Money is not enough to buy into New York's smartest addresses, as the singer Carly Simon discovered recently. You have to be the 'right kind of person', says Charles Laurence.
Up at number 740, Park Avenue, the imposing block of flats where Jacqueline Kennedy Onassis grew up, the residents are credited with introducing the high-water mark of New York's "co-op" housing rules: if you do not have $100 million in liquid assets, please do not apply. Prices of flats at this top Manhattan address start at $10 million, cash only. But the $100 million figure is designed less to make sure that prospective buyers are "serious" than that they are "people like us".
The snubbing of Carly Simon, the 58-year-old singer famed for her hit You're So Vain, by the residents of the Dakota Building overlooking Central Park has put the notorious co-op boards of New York in the headlines on both sides of the Atlantic.
Co-ops are organisations with the legal standing of shareholders or their elected representatives in a company. In the 1970s, the disgraced President Richard Nixon was deemed undesirable by a co-op - in the end, he was forced to buy a townhouse on 65th Street. Gloria Vanderbilt was once rejected for a building on Park, and Madonna, the film star Michael Douglas and fashion designer Calvin Klein have all been turned down.
To the cognoscenti of the city's property market, however, Carly Simon's humiliation at the Dakota was surprising. The Gothic pile on 72nd Street and Central Park West, home to John Lennon's widow, Yoko Ono, and the site of his assassination, is one of the few White Glove buildings that will accept members of the entertainment professions.
"These co-op boards can reject you for virtually anything," explains Richard Brand, a lawyer who specialises in property. "The law is that they can't discriminate on grounds of race, gender or creed. But then they don't have to tell you why you are not wanted. They just say 'no'. So how would you know?"
He lists the sort of reasons he believes are behind rejections: "Your clothes, your accent, your manners, your job, the cut of your gib. That is before we get to house rules such as a no children and no pets."
Carly Simon was rejected after having an argument at the "interview" with members of the board. She claims that the interview - an integral part of buying a flat in a co-op - was more like an inquisition and that the board members were "aggressive and impertinent". They have replied that Simon was "rude and disrespectful".
"Blackballing singers and actors is common in the White Gloves," says Brand. "There is the view that if you let in entertainers, then you'll have drunk people shouting in the lifts at four in the morning."
The co-op boards spring from a form of property ownership which is more common to New York - where they make up 80 per cent of Manhattan's private housing stock - than anywhere else. A buyer does not actually buy a flat: they buy shares in a property, and those shares entitled them to live in a designated apartment within the property. A large flat is worth more shares than a small one.
But all shareholders pay a monthly "maintenance" charge to meet the costs of repairs, doormen and underlying mortgages held on the whole property and divided among the "tenants". That charge alone averages more than $1,000 a month. If one member of the co-op defaults, others must make it up.
"You will stand 'naked' before the board. They will demand all of your financials - pay cheques, tax returns, debts, alimony charges, you name it," says Brand.
It was the shared financial liabilities of the co-op that first inspired the white-glove rules demanding proof that a prospective buyer could produce in cash up to 20 times the value of their flat. In the 1990s, the cost of restoring the fašade at 740 Park amounted to $240,000 per shareholder, according to one estate agent. "The co-ops want to know that you have those kind of resources available."
The landlords of rental apartments and developers, or "sponsors", of condominiums, the closest to leasehold property, can also set rules for living: "senior" developments may ban children, landlords can forbid pets - but it is the nature of the ownership that puts the co-op board in a category of its own.
New Yorkers know that the co-op boards long ago extended their reach to a form of social control. It is a natural effect of the free market that rich people are likely to live in Park Avenue, and the poor on the far side of the tracks. The problem, and the art, lies in sorting out the rich from, well, the rich - old money from new, Wall Street bankers and rock musicians, film stars and self-made businessmen.
Most co-ops, for instance, have rules preventing an owner renting out their flats, and specifying a minimum number of days in a week on which the owner should be in residence. They want a community of like-minded neighbours, rather than an enclave of absentee landlords and drifting-through tenants. Some are known to blackball foreigners: they could skip town and leave their debts behind, the argument goes, although their cooking smells may have something to do with it.
The latest ban to raise eyebrows was to be expected in Mayor Bloomberg's New York: co-op boards are asking buyers to sign legal documents certifying themselves as non-smokers who will also forbid smoking by others in their homes. Stuart Saft, the chairman of the Council of New York Co-Operatives and Condominiums, says that while existing residents are not being told to stub out, and have a legal right to smoke in their own homes, co-op boards are legally entitled to insist that only non-smokers move in. "They are attempting to deal with a very real problem," says Saft.
Lawyers warn that would-be buyers planning to challenge such rules will be wasting their money. Last month, the New York Court of Appeals ruled that the co-op boards not only have powers to set such standards, but also that they can even cancel the shares of an existing owner, and throw him or her out.
The case involved David Pullman, a shareholder of a building close to Central Park West. He demanded the installation of video cameras by the front door, engaged in unauthorised construction work in his flat at weekends, and argued so bitterly with his upstairs neighbour, a professor, that he had the poor man arrested on trumped-up charges of assault. Pullman took the case to the appeal courts after the co-op board cancelled his shares and won an eviction order. The judges ruled that the board was within its rights, as long as it was able to prove "objectionable conduct".
In their ruling, however, they highlighted cases where co-op boards had gone too far. One banned a succah - an Orthodox Jewish prayer hut - on a balcony, and another banned a "religious statue". Both fell under the laws protecting religious expression and forbidding discrimination on grounds of race, gender or creed.
To property lawyers, however, these cases suggested clumsy work by the co-op boards. "So you say the co-op board turned you down because you're black or Jewish? How would you know? All they have to say is that you seemed like a jerk, whatever race or creed you may be," says Brand.
There is, in the end, just no arguing with a New York co-op board.
The above article appeared in the Daily Telegraph of 08/10/2003.