§ 352-EEEEE — Conversions to condominium ownership for the preservation of expiring affordable housing in the city of New York

New York § 352-EEEEE

• Jurisdiction: New York
• Law GBS: General Business
• Art. 23-A: Fraudulent Practices In Respect to Stocks, Bonds and Other Securities

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* § 352-eeeee. Conversions to condominium ownership for the\npreservation of expiring affordable housing in the city of New York. 1.\nAs used in this section, the following words and terms shall have the\nfollowing meanings:\n (a) "Annual update amendment". An annual update amendment is an\namendment to the preservation plan that shall be submitted to the\nattorney general every year that a dwelling unit is unsold, with the\nfirst such annual update amendment due within forty-five days of the\nanniversary of the acceptance of the post-closing amendment to the\npreservation plan. An annual update amendment shall supply the evidence,\ndata and information required in this section, and such other\ninformation as the attorney general's regulations shall require, so that\nthe attorney general is satisfied that the preservation plan as amended\ndiscloses the information necessary for a reasonable investor to make\ntheir purchase decision and that the preservation plan is otherwise\ncomplete, current and accurate.\n (b) "Bona fide purchaser". A bona fide purchaser is either (i) a\ntenant in occupancy who enters into a purchase agreement for a dwelling\nunit pursuant to their or its exercise of one of the rights accorded to\ntenants in occupancy in subdivision five of this section, or (ii) a bona\nfide non-tenant purchaser.\n (c) "Bona fide non-tenant purchaser". A bona fide non-tenant purchaser\nis a purchaser of a dwelling unit who has represented that they or a\nmember or members of their immediate family intend to occupy the\ndwelling unit when it becomes vacant. A bona fide non-tenant purchaser\nshall not include any purchaser who is an offeror, the selling agent, or\nthe managing agent or is a principal of the offeror, the selling agent\nor the managing agent or is related to the sponsor, the selling agent or\nthe managing agent or to any principal of the sponsor or the selling\nagent or the managing agent by blood, marriage or adoption or as a\nbusiness associate, an employee, a shareholder or a limited partner;\nexcept that such a purchaser other than the offeror or a principal of\nthe sponsor may be included as a bona fide non-tenant purchaser if the\nofferor has submitted proof satisfactory to the department of law\nestablishing that the purchaser is bona fide.\n (d) "Commercially reasonable good faith effort". A commercially\nreasonable good faith effort on the part of an offeror of a preservation\nplan shall, at minimum, include (i) the filing of an annual update\namendment to the preservation plan; (ii) all of the condominium's\ndwelling units other than any income-restricted rental units as the\nunits being offered for sale under the preservation plan, each at an\noffering price that is consistent with comparable dwelling units\nrecently sold within the locality; and (iii) entering into a written\nagreement with a licensed real estate broker or selling agent in\nconnection with the sale of dwelling units offered for sale under the\npreservation plan. For the avoidance of doubt, a commercially reasonable\ngood faith effort shall not require an offeror to sell dwelling units at\na price substantially below the market-rate for comparable units\nrecently sold within the locality, nor shall it require an offeror to\noffer for sale dwelling units that are occupied by non-purchasing\ntenants.\n (e) "Condominium". A condominium shall also include a qualified\nleasehold condominium as defined in subdivision twelve of section three\nhundred thirty-nine-e of the real property law.\n (f) "Consummation of the preservation plan". Consummation of the\npreservation plan shall refer to the filing of the declaration for the\ncondominium and the first transfer of title to at least one purchaser\nunder the preservation plan following a declaration of effectiveness by\nthe department of law declaring the preservation plan effective.\n (g) "Eligible disabled persons". Non-purchasing tenants who have an\nimpairment which results from anatomical, physiological or psychological\nconditions, other than addiction to alcohol, gambling, or any controlled\nsubstance, which are demonstrable by medically acceptable clinical and\nlaboratory diagnostic techniques, and which are expected to be permanent\nand which prevent the tenant from engaging in any substantial gainful\nemployment on the date the preservation plan is submitted to the\ndepartment of law or on the date the attorney general has accepted the\npreservation plan for filing, and the spouses of any such tenants on\nsuch date, and who have elected, within sixty days of the date the\npreservation plan is submitted to the department of law or on the date\nthe attorney general has accepted the preservation plan for filing, on\nforms promulgated by the attorney general and presented to such tenants\nby the offeror, to become non-purchasing tenants under the provisions of\nthis section; provided, however, that if the disability first occurs\nafter acceptance of the preservation plan for filing, then such election\nmay be made within sixty days following the onset of such disability\nunless during the period subsequent to sixty days following the\nacceptance of the preservation plan for filing but prior to such\nelection, the offeror accepts a written agreement to purchase the\napartment from a bona fide purchaser; and provided further that such\nelection shall not preclude any such tenant from subsequently purchasing\nthe dwelling unit on the terms then offered to tenants in occupancy.\n (h) "Eligible project". An eligible project shall refer to a building\nor group of buildings or development with one hundred or more dwelling\nunits built after nineteen hundred ninety-six that is the subject of a\npreservation plan under this section, which shall meet the criteria set\nforth in subdivision two of this section. An eligible project shall not\ninclude any building or group of buildings or development owned under\narticle two, four or five of the private housing finance law. For the\navoidance of doubt, no building, group of buildings or development other\nthan an eligible project shall convert to condominium status under this\nsection, the status of which shall be confirmed by the relevant housing\nfinance agency prior to the date of submission of the preservation plan.