Can a co-op board reject a buyer?

The business judgment rule governs. Courts in New York give a cooperative board wide latitude over admissions, and a rejected purchaser who wants to challenge the decision has to show the board acted outside the scope of its authority, in bad faith, or on a discriminatory ground. Silence from the board is not itself evidence of anything.

Fair-housing law is the real boundary. Federal, state and city statutes bar decisions based on race, national origin, religion, sex, disability, familial status, lawful source of income and the other protected categories those laws name. New York City’s source-of-income protections reach housing vouchers, and boards that ignore them draw enforcement attention.

The grounds boards actually use are financial and behavioral. Debt-to-income ratios outside the building’s comfort range, thin post-closing liquidity, a purchase price the board reads as low for the building, an intention to use the apartment as a part-time residence, or an interview that leaves directors uneasy about how the applicant will live in a shared building.

Contract drafting is where a purchaser manages the risk. A rider that returns the down payment on a board rejection, that sets an outside date, and that requires the seller to cooperate in a resubmission if the board invites one, converts a rejection from a loss into a delay. Without that language the deposit is exposed.