Cohousing-L Mailing List: Re: reserve investment and taxes

[Sharon Villines (sharon]

> On Apr 18, 2026, at 1:02 PM, Mabel Liang <mabel [at] twomeeps.com> wrote:
> 
> I think the properties in NYC that don't allow mortgages or restrict them are 
> probably mostly _co-ops_, not condos.  There everyone owns shares of the 
> building, and the collectively are responsible for the payment of the 
> mortgage on the entire building.  So they get to scrutinize the buyers a lot 
> more.  I believe I heard that a co-op in NYC refused either Bill Clinton or 
> Richard Nixon, just from not wanting the attention the building would get 
> with a former president living there.

They are mostly co-ops because coops don’t have to explain why someone is 
refused — the sale is the sale of shares in a private corporation. Although in 
one instance I heard about a coop was taken to court over refusing gay men. 
Over several years, the group documented each offer to purchase and who ended 
up moving in. So they had a history that showed a pattern of discrimination 
based on sexual orientation and they won. As I remember it was one of the 
Beekman/Sutton Place buildings

I didn’t follow the case after that — what the coop did. I don’t think they 
could have been commanded to sell to any specific person but perhaps to show 
that they had broken the pattern over the next five years. Of course the way 
around that is not publishing sales publically. Sales only to current residents 
or friends/family of current residents. 

Condos can also have serious restrictions, but the restrictions are open to 
challenge. The restrictions just have to avoid discriminating against any of 
the protected classes in the housing laws. The reason condos have gotten the 
reputation of not being able to put restrictions on sales is the they are most 
often built by people whose only purpose is to make a lot of money. They are 
more than happy to sell to a Clinton or Nixon. Or a super wealthy rock star. 
The bylaws are binding and must be shown to the buyer before purchase. 

From Perplexity:

> Condominiums (condos) can impose various restrictions on unit sales through 
> their governing documents like bylaws, declarations, and CC&Rs, but these 
> must generally be reasonable to avoid violating laws against restraints on 
> alienation. These controls help maintain community standards, financial 
> stability, and owner occupancy levels.
> 
> Key Restrictions
>     • Right of First Refusal (ROFR): The condo board or adjacent owners get 
> the first chance to buy the unit on the same terms as a third-party offer, 
> often within 15-20 days of notice.
>     • Buyer Approval: Boards may review and approve buyers based on 
> financials, background, or suitability, similar to cooperatives but less 
> stringent.
>     • Transfer Fees: Sellers pay fees upon ownership transfer, which must be 
> disclosed to buyers.
>     • Signage and Showing Limits: Rules cap "For Sale" sign sizes, ban 
> lockboxes, or restrict agent access to preserve aesthetics.
> 
> Usage Limits
> Restrictions often tie sales to post-purchase use:
>     • Caps on investor buyers or rental conversions to preserve 
> owner-occupancy.
>     • Bans or limits on short-term rentals (e.g., Airbnb), affecting buyer 
> appeal.
>     • Unit-specific rules, like prohibiting sales of studios for certain uses 
> (e.g., storage only).
> Legal Limits
> Courts uphold reasonable restrictions but strike down overly burdensome ones, 
> such as those mimicking full co-op veto power. In some states, supermajority 
> votes can force sales for deconversion, but that's rare. Always check local 
> laws, as rules vary by jurisdiction.

The major difference is that the sale of a condo is “public” and this open to 
legal challenge to prove a sales process was discriminatory.

Sharon
----
Sharon Villines
Riderwood Village, Silver Spring MD
Founding member and 25 year resident in Takoma Village, Washington DC