Vendor Conflicts and Competitive Bidding Act

Drafting status. A complete bill draft with a sponsor’s memorandum. No bill number is assigned and no legislator has agreed to carry it. Every citation was verified against a primary source on 2026-07-27; see Part V.

This mechanism has the highest documented reach of anything in the CondosCoopsNYC model that no bill anywhere is carrying — nine documented issues, five of them closed outright.

PART I — SPONSOR’S MEMORANDUM IN SUPPORT

BILL NUMBER: to be assigned

TITLE OF BILL: An act to amend the real property law, in relation to disclosure and prohibition of compensation received by managing agents and board members from vendors, and to competitive bidding for contracts of common interest communities.

PURPOSE OR GENERAL IDEA OF BILL:

To stop the person who chooses the building’s vendors from being paid by them, and to require that a contract above a threshold be put out to bid with a record the owners can see.

SUMMARY OF PROVISIONS:

Section 1 sets out legislative findings.

Section 2 requires annual written disclosure by managing agents and board members of any interest in, or compensation from, a person contracting with the association; prohibits undisclosed compensation; and voids a contract entered in violation, at the association’s election.

Section 3 requires competitive bidding for contracts above a threshold scaled to the association’s budget, requires retention of the bid file, and makes the bid file available to owners.

Section 4 provides severability and an effective date.

JUSTIFICATION:

The pattern this bill addresses is not theft, and prosecuting it as theft is why nothing has been done about it.

A building pays a market price to a contractor. The contractor pays part of that price back to whoever selected them — a referral fee, a commission, a rebate, a share of the renewal. No money is missing from any account. Every invoice reconciles. The building simply pays more than it needed to, forever, and the person who could have negotiated it down had a reason not to.

CondosCoopsNYC’s issue catalog documents this pattern in insurance brokerage, bulk telecommunications agreements, fuel supply, alteration-approval consulting, and facade work. The worked example that gives the pattern its name is the facade inspection cycle, in which the engineer who determines the scope of the required repair and the contractor who performs it are not independent of one another.

Disclosure alone would be a meaningful improvement, and other states have gone no further. Section 5375 of the California Civil Code requires a prospective managing agent to disclose in writing to the board, within ninety days before executing a management agreement, any business in which the manager holds ownership interests, profit-sharing arrangements, or other monetary incentives, and whether it receives a referral fee or other monetary benefit from a third-party provider distributing documents. Verified 2026-07-27. That provision is narrower than it is usually described — the referral-fee clause is specific to document providers — and it is a disclosure rule, not a prohibition.

This bill goes further in two respects, deliberately. It reaches board members as well as agents, because a board member with an undisclosed interest is in the same position as an agent with one. And it makes undisclosed compensation unlawful rather than merely undisclosed, because a rule that permits the payment so long as it is buried in an annual filing nobody reads is a rule the practice can survive.

Competitive bidding is the second half, and it does different work. Disclosure catches the arrangement that exists. Bidding constrains the price where no undisclosed arrangement exists at all, and it produces a document — the bid file — that makes the first half enforceable. Without a record of what the alternatives were, an owner asserting a conflict has nothing to compare the chosen vendor to.

Senate bill S.8912 of the 2025–2026 session, sponsored by Senator Shelley B. Mayer, would require competitive bidding with unredacted bids furnished to directors for non-emergency capital work above fifty thousand dollars in cooperative housing corporations. Verified 2026-07-27: that bill passed the Senate Committee on Corporations, Authorities and Commissions on May 19, 2026 by a vote of six ayes and one aye with reservations, and was committed to the Rules Committee on June 5, 2026. This bill extends the same principle to condominiums, scales the threshold to the size of the association rather than fixing it at a single figure, and furnishes the bid file to owners rather than only to directors.

FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:

No appropriation. No agency role. Enforcement runs through the association’s own election to void a tainted contract and through the enforcement route created by the Owner Standing and Enforcement Act, if enacted.

EFFECTIVE DATE:

First day of the first fiscal year of the association commencing at least one hundred eighty days after this act becomes a law.

PART II — THE BILL

                           STATE OF NEW YORK
    ____________________________________________________________________

                                                    [NUMBER TO BE ASSIGNED]

                              IN SENATE / IN ASSEMBLY

    Introduced by ____ -- read twice and ordered printed, and when printed
      to be committed to the Committee on Judiciary


    AN ACT to amend the real property law, in relation to vendor
      compensation disclosure and competitive bidding by common interest
      communities


    The People of the State of New York, represented in Senate and Assembly,
    do enact as follows:

Section 1. Legislative findings.