\n (i) "Eligible senior citizens". Non-purchasing tenants who are\nsixty-two years of age or older on the date the preservation plan is\nsubmitted to the department of law or on the date the attorney general\nhas accepted the preservation plan for filing, and the spouses of any\nsuch tenants on such date, and who have elected, within sixty days of\nthe date the preservation plan is submitted to the department of law or\non the date the attorney general has accepted the preservation plan for\nfiling, on forms promulgated by the attorney general and presented to\nsuch tenants by the offeror, to become non-purchasing tenants under the\nprovisions of this section; provided that such election shall not\npreclude any such tenant from subsequently purchasing the dwelling unit\non the terms then offered to tenants in occupancy.\n (j) "Extended affordability term". The extended affordability term for\nthe income-restricted rental units shall be in perpetuity for so long as\nthe building or group of buildings or development are in existence, and\nsubject to any obligation to rebuild in the event of condemnation,\ndamage or destruction required by the regulatory agreement with the\nrelevant housing finance agency.\n (k) "Inclusionary housing unit". An inclusionary housing unit is an\nincome-restricted rental unit that is located within a building that\nreceived an increase in the maximum permitted floor area pursuant to\nsections 23-154 and 23-90 of the zoning resolution or is located in a\nmandatory inclusionary housing area, as such sections may be amended\nfrom time to time.\n (l) "Inclusionary housing designated area". An inclusionary housing\ndesignated area is a specified area in which the inclusionary housing\nprogram (also known as the voluntary inclusionary housing program) is\napplicable, pursuant to the regulations set forth for such areas in\nsection 23-90 of the zoning resolution, as such section may be amended\nfrom time to time. The locations of inclusionary housing designated\nareas are identified in either (i) appendix "F" of the zoning resolution\nor (ii) in a special purpose district as described in section 15-011 of\nthe zoning resolution, as such appendix or section may be amended from\ntime to time.\n (m) "Income-restricted rental unit". An income-restricted rental unit\nshall refer to a dwelling unit located in a building or group of\nbuildings or development of an eligible project that is the subject of a\npreservation plan submitted to the attorney general pursuant to this\nsection, and such dwelling unit:\n (i) meets the definition of a "low-income unit" as such term is\ndefined in section forty-two of the internal revenue code and is subject\nto a regulatory agreement with a relevant housing finance agency; or\n (ii) meets the definition of a "low-income unit" as such term is\ndefined in subdivision (d) of section one hundred forty-two of the\ninternal revenue code and is subject to a regulatory agreement with a\nrelevant housing finance agency; or\n (iii) previously met the definition of "low-income unit" pursuant to\nsubparagraph (i) or (ii) of this paragraph, and notwithstanding the\nexpiration of a regulatory agreement with a relevant housing finance\nagency, the owner of such dwelling unit affirms, under the penalty of\nperjury and provides other documentation to the satisfaction of the\nrelevant housing finance agency, that it has continuously operated and\nrented the dwelling unit (A) as if it remained an income-restricted\nrental unit and (B) as if all of the restrictions of the expired\nregulatory agreement had continuously been extended or otherwise\nremained in effect; or\n (iv) is a dwelling unit located within a building or group of\nbuildings or development that, in accordance with provisions of\nsubdivisions one through fifteen of section four hundred twenty-one-a of\nthe real property tax law, the relevant housing finance agency shall\nhave required to be a unit affordable to families of low and moderate\nincome;\n (v) is a dwelling unit that is rented to persons of low income or\nfamilies of low income as defined in subdivision nineteen of section two\nof the private housing finance law or as otherwise required by a\nfederal, state, or local law or mandate; or\n (vi) is a dwelling unit located in a building, group of buildings or\ndevelopment subject to a regulatory agreement due to bond financing\nprovided by the relevant housing finance agency that required dwelling\nunits be affordable to families of low or moderate income.\n (n) "Mandatory inclusionary housing area". A mandatory inclusionary\nhousing area is a specified area in which the inclusionary housing\nprogram is applicable, pursuant to the regulations set forth for such\nareas in section 23-90 of the zoning resolution, as such section may be\namended from time to time. The locations of mandatory inclusionary\nhousing areas are identified in either (i) appendix "F" of the zoning\nresolution or (ii) in a special purpose district as described in section\n15-011 of the zoning resolution, as such appendix or section may be\namended from time to time.\n (o) "Non-purchasing tenant". A person who has not purchased under the\npreservation plan from offeror and who is a tenant entitled to\npossession at the time the preservation plan is declared effective or a\nperson to whom a dwelling unit is rented from offeror after the\npreservation plan was declared effective, which solely for purposes of\nthis section, shall include any person who is a tenant regardless of\nwhether (i) such person was a tenant entitled to possession at the time\nthe preservation plan was declared effective, or (ii) such person rented\na dwelling unit from offeror after the preservation plan was declared\neffective. A person who sublets a dwelling unit from a purchaser under\nthe preservation plan shall not be deemed a non-purchasing tenant. A\ntenant entitled to possession of an income-restricted rental unit at the\ntime the preservation plan is declared effective or a person to whom an\nincome-restricted rental unit is rented from offeror or qualified owner\nafter the preservation plan is declared effective is a non-purchasing\ntenant, notwithstanding that the income-restricted rental units are not\noffered for sale pursuant to such preservation plan.\n (p) "Post-closing amendment". A post-closing amendment is an amendment\nto a preservation plan filed with the attorney general confirming that\nthe preservation plan has been consummated. A post-closing amendment\nmust be submitted to the attorney general no more than forty-five days\nafter the first closing of a dwelling unit to a bona fide purchaser\nunder the preservation plan.\n (q) "Preservation plan". An offering statement or prospectus submitted\nto the department of law pursuant to this section for the conversion of\na building or group of buildings or development of an eligible project\nfrom rental status to condominium ownership, wherein the offeror\ndocuments that it has entered into a regulatory agreement with a\nrelevant housing finance agency in which it agreed to an extended\naffordability term for the income-restricted rental units with a\nrelevant housing finance agency.