identity theft, anyone? / what really happens to confidential purchase applications? : Manhattan Loft Guy

Manhattan Loft Guy

May. 28, 2007 - identity theft, anyone? / what really happens to confidential purchase applications?

why are 6 copies of my tax returns in the trash at my new building?

One of yesterday’s Real Estate Q + As In the NY Times (How Confidential Are Applications?) deals with one of those dirty little secrets in the Manhattan purchase process: buyers who submit multiple copies of tax returns, employment information, and copies of investment account statements rely on the focused good faith of coop and condo boards about disposition of all of that highly confidential paperwork.

Jay Romano of the NY Times quotes a Manhattan coop lawyer to the effect that there are no laws that protect buyers here, but that boards should act wisely:

Eva Talel, a Manhattan co-op lawyer, said there are no New York laws that specify how a co-op board treats information it receives from prospective purchasers, nor are there any laws limiting the locations at which purchasers’ applications can be reviewed.

But Ms. Talel said that as a matter of good practice, board members should maintain the confidentiality of application packages, regardless of where that information is reviewed.

“With regard to the disposition of application packages, management may wish to retain one copy of the package in a secure location, but the remaining copies should either be destroyed or returned to the applicant,” she said.

If Ms. Talel represents coop boards, I wonder how many boards she has advised to appropriately destroy or return copies of application materials….

this is a job for REBNY

I don’t have any doubt about the good faith of coop or condo boards, but I do worry about the focus of these people after they have reviewed a purchase application. And I wonder why REBNY has not addressed this in the standards of practice that it establishes for its managing agent member (who usually control such mundane processes as the handling of purchase applications).

I have yet to see a single purchase application that describes what happens to the application materials. The managing agent and the real estate agents involved in the purchase have implicit duties of confidentiality, I would think. Board members do, as well, but I suspect that they are not specifically aware of this (or, at least, that they don’t act consistently with purchase applications as if they do).

I know of some board members who are very diligent and very anal about retaining documents. But when it comes time for them to purge themselves of boxes and boxes of documents from their board service, I am not sure that they all use shredders.

a modest suggestion

When an application is finally approved, managing agents should collect all the material from board members and should either (a) shred it or (b) (more likely to occur) make it available for pick up by the applicants, to dispose of as they wish. I suspect there are arguments to be made that managing agents should securely retain one set, on the theory that you-never-know-when-it-might-be-relevant (even though it won’t be).

If the managing agent has a copy, there is simply no reason for any other sets to remain with board members or the Department of Sanitation.

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May. 28, 2007 - identity theft, anyone? / what really happens to confidential purchase applications?

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