The Legislature finds and declares as follows:

1. The selection of vendors by a condominium or cooperative corporation is ordinarily made by a managing agent or by members of the board, acting on behalf of owners who do not participate in the selection.

2. Where the person making the selection receives compensation from the vendor selected, the interest of that person diverges from the interest of the owners, and the divergence is not apparent from the association’s financial records, because the amounts paid by the association are recorded accurately.

3. The absence of a record of alternatives considered makes such an arrangement difficult to identify after the fact and difficult to prove.

4. It is the purpose of this act to require disclosure of such compensation, to prohibit it where undisclosed, and to require that contracts above a threshold be awarded upon competitive bids for which a record is kept and made available to owners.

§ 2. Vendor compensation; disclosure and prohibition.

The real property law is amended by adding a new section 339-kk-1 to read as follows:

§ 339-kk-1. Vendor compensation.

1. Definitions. As used in this section:

  (a) “Association” means a condominium board of managers or the board of directors of a cooperative corporation organized for the purpose of providing residential occupancy to its shareholders.

  (b) “Covered person” means a managing agent of an association, a principal or employee of such a managing agent having responsibility for that association, and a member of the board.

  (c) “Vendor” means a person that has contracted with the association, or that is under consideration to contract with the association, to provide goods or services, including insurance, telecommunications, fuel, construction, engineering, architectural, legal, and accounting services.

  (d) “Compensation” means any payment, commission, rebate, referral fee, discount not passed through to the association, thing of value, or profit-sharing or ownership interest, received directly or indirectly, including by a spouse, domestic partner, parent, child, sibling, or an entity controlled by any of them.

2. Annual disclosure. Each covered person shall deliver annually to the board, and the board shall furnish to owners with the annual financial statement, a signed written statement disclosing:

  (a) each vendor from which the covered person received compensation during the period covered, and the nature and amount of such compensation; and

  (b) each vendor in which the covered person holds an ownership interest, and the nature of that interest.

A covered person having nothing to disclose shall so state in writing.

3. Prohibition. No covered person shall accept compensation from a vendor unless it has been disclosed in writing to the board before the association enters or renews the contract with that vendor, and disclosed to owners in the next statement furnished under subdivision two of this section.

4. Recusal. A member of the board who has disclosed compensation from or an ownership interest in a vendor shall not vote upon, and shall not participate in the board’s deliberation concerning, the selection of or contracting with that vendor. The minutes shall record the recusal.

5. Remedy. A contract entered in violation of subdivision three of this section is voidable at the election of the association, exercised within one year after the association learns of the violation. A covered person who accepted compensation in violation of subdivision three shall account to the association for the compensation received. Nothing in this subdivision affects the rights of a vendor that neither knew nor had reason to know of the violation, other than the association’s election to avoid the contract prospectively.

6. Construction. Disclosed compensation is not prohibited by this section. This section does not prohibit an association from contracting with a vendor in which a covered person holds an interest, provided the interest is disclosed and the recusal required by subdivision four is observed.

§ 3. Competitive bidding.

The real property law is amended by adding a new section 339-kk-2 to read as follows:

§ 339-kk-2. Competitive bidding.

1. Threshold. An association shall not enter a contract for goods or services the total consideration for which exceeds the greater of twenty-five thousand dollars or two percent of the association’s annual operating budget, except upon compliance with this section.

2. Solicitation. The association shall solicit written bids from not fewer than three vendors that are not affiliated with one another. Where fewer than three responsive bids are received, the association shall record in the minutes the vendors solicited and the responses received, and may proceed.

3. Bid file. The association shall retain, for not less than six years, the solicitation, each bid received, the identity of each vendor solicited, and a written statement of the basis on which the contract was awarded where the award was not made to the lowest responsive bidder.

4. Availability to owners. The bid file shall be made available for examination by any owner upon written request, within ten business days, after the contract has been awarded. The association may redact from a bid only information that is a trade secret of the bidder.

5. Emergency. This section does not apply to a contract entered to address a condition that presents an immediate threat to health or safety or to the physical integrity of the property. The board shall record in the minutes the nature of the emergency and shall include the contract in the next bid file made available under subdivision four of this section.

6. Related party. Where a contract subject to this section is awarded to a vendor from which a covered person, as defined in section three hundred thirty-nine-kk-one of this article, has disclosed compensation or in which such person holds a disclosed interest, the association shall obtain not fewer than three responsive bids and shall record in the minutes the reason for the award.

§ 4. Severability; effective date.

If any provision of this act is held invalid, such invalidity shall not affect any other provision. This act shall take effect on the first day of the first fiscal year of the association commencing at least one hundred eighty days after it shall have become a law, and shall apply to contracts entered or renewed on or after that date.