\n (r) "Purchaser under the preservation plan". A purchaser under the\npreservation plan is a person who purchases a dwelling unit from offeror\npursuant to the terms of a preservation plan that has been accepted for\nfiling by the attorney general. A person or entity that acquires\ndwelling units and assumes certain obligations of offeror shall not be\nconsidered a purchaser under the preservation plan.\n (s) "Qualified owner". A qualified owner refers to the entity approved\nby the relevant housing finance agency on or before the date of\nsubmission of a preservation plan to the department of law that will\nown, operate and maintain the income-restricted rental unit or units\nthat are in the building, group of buildings or development that are the\nsubject of the preservation plan. The entity which is a qualified owner\nshall only be either: (i) a housing development fund company\nincorporated pursuant to article eleven of the private finance housing\nlaw; or (ii) a community land trust or other charitable corporation\norganized under the not-for-profit corporation law that has as its\nprimary charitable purpose the ownership, operation and maintenance of\nmultifamily housing for persons and families of low income as defined by\nsubdivision nineteen of section two of the private finance housing law.\n (t) "Relevant housing finance agency". Relevant housing finance agency\nshall refer to a city or state agency with oversight over\nincome-restricted rental units prior to the date of submission of a\npreservation plan. For purposes of this section, a relevant housing\nfinance agency shall also refer to the city or state agency that will\ncontinue to have oversight of income-restricted rental units after\nconsummation of the preservation plan and in accordance with the terms\nof a regulatory agreement.\n (u) "Regulatory agreement". A regulatory agreement shall refer to the\nwritten agreement with a relevant housing finance agency that restricts\nthe income and rents of income-restricted rental units that is either:\n(i) in effect prior to the date of submission of a preservation plan; or\n(ii) in effect after consummation of the preservation plan. Any\nregulatory agreement in effect at the date of the submission of the\npreservation plan shall remain in effect until the consummation of the\npreservation plan unless otherwise agreed to by the relevant housing\nfinance agency. A regulatory agreement that shall take effect after\nconsummation of the preservation plan shall require that at least twenty\npercent of all units be income-restricted rental units, and require\nfurther that all existing income-restricted rental units, as of the\neffective date of this act, shall remain income-restricted in\nperpetuity.\n (v) "Rent stabilization". Rent stabilization shall mean, collectively,\nthe rent stabilization law of nineteen sixty-nine, and the emergency\ntenant protection act of nineteen seventy-four together with any other\nsuccessor statutes thereto.\n (w) "Zoning resolution". Zoning resolution shall refer to the zoning\nresolution of the city of New York.\n 2. The attorney general shall refuse to accept for submission a\npreservation plan for the conversion of a building or group of buildings\nor development if the relevant housing finance agency has not confirmed\nin writing through the issuance of a letter of support as described in\nsubdivision three of this section and that the preservation plan is for\nan eligible project, which shall be defined as a building or group of\nbuildings or development that meets the definition of an eligible\nproject and one or more of the following requirements as of the date of\nsubmission of the preservation plan:\n (a) The preservation plan is for a building or group of buildings or\ndevelopment that (i) receives a partial property tax exemption pursuant\nto subdivisions one through fifteen of section four hundred twenty-one-a\nof the real property tax law, (ii) contains income-restricted rental\nunits, and (iii) is not otherwise prohibited by any federal, state, or\nlocal law, rule, or regulation or subject to an existing regulatory\nagreement that prohibits the conversion of the dwelling units to\ncondominium ownership; or\n (b) The preservation plan is for a building or group of buildings or\ndevelopment that (i) receives low income housing tax credits pursuant to\nsection forty-two of the internal revenue code, (ii) contains\nincome-restricted rental units, (iii) is not subject to any agreement\nproviding for a right of first refusal with a not-for-profit corporation\nunless evidence deemed satisfactory to the department of law has been\nprovided that such right of first refusal has either expired or that\nsuch not-for-profit declined to exercise such right, and (iv) is not\notherwise prohibited by any federal, state, or local law, rule, or\nregulation or subject to an existing regulatory agreement that prohibits\nthe conversion of the dwelling units to condominium ownership; or\n (c) The preservation plan is for a building or group of buildings or\ndevelopment that (i) receives bond financing under subsection (d) of\nsection one hundred forty-two of the internal revenue code, (ii)\ncontains income-restricted rental units, and (iii) is not otherwise\nprohibited by any federal, state, or local law, rule, or regulation or\nsubject to an existing regulatory agreement that prohibits the\nconversion of the dwelling units to condominium ownership; or\n (d) The preservation plan is for a building or group of buildings or\ndevelopment, that (i) contains one or more inclusionary housing units,\n(ii) is not otherwise prohibited by any federal, state, or local law,\nrule, or regulation or subject to an existing regulatory agreement that\nprohibits the conversion of the dwelling units to condominium ownership,\nand (iii) contains a representation that an agreement has been reached\nwith the relevant housing finance agency to increase the total number of\nincome-restricted rental units in the building or group of buildings or\ndevelopment to thirty percent for the extended affordability term upon\nconsummation of the preservation plan; or\n (e) The preservation plan is for a building or group of buildings or\ndevelopment that (i) contains exclusively moderate income units as\nrequired for bond financing with the relevant housing finance agency,\n(ii) the total number of income-restricted rental units in the building\nor group of buildings or development is less than twenty percent, (iii)\nis not subject to an existing regulatory agreement that prohibits the\nconversion of the dwelling units to condominium ownership, and (iv)\ncontains a representation that an agreement has been reached with the\nrelevant housing finance agency to increase the total number of\nincome-restricted rental units in the building or group of buildings or\ndevelopment to at least twenty percent for the extended affordability\nterm upon consummation of the preservation plan.