Rejected by a Co-op Board: Your Rights and Next Steps

If a co-op board rejects you and your contract has the usual board-approval condition, the deal normally ends and your contract deposit is returned, as long as you met your obligations under the contract. Boards generally are not required to tell you why, but they cannot reject you for a reason that violates New York State or New York City human rights law.

This guide covers the deposit, your legal rights, where to complain if you think the decision was discriminatory, and how to make your next application stronger.

What happens to your contract deposit

In NYC co-op sales, the buyer usually pays a deposit at contract signing, held in escrow by the seller's attorney (see the 10% contract deposit in NYC). Co-op contracts almost always make the sale conditional on the board's consent, because shares cannot be transferred without it.

When that condition fails, the contract typically lets either side cancel and directs the escrow agent to return the deposit to the buyer. The protection usually depends on your having done your part. Contracts commonly require the buyer to:

• submit a complete application within a set number of days,
• attend the interview and answer the board's reasonable requests,
• give truthful information in the package, and
• not do anything to cause the rejection on purpose.

Does the board have to explain?

In most cases, no. Co-op boards usually send a short letter without reasons, and we are not aware of any New York State or New York City law that requires a co-op board to give reasons for most rejections. Some buyers ask the managing agent or the seller's broker for informal feedback, which is sometimes shared.

There is one important exception. Under the NYC Fair Chance Housing law, in effect since January 1, 2025 and covering co-op buyers, a board that considers revoking an offer because of criminal history must give you copies of the records it reviewed and 5 business days to respond. It must then do an individualized assessment and explain any adverse decision in writing. Only felonies from the last 5 years, misdemeanors from the last 3 years and current sex offense registry status can be considered.

When a rejection may be illegal

New York State law makes it an unlawful practice for anyone with the right to sell or lease housing to refuse a sale because of a protected trait. The NYC Human Rights Law adds more traits for housing in the city.

A dash means that trait is not on the list we checked for that law, not that discrimination on it is allowed. Signs that a rejection may deserve a closer look include questions in the interview about protected traits, a buyer who clearly met the building's stated financial standards, or a pattern of similar buyers being turned down.

Where to file a complaint

You generally must choose one route. The NYC Commission says you cannot file with it if you have already filed over the same facts with the State Division of Human Rights, HUD or a court. The Commission also notes a three-year statute of limitations for bringing a case in court. A housing discrimination lawyer can help you pick the best forum. For more on the process, see housing discrimination in NYC.

What to do next

1. 1

   Send the rejection letter to your attorney

   Ask them to confirm the contract is cancelled and to request the deposit from the escrow agent.
2. 2

   Write down everything

   Note the interview date, who attended, the questions asked and anything said about the decision. Do it while you remember.
3. 3

   Ask for feedback, politely

   Your broker can ask the seller’s broker or managing agent whether there was a fixable issue, such as liquidity or debt-to-income.
4. 4

   Decide whether to file a complaint

   If you believe a protected trait played a role, contact the NYC Commission or the NYS Division before the deadline.
5. 5

   Check your loan and rate lock

   Tell your lender the deal fell through. Ask whether your approval can move to a new property.
6. 6

   Re-target your search

   If finances were the likely issue, run the numbers for your next building before bidding, or consider a condo, where the board usually has a right of first refusal rather than an approval vote (see condo right of first refusal).

Before your next offer, test your numbers with the co-op board approval calculator, review co-op financial requirements, and rebuild your package using the board package checklist. If board approval is the main obstacle, co-op vs condo explains the trade-offs.