PART III — WHAT THIS BILL DELIBERATELY DOES NOT DO

It does not ban compensation. Subdivision 6 of section 2 says so expressly. A prohibition on all vendor compensation would sweep in ordinary volume pricing, would be unenforceable at the margin, and would give the opposition a legitimate objection. What ends is undisclosed compensation, and no lawful arrangement requires secrecy from the party paying for it.

It does not require the lowest bid to be accepted. Subdivision 3 of section 3 requires only that the basis for a different award be written down. Boards routinely and properly choose a more expensive bidder; the record is what makes that judgment reviewable rather than invisible.

It does not create a penalty or an agency enforcement route. The remedies are the association’s election to void and an accounting. This is a deliberate narrowing: adding a civil penalty would require naming an enforcement body, and no body has jurisdiction over these associations. If the Common Interest Community Division is created, a penalty provision can be added by amendment.

It does not reach the facade inspector conflict directly. The independence of a qualified exterior wall inspector from the contractor performing the resulting repair is a New York City construction-code question addressed in the Building Safety Integrity Act draft, not a Real Property Law question. This bill reaches the payment leg of that arrangement where a covered person is involved; it does not reach an arrangement between two vendors that involves no covered person.

It sets the threshold as a formula rather than a number. Twenty-five thousand dollars or two percent of budget, whichever is greater. A fixed figure is either meaningless in a large building or crushing in a small one. S.8912’s fifty-thousand-dollar figure is noted in Part V and the divergence is deliberate.

PART IV — OPEN DRAFTING QUESTIONS

1. Section numbering. 339-kk-1 and 339-kk-2 are placeholders; RPL article 9-B runs §339-d to §339-ll — verified 2026-07-27 — and the Commission assigns actual designations.

2. Cooperatives. The same unresolved chapter question flagged in the Owner Standing, Fraud Prevention, and Ombudsperson drafts applies here and should be settled once across all of them.

3. The threshold formula is untested. Two percent of operating budget has not been modelled against any real distribution of association budgets. It could produce a threshold that is too low in a large building with a high budget and modest capital needs. This should be modelled before introduction.

4. “Not affiliated with one another” is doing a lot of work in section 3(2) and is not defined. Courtesy bids from related entities are the obvious circumvention. A definition, or a certification requirement from each bidder, is probably needed.

5. Trade-secret redaction in section 3(4) is a likely abuse vector. Every bidder will claim its pricing is a trade secret. Either the term needs definition or pricing needs to be expressly excluded from what may be redacted.

6. Interaction with S.8912. If S.8912 is enacted, cooperative housing corporations will be subject to a fifty-thousand-dollar threshold with bids to directors, and to this bill’s formula threshold with bids to owners. The two must be reconciled. The cleanest path is to offer the condominium provisions of this bill as an amendment to S.8912 rather than as a competing vehicle.

PART V — CITATION APPENDIX

Verified 2026-07-27 against the source shown.

Claims deliberately not made

PATH TO PASSAGE

Choke-point analysis: the choke-point analysis. In the 2025 session 16,794 bills were introduced and roughly 800 reached the Governor — about 4.8%. Verified 2026-07-27.

Route: fold the bidding provisions into S.8912; introduce the conflicts provisions standalone if S.8912 will not take them.

S.8912 already requires competitive bidding with unredacted bids to directors for non-emergency capital work above $50,000 in cooperative housing corporations, and it is out of committee. Verified 2026-07-27. Introducing a competing bidding bill would split the constituency for a provision that has already been voted 6–1.

What folding requires, specifically. Three amendments to S.8912: extend it to condominiums (it reaches cooperative corporations only), change the bid threshold from a flat $50,000 to the greater of $25,000 or 2% of operating budget, and furnish the bid file to owners rather than only to directors. Each is a discrete amendment that can be accepted or rejected on its own.

What has to happen before introduction. The threshold formula — the greater of $25,000 or 2% of operating budget — has never been modelled against any real distribution of association budgets. A two-percent floor could be far too low in a large building with a high operating budget and modest capital needs. Model it first; a threshold that produces absurd results in the first building someone checks will lose the provision.

What cannot be folded. The vendor-compensation prohibition in section 2 is a new prohibition with a new remedy, and adding it to a bill sitting in Rules would reopen a bill that has already been voted. Carry it separately, and only after S.8912 clears. Attaching it now risks the thing that is working.

Related: LEGISLATIVE_MODEL.md · solutions S08, S11, S13 in 01_Database/condoscoop.db · companion: owner-standing-and-enforcement-act.md