\n 3. At the time of submission of the preservation plan, the offeror\nshall provide a letter of support from the relevant housing finance\nagency demonstrating that a regulatory agreement has been entered into\nbetween the offeror, the qualified owner, and the relevant housing\nfinance agency regarding the income-restricted rental units during the\nextended affordability term, and that such regulatory agreement will,\namong other things, require the offeror to include the following\ndisclosures in the preservation plan:\n (a) A list of the proposed income-restricted rental units;\n (b) The proposed qualified owner of the income-restricted rental\nunits, which qualified owner shall take title to the income-restricted\nrental units no later than three hundred sixty-five days from the date\nof consummation of the preservation plan;\n (c) The operating expenses and revenues applicable to the\nincome-restricted rental units, which shall be reflected in the updated\nSchedule A and Schedule B for the first year of operation of the\ncondominium, the allocation of common interests, projected common\ncharges, estimated real estate taxes, and rents to be collected from\neach income-restricted rental unit, and the allocation of common\nexpenses under section three hundred thirty-nine-m of the real property\nlaw, applicable to the income-restricted rental units, which shall be\nused to limit certain condominium expenses allocable to the\nincome-restricted rental units and to cover any shortfall in the revenue\nfrom rent to cover the costs of operation of the income-restricted\nrental units;\n (d) A description of any financing encumbering the income-restricted\nrental units, and whether a tax exemption or abatement is in place to\nreduce real estate taxes for the income-restricted rental units;\n (e) A description of any regulatory agreement or agreements to be\nrecorded against the income-restricted rental units and the term thereof\nand the relevant housing finance agency or agencies with supervisory\noversight;\n (f) A description of the provisions of the declaration and by-laws for\nthe condominium that provides for the special allocation of common\nexpenses in accordance with section three hundred thirty-nine-m of the\nreal property law, and any specific requirements set forth in a\nregulatory agreement requiring unit owners in the condominium to cover\nany shortfall in the revenue from rent to cover the costs of operation\nof the income-restricted rental units;\n (g) A description of the contemplated structure of the board of\nmanagers of the condominium, including specifically an explanation as to\nhow the interests of the qualified owner of the income-restricted rental\nunits are to be adequately represented;\n (h) A description of the building-wide amenities and a representation\nthat the declaration and by-laws for the condominium shall require that\ntenants of the income-restricted rental units be provided an opportunity\nto use commonly accessible amenities of the condominium and not unique\nto an individual unit, including but not limited to: pools, fitness\ncenters, storage spaces, parking, and roofs or gardens accessible on a\nbuilding-wide basis, and that the tenants of the income-restricted\nrental units may only be charged a nominal and reasonable fee for such\nuse, as approved by the relevant housing finance agency in accordance\nwith the regulatory agreement, and which shall not be treated as rent\nunder any rental agreement;\n (i) The name, address and contact details for the relevant housing\nfinance agency or agencies with supervisory oversight of the\nincome-restricted rental units and the occupants within;\n (j) That the regulatory agreement contains a provision which requires\nthat once a vacancy occurs of an income-restricted rental unit, after\nconsummation of the preservation plan, then said unit shall only be\nleased to low income households whose annual household income is not\ngreater than sixty percent of area median income at the time of the\ninitial lease, and such unit shall be marketed and leased in compliance\nwith the relevant housing finance agency's leasing requirements, which\nmay include leasing through New York city's housing connect portal;\n (k) A representation by offeror that the regulatory agreement includes\nand accounts for (i) all of the existing on-site income-restricted\nrental units in an existing building or group of buildings or\ndevelopment, or (ii) all of the income-restricted rental units\nassociated with an existing building or group of buildings or\ndevelopment located on a zoning lot where one or more buildings were set\naside as affordable housing for purposes of qualifying for a partial\nproperty tax exemption pursuant to section four hundred twenty-one-a of\nthe real property tax law;\n (l) To the extent not already subject thereto prior to the\nconsummation of the preservation plan, a representation by offeror that\nthe regulatory agreement shall require all income-restricted rental\nunits be subject to rent stabilization during the extended affordability\nterm, and that no income-restricted rental units shall be removed from\nrent stabilization pursuant to the exemption for units owned as a\ncondominium under section 26-504 of the administrative code of the city\nof New York; and\n (m) The recording of the condominium declaration and commencement of\ncondominium operations does not modify the requirement under section\nfour hundred twenty-one-a of the real property tax law that all\nresidential rental apartments are subject to rent stabilization.\n 4. Upon submission of the preservation plan to the department of law,\neach tenant in occupancy of any unit, including but not limited to any\nincome-restricted rental unit, in the eligible project that is the\nsubject of such preservation plan shall be provided with a written\nnotice stating that such preservation plan has been submitted to the\ndepartment of law. Written notice to each tenant in occupancy shall\ncontain or be accompanied by:\n (a) a copy of the proposed preservation plan that has been submitted\nto the department of law;\n (b) a statement that tenants of the dwelling units being offered for\nsale pursuant to the preservation plan or their representatives may\nphysically inspect the premises at any time subsequent to the submission\nof the preservation plan to the department of law, during normal\nbusiness hours, upon written request made by them to the offeror,\nprovided such representatives are registered architects or professional\nengineers licensed by the office of the professions of the education\ndepartment of the state of New York; and\n (c) a statement to tenants of the income-restricted rental units that\nthe dwelling units they occupy are not being offered for sale, but their\ntenancies shall continue undisturbed during and after the conversion of\nthe property to condominium ownership. The statement shall also disclose\nthat all income-restricted rental units shall be subject to rent\nstabilization throughout the extended affordability term.