specialize in housing cooperatives draft membership applications may help cooperatives avoid potential legal issues down the road. Although cooperatives may have some differences in their membership applications, they do share some commonalities.
Each Cooperative has or should have a screening policy in place for all individuals who wish to reside in the Cooperative. It is vital that each Cooperative comply with all fair housing laws and not discriminate against a potential applicant during this process. As Cooperatives are uniquely created, each Cooperative’s qualifications for membership will very. Typically the qualification requirements include, but are not limited to, income requirements, family size requirements, and age requirements. It is vital to remember that the membership selection criteria cannot automatically deny membership to a particular group or category of otherwise eligible applicants.
It is critical that the application for Membership itself cannot be discriminatory. The application must conform to all federal and state laws and statutes and if the Cooperative is under HUD, it must also comply with all HUD policies, procures and guidelines. The application must be completed by the applicant who is over the age of 18. The application packet typically includes a release for the applicant to sign for the compilation and review of all information forms to verify credit and criminal history for all applicants and proposed occupants over the age of 18.Credit History
The Cooperative must look at the following (including, but not limited to:
- Valid photo identification, such as a current driver’s license, passport, and/or state issued photo identification card.
- Prior residency/tenancy history
- If no employment, look to liquidity
- CreditCriminal History
Take into consideration nay mitigating factors from the applicant. Applicant is permitted to submit his/her own documentation regarding any criminal history and mitigating circumstances.
If a denial of admission is proposed as a result of negative criminal history of either the applicant or an occupant of applicant’s household, the management agent or Board must immediately notify the Cooperative’s attorney for purposes of conducting a legal review on the basis of the proposed denial. The Cooperative’s attorney’s role at this stage is to provide a recommendation to the Cooperative as to whether the denial is legally sufficient under the Fair Housing Act. If a denial is legally sufficient, then the Cooperative must send the applicant notice of the proposed adverse action and must allow the applicant an opportunity to dispute the accuracy of the record within 10 days. The notice must contain the name, address, and the telephone number of the agency that composed the criminal record report. The notice must also state that the applicant has a right to a free copy of the criminal record report. If the applicant does not dispute the accuracy of the denial or the criminal record within the 10 day period, then the Cooperative can send a written notice of ineligibility to the applicant stating the reasons for denial. The applicant does have the right to exercise his/her appeal rights after the denial of ineligibility is sent to him/her. Remember, it is vital to include your Cooperative Attorney during this process so that the Cooperative does not lend itself to any Fair Housing lawsuits.
If denial of the applicant is based on the criminal acts of an occupant member of applicant’s household, the applicant must also be advised of his/her right to remove the individual from the application.
Can’t be determined solely based upon whether the applicant has an arrest record.Interview selection process
Typically Board meets with the applicant for an interview, management agent is also in attendance, sometimes the Cooperative Attorney.Pitfalls to avoid
Not having cooperative attorney involved.
Potential fair housing/discrimination litigation if Cooperative does not have a strict membership screening process in place that adheres to federal and state laws. Cooperative must always encompass a non-discriminatory interest in protecting the peaceful possession of the Members and their families that make up the Cooperative.