Living clubs

January 30, 2006 | Co-ops, Discrimination

Where is it legal to discriminate against anyone on the basis of wealth, income, gender, marital status, race, religion, or what kind of evening visitors one entertains?  To exclude from the most trivial of reasons, and neither be held accountable nor even be called upon to explain?


Not in America, you might say.  That’s illegal, you might conclude. 



Ever wonder why co-ops flourish in New York City?  Everywhere else in America, condos rule. 


In every other city in the world, the condominium model, in which you buy the four walls and floors of the space you live in and pay common carrying charges based upon its size, is the usual form of ownership.  Page 46.


What is it about the Big Apple that preserves this archaic ownership structure?


There are now over 3,500 co-operative buildings in Manhattan and 10,000 in all five boroughs.  It is the only city in the world where so much residential real estate is held [this way].  Page 84.


Long has this bothered me, in that what’s-missing-here way things rattle about in one’s head, until I read Steven Gaines’s deliciously gossipy The Sky’s the Limit: Passion and Property in Manhattan



… where the answer is buried amidst the catty tales-out-of-school that Mr. Gaines, more tattler than analyst, delights in passing on:


Barbra Streisand moved to a seventeen-room triplex penthouse at the Ardsley, at 320 Central Park West, where she never gave parties and hardly ever entertained. 



The Ardsley, 320 Central Park West


In fact, she would have been a model tenant at the Ardsley had she now earned a reputation as the building’s chief kvetch and critic, for whom nothing was quite good enough, including the way the lobby was decorated. 



“People/ people who blackball people/


And the nastiest people/ in the world.”


It was also from the Ardsley that for twenty years she relentlessly conducted a search for her dream apartment on the Upper West Side.  Unfortunately, her reputation as a diva preceded her, and whenever she showed any interest in a Good Building, she was invariably advised that she would have a hard time getting by the board.  Streisand was furious when it was reported in the press that the board at 2 Beekman Place had turned her down when she hadn’t even made a bid on an apartment.  Page 63.


In this power of exclusion both co-op members and co-op boards revel:


A River House resident smugly told the New York Post, “directors of a co-op can exclude anybody they want.”  72.


This power to choose is unique to co-ops because of their legal ownership of the building and the apartments therein:


With the co-operative method, people do not really own the walls and floors of their apartments — they own stock in a private corporation that owns the entire building. 



Shares in a superpower ownership entity


The number of shares of stock they own represents the square footage of the physical apartments they occupy, and the owners are assessed monthly maintenance fees based on their number of shares.  Every shareholder is obligated to behave according to a set of commandments outlined in the ‘property lease,’ a codex of policies and ordinances enforced by the board of directors that covers almost every situation imaginable in a Manhattan apartment building, from the obvious, such as not leaving garbage on the floor of the incinerator room or allowing children to play in the hallways, to the more obscure, like the interdiction of offensive odors emanating from one’s apartment (be it frying fish or marijuana smoke or not eating in the elevators or not sitting on the chairs in the lobby while waiting for guests, or the prohibition of holiday decorations on doors in common hallways.  Pages 46-47. 


Key among the co-op rules is the absolute and unilateral right to prohibit anyone from buying shares unless the buyer passes muster.  Their hurdles include the economic:


Today’s toughest boards want the previous three years of an applicant’s tax returns; statement from all savings and retirement accounts; an accounting of all financial liabilities, including personal debts, loans, mortgages, credit card balances, and alimony payments; and the last three months’ canceled checks. 


The personal:


Canceled checks in particular are scrutinized for incriminating evidence.  Page 52.


The picayune if understandable:


Arthur Carter, the New York Observer publisher who is one of the 2 East Sixty-Seventh Street’s three board members, [described it as]: ‘No litigious types.  No one who is so public a figure they require security or are followed by paparazzi.  No one who is in a lunatic marriage, or a second marriage, and no one who is single, because you never know whom their spouses are going to turn out to be.’   Page 55.


And the downright offensive:


Finally, Carter explained, buildings also worry about having ‘too many Jews’ and being known as a ‘Jewish building.’  Brokers openly agree with him that although none of the top buildings have prohibitions against Jews altogether, there is a perceived quota before a building gets pegged as ‘Jewish’ and loses prestige and value.  (‘This is the way it works,’ explained Alice Mason [A New York City co-op doyenne. — Ed.].  ‘There is one Jewish person on the board, and that Jewish person is the one who vetoes all the other Jewish people.’)  Page 55.


Thus co-ops are a unique form of private living club.  As such they can do as they choose, including blackballing applicants for any reason — or no reason.


You might think this blatantly illegal, but it is solid as a rock:


The legal right to blackball people from buying an apartment without explanation was affirmed by a landmark 1959 New York Court of Appeals ruling when Sidney Weisner, an attorney, and his wife were rejected by the co-op board at 791 Park Avenue and Weisner sued the board to find out why they had been turned down.



791 Park Avenue (on the left)


“There is no reason,” the court wrote, “why the owners of the co-operative apartment house could not decide for themselves with whom they wish to share their elevators, their common halls and facilities, their stockholders’ meetings, their management problems and responsibilities and their homes.”  49.


How did New York find its way to this most exclusionary of living club models?  Sprinkled among his renditions of petty vendettas and competitive backbiting, Mr. Gaines does lay down a fascinating cluster of facts, which when rearranged tell us why.


Taking a leaf from the co-op boards themselves, maybe I’ll put this into a future blog post … and maybe I won’t.