\n 5. The tenants in occupancy of dwelling units being offered for sale\non the date the attorney general accepts the preservation plan for\nfiling shall have the exclusive right to purchase their dwelling units\nfor ninety days after the preservation plan has been accepted for filing\nby the attorney general, during which time the offering price available\nto the tenant in occupancy shall not be increased and a tenant's\ndwelling unit shall not be shown to a third party unless such tenant\nhas, in writing, waived their right to purchase. Subsequent to the\nexpiration of such ninety-day period, a tenant in occupancy of a\ndwelling unit who has not purchased shall be given the exclusive right\nfor an additional six months from said expiration date to purchase said\ndwelling unit on the same terms and conditions as are contained in any\nexecuted contract to purchase said dwelling unit entered into by a\npurchaser under the preservation plan, such exclusive right to be\nexercisable within fifteen days from the date of mailing by registered\nmail of notice of the execution of a contract of sale together with a\ncopy of said executed purchase agreement to said tenant.\n 6. The preservation plan shall also disclose that the offeror shall:\n (a) market and sell all the dwelling units (other than the\nincome-restricted rental units) in the building or group of buildings or\ndevelopment, as each such dwelling unit becomes vacant, to a purchaser\nunder the preservation plan through the use of commercially reasonable\ngood faith efforts;\n (b) fund the reserve fund and dedicated capital fund in the manner and\namounts as provided in section three hundred thirty-nine-mm of the real\nproperty law;\n (c) file an annual update amendment every year which shall include an\nupdated Schedule A of all dwelling units being offered for sale under\nthe preservation plan; and\n (d) exercise commercially reasonable good faith efforts to sell at\nleast fifty-one percent of the total number of dwelling units offered\nfor sale under the preservation plan (excluding any income-restricted\nrental units not offered for sale) within five years from the date of\nconsummation of the preservation plan.\n 7. After the issuance of the letter from the attorney general stating\nthat the preservation plan has been accepted for filing, the offeror\nshall, on the thirtieth, sixtieth, eighty-eighth and ninetieth day after\nsuch date and at least once every thirty days until the preservation\nplan is declared effective or abandoned, as the case may be, and on the\nsecond day before the expiration of any exclusive purchase period\nprovided in a substantial amendment to the preservation plan:\n (a) file with the attorney general a written statement under oath\nsetting forth the percentage of bona fide tenants in occupancy of all\ndwelling units in the building or group of buildings or development on\nthe date the preservation plan was accepted for filing by the attorney\ngeneral who have executed and delivered written agreements to purchase\nunder the preservation plan as of the date of such written statement\nunder oath; and\n (b) before noon on the day such statement is filed post a copy of such\nwritten statement under oath in a prominent place accessible to all\ntenants in each building covered by the preservation plan.\n 8. A preservation plan shall not be declared effective until written\npurchase agreements have been executed and delivered for at least\nfifteen percent of all dwelling units offered for sale in the building\nor group of buildings or development from either (a) bona fide tenants\nwho were in occupancy on the date a letter was issued by the attorney\ngeneral accepting the preservation plan for filing or (b) bona fide\nnon-tenant purchasers. The purchase agreement shall be executed and\ndelivered pursuant to an offering made in good faith without fraud and\ndiscriminatory repurchase agreements or other discriminatory\ninducements. A negotiated reduction from the original offering price\nextended shall not, by itself, be deemed a discriminatory inducement.\n 9. Those written statements under oath that the offeror is required to\nfile with the attorney general pursuant to subdivision seven of this\nsection shall also include:\n (a) the total number of written agreements to purchase under the\npreservation plan received from bona fide non-tenant purchasers;\n (b) the total number of written agreements to purchase under the\npreservation plan received from all bona fide tenants in occupancy;\n (c) the percentage of dwelling units under contract, calculated by\nadding the number of written purchase agreements for a unit that were\nreceived from (i) all bona fide tenants in occupancy plus (ii) all bona\nfide non-tenant purchasers and then dividing the sum of those two\nnumbers by the total number of dwelling units offered for sale under the\npreservation plan;\n (d) whether or not the offeror intends to claim a credit against the\nmandatory initial contribution the offeror is obligated to deposit into\nthe condominium's reserve fund pursuant to subdivision three of section\nthree hundred thirty-nine-mm of the real property law for the actual\ncost of capital replacements which the offeror has begun after the\npreservation plan was submitted for filing to the department of law but\nbefore the preservation plan is declared effective, together with their\nactual or estimated costs which credit shall not exceed the actual cost\nof the credit;\n (e) whether or not the offeror shall be making its reserve fund\ncontributions required pursuant to section three hundred thirty-nine-mm\nearlier or in an amount greater than required; and\n (f) a representation that no purchaser counted for purposes of\ndeclaring the preservation plan effective is the offeror, the selling\nagent or the managing agent, or is a principal of the offeror, the\nselling agent, or the managing agent or is related to any principal of\nthe offeror, any principal of the selling agent or any principal of the\nmanaging agent by blood, marriage, or adoption, or is an affiliate,\nbusiness associate, an employee, a shareholder, a member, a manager, a\ndirector, an officer, a limited partner of the offeror, selling agent or\nmanaging agent.\n 10. The preservation plan shall provide that it will be deemed\nabandoned, void and of no effect if it does not become effective within\nfifteen months from the date of issue of the letter of the attorney\ngeneral stating that the preservation plan has been accepted for filing\nand, in the event of such abandonment, no new plan, including but not\nlimited to a preservation plan, for the conversion of such building or\ngroup of buildings or development shall be submitted to the attorney\ngeneral for at least twelve months after such abandonment.\n 11. No closings of title of a dwelling unit to a purchaser under the\npreservation plan shall take place until the attorney general shall have\nalso accepted for filing an amendment that declares the preservation\nplan effective. Within forty-five days of the first closing of title of\na dwelling unit to a purchaser under the preservation plan, the offeror\nshall submit to the attorney general its post-closing amendment to the\npreservation plan. Thereafter, the preservation plan shall continually\nbe updated with the filing of an annual update amendment, no later than\nthirty days from the anniversary of the date the attorney general\naccepted the post-closing amendment for filing. An offeror or successor\nofferor shall only be relieved of its obligation to file an annual\nupdate amendment to the preservation plan after the last dwelling unit\noffered for sale is conveyed to a purchaser under the preservation plan.\n 12. After the date of acceptance for filing of the post-closing\namendment, the offeror or successor offeror shall continue to make\ncommercially reasonable good faith efforts to sell the dwelling units it\nowns.\n 13. The attorney general shall refuse to accept for filing an annual\nupdate amendment to the preservation plan unless:\n (a) The annual update amendment discloses, in addition to the other\ndisclosures required elsewhere in this section or the regulations of the\nattorney general, the following data and information:\n (i) an accounting of the dwelling units sold and closed by the offeror\nin the preceding twelve months, with an indication if the dwelling unit\nwas conveyed to a purchaser under the preservation plan or to a\nsuccessor offeror;\n (ii) an inventory of the offeror's unsold dwelling units at the end of\nthe preceding twelve months, in form and substance as shall satisfy the\nattorney general; and\n (iii) all the information, data and literature presented by the board\nof managers in its semi-annual reports on the status of the reserve fund\nas required under subdivision five of section three hundred\nthirty-nine-mm of the real property law.\n (b) The annual update amendment shall be accompanied by an affidavit\nfrom a principal of the offeror attesting to the following data and\ninformation with respect to all the dwelling units the offeror then\nowns:\n (i) the dwelling units' identifying information and general location;\n (ii) whether, on the date of submission of the annual update\namendment, the unsold dwelling unit is subject to a fully executed\npurchase agreement, and if so, whether the purchaser is a purchaser\nunder the preservation plan or otherwise;\n (iii) whether, on the date of submission of the annual update\namendment, the dwelling unit is occupied or vacant, and if occupied, an\nindication that occupancy is:\n (A) by a rent-regulated tenant;\n (B) by a market-rate tenant;\n (C) a month-to-month tenancy;\n (D) a tenancy at sufferance; or\n (E) other.\n (iv) regardless of the occupancy status of a dwelling unit on the date\nof submission of the annual update amendment, an indication if the\ndwelling unit was vacant for more than one of the twelve preceding\nmonths. For each dwelling unit so indicated, the offeror shall also\ndisclose:\n (A) the date range that the dwelling unit was vacant;\n (B) the date range for any period of time that the dwelling unit was\nmarketed for sale;\n (C) date of sale;\n (D) the date the dwelling unit was leased by a tenant; and\n (E) the date the lease is set to expire (if applicable).\n 14. No eviction proceedings shall be commenced at any time against\nnon-purchasing tenants for failure to purchase or for any other reason\napplicable to expiration of tenancy; provided that such proceedings may\nbe commenced for non-payment of rent, illegal use or occupancy of the\npremises, refusal of reasonable access to the owner or a similar breach\nby the non-purchasing tenant of their obligations to the owner of the\ndwelling unit; and provided further that an owner of a unit shall not\ncommence an action to recover possession of a dwelling unit from a\nnon-purchasing tenant on the grounds that they seek the dwelling unit\nfor the use and occupancy of themself or their family's use and\noccupancy.\n 15. No eviction proceedings shall be commenced, except as provided in\nthis subdivision, at any time against either eligible senior citizens or\neligible disabled persons. The rentals of eligible senior citizens and\neligible disabled persons who reside in dwelling units not subject to\ngovernment regulation as to rentals and continued occupancy and eligible\nsenior citizens and eligible disabled persons who reside in dwelling\nunits with respect to which government regulation as to rentals and\ncontinued occupancy is eliminated or becomes inapplicable after the\npreservation plan has been accepted for filing shall not be subject to\nunconscionable increases which, solely for the purposes of this\nsubdivision, and notwithstanding any exemptions for housing\naccommodations owned as condominiums provided for under subdivision\nseven of section two hundred fourteen of the real property law, and\nregardless of whether such non-purchasing tenant has a rent that exceeds\ntwo hundred forty-five percent of the fair market rent, all rent\nincreases for eligible senior citizens and eligible disabled persons\nshall be considered unconscionable if such increases exceed the\npermissible increases provided for under the good cause eviction law\nunder article six-A of the real property law; provided that such\nproceedings may be commenced against such tenants for non-payment of\nrent, illegal use or occupancy of the premises, refusal of reasonable\naccess to the owner or a similar breach by the tenant of their\nobligations to the owner of the dwelling unit.\n 16. Eligible senior citizens and eligible disabled persons who reside\nin dwelling units subject to government regulation as to rentals and\ncontinued occupancy shall continue to be subject thereto.\n 17. The rights granted under the preservation plan to eligible senior\ncitizens and eligible disabled persons shall not be abrogated or reduced\nnotwithstanding any expiration of, or amendment to, this section.\n 18. Any offeror who disputes the election by a person to be an\neligible senior citizen or an eligible disabled person shall apply to\nthe attorney general within thirty days of the receipt of the election\nforms for a determination by the attorney general of such person's\neligibility. The attorney general shall, within thirty days thereafter,\nissue a determination of eligibility. The foregoing shall, in the\nabsence of fraud, be the sole method for determining a dispute as to\nwhether a person is an eligible senior citizen or an eligible disabled\nperson. The determination of the attorney general shall be reviewable\nonly through a proceeding under article seventy-eight of the civil\npractice law and rules, which proceeding shall be commenced within\nthirty days after such determination by the attorney general becomes\nfinal.\n 19. Non-purchasing tenants who reside in dwelling units subject to\ngovernment regulation as to rentals and continued occupancy prior to the\nconversion of the building or group of buildings or development to\ncondominium ownership shall continue to be subject thereto.\n 20. The rentals of non-purchasing tenants who reside in dwelling units\nnot subject to government regulation as to rentals and continued\noccupancy and non-purchasing tenants who reside in dwelling units with\nrespect to which government regulation as to rentals and continued\noccupancy is eliminated or becomes inapplicable after the preservation\nplan has been accepted for filing by the attorney general shall not be\nsubject to unconscionable increases which, solely for the purposes of\nthis subdivision, and notwithstanding any exemptions for housing\naccommodations owned as condominiums provided for under subdivision\nseven of section two hundred fourteen of the real property law, in the\nevent the rent of a non-purchasing tenant shall be less than two hundred\nforty-five percent of the fair market rent, then such increases for such\nnon-purchasing tenant shall be governed by article six-A of the real\nproperty law.\n 21. The rights granted under the preservation plan to purchasers under\nthe preservation plan and to non-purchasing tenants shall not be\nabrogated or reduced notwithstanding any expiration of, or amendment to,\nthis section.\n 22. Any local legislative body may adopt local laws and any agency,\nofficer or public body may prescribe rules and regulations with respect\nto the continued occupancy by tenants of dwelling units which are\nsubject to regulation as to rentals and continued occupancy pursuant to\nlaw, provided that in the event that any such local law, rule or\nregulation shall be inconsistent with the provisions of this section,\nthe provisions of this section shall control.\n 23. The attorney general shall refuse to accept for filing a\npreservation plan when the attorney general determines: (a) that one or\nmore of the income-restricted rental units within the building, group of\nbuildings or development was vacant on the date of submission; or (b) of\nthe dwelling units that are not income-restricted rental units, an\nexcessive number of long-term vacancies existed on the date that the\npreservation plan was first submitted to the department of law. For\npurposes of this subdivision, "long-term vacancies" shall mean dwelling\nunits not leased or occupied by bona fide tenants for more than five\nmonths prior to the date of such submission to the department of law;\nand "excessive" shall mean a vacancy rate in excess of the greater of\n(i) ten percent and (ii) a percentage that is double the normal average\nvacancy rate for the building or group of buildings or development for\ntwo years prior to the January preceding the date the preservation plan\nwas first submitted to the department of law.\n 24. All dwelling units occupied by non-purchasing tenants shall be\nmanaged by the same managing agent who manages all other dwelling units\nin the building or group of buildings or development. Such managing\nagent shall provide to non-purchasing tenants all services and\nfacilities required by law on a non-discriminatory basis. The offeror\nshall guarantee the obligation of the managing agent to provide all such\nservices and facilities until such time as the offeror surrenders\ncontrol of the board of managers, at which time the board of managers of\nthe condominium shall assume responsibility for the provision of all\nservices and facilities required by law on a non-discriminatory basis.\nSuch managing agent shall also ensure that non-purchasing tenants be\nprovided an opportunity to use commonly accessible amenities of the\ncondominium and not unique to an individual unit, including but not\nlimited to pools, fitness centers, storage spaces, parking and roofs or\ngardens accessible on a building-wide basis, and that the tenants of the\nincome-restricted rental units may only be charged a nominal and\nreasonable fee for such use, as approved by the relevant housing finance\nagency in accordance with the regulatory agreement, and which shall not\nbe treated as rent under any rental agreement.\n 25. It shall be unlawful for any person to engage in any course of\nconduct, including, but not limited to, interruption or discontinuance\nof essential services, which substantially interferes with or disturbs\nthe comfort, repose, peace or quiet of any tenant in their use or\noccupancy of their dwelling unit or the facilities related thereto. The\nattorney general may apply to a court of competent jurisdiction for an\norder restraining such conduct and, if they deem it appropriate, an\norder restraining the owner from selling the dwelling unit itself or\nfrom proceeding with the preservation plan of conversion; provided that\nnothing contained herein shall be deemed to preclude the tenant from\napplying on their own behalf for similar relief.\n 26. Any provision of a lease or other rental agreement which purports\nto waive a tenant's rights under this section or rules and regulations\npromulgated pursuant hereto shall be void as contrary to public policy.\n 27. Notwithstanding the requirements of this section regarding the\npreservation of an income-restricted rental unit or units as permanently\naffordable, and to the extent permitted under existing law as it relates\nto the income-restricted rental unit or units, the income-restricted\nrental unit or units in a building or group of buildings or development\nof an eligible project may be converted to a limited equity housing\ncooperative pursuant to article eleven of the private housing finance\nlaw under a separate offering statement or prospectus, if the relevant\nhousing finance agency ensures that the proposed offering statement or\nprospectus discloses that the regulatory agreement provides as follows:\n (a) the offering prices are affordable to the existing tenants and/or\nthe qualified low-income purchasers who meet the definition of persons\nof low income or families of low income as defined by subdivision\nnineteen of section two of the private housing finance law;\n (b) any tenant of an income-restricted rental unit that chooses not to\nbuy the income-restricted rental unit such tenant occupies shall\ncontinue to be protected under rent stabilization throughout the process\nof conversion to a limited equity housing cooperative and thereafter,\nand that no existing tenant of an income-restricted rental unit shall be\nevicted solely due to such tenant's decision not to purchase their\nincome-restricted rental unit;\n (c) the regulatory agreement and certificate of incorporation of the\nlimited equity housing cooperative shall ensure that the\nincome-restricted rental units converted to a limited equity housing\ncooperative shall be reserved for occupancy by persons of low income and\nfamilies of low income in perpetuity;\n (d) the regulatory agreement and certificate of incorporation of the\nlimited equity housing cooperative shall ensure that, notwithstanding\nthe creation of a separate condominium, any obligations that the\nnon-income-restricted rental unit owners may have to ensure the\nfinancial viability and delivery of services in a non-discriminatory\nmanner, prior to the date of conversion to a limited equity housing\ncooperative, shall not be abrogated and shall remain in full force and\neffect;\n (e) the relevant housing finance agency shall have oversight authority\nover the limited equity housing cooperative in the regulatory agreement,\ncondominium declaration, condominium by-laws and certificate of\nincorporation of the limited equity housing cooperative, including the\nability to appoint a new board of directors of the limited equity\nhousing cooperative in the event of a violation of a term of, or an\nevent of default by the limited equity housing cooperative under any of\nits governing documents, requiring purchasers of such units to attend\nhomeownership training, and providing for the procedures to sell the\nunits upon vacancy; and\n (f) that the ownership of the dedicated capital account by the\nqualified owner, and the funding of the dedicated capital account by the\nofferor of the preservation plan, shall each be subject to the oversight\nauthority of the relevant housing finance agency as provided in section\nthree hundred thirty-nine-mm of the real property law.\n 28. It shall be unlawful for an offeror, its designees and/or\nsuccessors to have or exercise voting control of the condominium's board\nof managers for more than ninety days from the fifth anniversary date of\nthe first closing of title to a dwelling unit, or whenever the unsold\ndwelling units constitute less than fifty percent of the common\ninterests appurtenant to all dwelling units, whichever is sooner.\n 29. The attorney general may, in their discretion, waive the\nrequirement in paragraph (d) of subdivision six of this section that an\nofferor sell at least fifty-one percent of the dwelling units offered\nfor sale under the preservation plan when the offeror provides proof\nsatisfactory to the attorney general that five years of commercially\nreasonable good faith efforts did not result in the sale of fifty-one\npercent of the dwelling units. If such waiver is granted, the offeror\nshall be required to disclose the new date by which it will sell at\nleast fifty-one percent of the dwelling units offered for sale under the\npreservation plan in its subsequent annual update amendment. Any waiver\ngranted hereunder shall not alleviate an offeror, its designees and/or\nsuccessors of the obligation set forth in subdivision twenty-eight of\nthis section.\n 30. Within three hundred and sixty-five days of the effective date of\nthis section, the attorney general shall submit a notice of proposed\nrulemaking for publication in the state register which shall contain the\nsuitable rules necessary to carry out the provisions of this section.\nThe authority of the attorney general to promulgate, adopt, publish,\nnotify, review, amend, modify, reconsider, or rescind any rule or\nregulation as may be conferred anywhere within this section shall comply\nwith the state administrative procedure act in all respects.\nNotwithstanding the foregoing, an offeror may submit a preservation plan\nto the department of law regardless of whether the attorney general has\nadopted suitable rules to carry out this section, and the department of\nlaw shall not rely on the lack of rulemaking to refuse to accept a\npreservation plan for submission or filing if offeror has otherwise\ncomplied with the requirements of this section.\n 31. For any offering statement or prospectus (including, without\nlimitation, a preservation plan and any amended filings thereto),\nsubmitted to the department of law pursuant to this section, the filing\nfees set forth in paragraph (a) of subdivision seven of section three\nhundred fifty-two-e of this article shall not apply. Instead, an offeror\nshall tender the following filing fee with and for its submission:\n (a) seven hundred fifty dollars for every offering not in excess of\ntwo hundred fifty thousand dollars;\n (b) for every offering in excess of two hundred fifty thousand\ndollars, four-tenths of one percent of the total amount of the offering\nbut not in excess of sixty thousand dollars, of which one-half of said\namount shall be a nonrefundable deposit paid at the time of submitting\nthe preservation plan to the department of law for review and the\nbalance payable upon the attorney general's issuance of a letter of\nacceptance of the preservation plan for filing;\n (c) seven hundred fifty dollars for each price change amendment to a\npreservation plan;\n (d) seven hundred fifty dollars for any other amendment to a\npreservation plan; and\n (e) seven hundred fifty dollars for each such application, and an\nadditional seven hundred fifty dollars for each and every amendment\nsubmitted in furtherance of such an application to permit an offeror to\nsolicit public interest prior to the filing of a preservation plan to\nthe department of law.\n 32. The relevant housing finance agency may promulgate regulations,\nrules, and other guidance documents necessary to carry out the\nprovisions of this section, as it deems necessary.\n 33. The provisions of this section shall only be applicable in the\ncity of New York.\n 34. The attorney general shall make any offering statement or\nprospectus (including, without limitation, a preservation plan and any\namended filings thereto), submitted pursuant to this section available\nto the public in a searchable repository on its official internet\nwebsite.\n * NB Repealed November 5, 2031\n