§ 339-MM — Establishment of reserve fund and dedicated capital fund for buildings converting to condominium ownership under section three hundred fi...

New York § 339-MM

• Jurisdiction: New York
• Law RPP: Real Property
• Art. 9-B: Condominium Act

Text

* § 339-mm. Establishment of reserve fund and dedicated capital fund\nfor buildings converting to condominium ownership under section three\nhundred fifty-two-eeeee of the general business law. 1. Within thirty\ndays after the consummation of a preservation plan, the offeror thereof\n(and/or its designee or designees and/or successor or successors) shall\nestablish and transfer:\n (a) to the condominium board of managers a reserve fund to be used\nexclusively for making capital repairs, replacements and improvements\nnecessary for the health and safety of the residents (including\nresidents of the income-restricted rental units) of such building or\ngroup of buildings or development. Such reserve fund shall be exclusive\nof any other funds required to be reserved under the preservation plan\nor applicable law or regulation of the attorney general, except a fund\nfor capital repairs, replacements and improvements substantially similar\nin purpose to and in an amount not less than the reserve fund mandated\nby this section. Such reserve fund shall also be exclusive of any\nworking capital fund or dedicated capital fund and shall not be subject\nto reduction for closing apportionments.\n (b) to the qualified owner of the income-restricted rental units, and\nsubject to the oversight of the relevant housing finance agency set\nforth in a regulatory agreement, a dedicated capital fund to be used\nexclusively for making unit repairs, replacements and improvements\nnecessary for the health and safety of the residents of an\nincome-restricted rental unit or units of such building or group of\nbuildings or development. Such dedicated capital fund shall be exclusive\nand supplemental of any other funds required to be reserved under the\npreservation plan or applicable law or regulation. Such dedicated\ncapital fund shall also be exclusive and supplemental of any reserve\nfund or working capital fund and shall not be subject to reduction for\nclosing apportionments. The dedicated capital fund shall not be used\ntowards any building-wide capital replacement, and instead shall be used\nsolely for unit repairs, replacements and improvements of the\nincome-restricted rental units.\n 1-a. In the event that the funds are insufficient, unless the relevant\nhousing finance agency provides otherwise, repairs and capital\nimprovements necessary for the health and safety of the residents in all\ncommon areas and building infrastructure shall be at the sole expense of\nthe condominium board of managers. The relevant housing finance agency\nmay establish penalties for failure to comply with legal and regulatory\nrequirements.\n 2. (a) Such reserve fund shall be established in an amount equal to\neither (i) three percent of the total price or, (ii) (A) three percent\nof the actual sales price of all condominium units sold by the offeror\nat the time the preservation plan is declared effective, provided,\nhowever, that if such amount is less than one percent of the total\nprice, then the fund shall be established as a minimum of one percent of\nthe total price; plus (B) supplemental contributions to be made by the\nofferor at a rate of three percent of the actual sales price of\ncondominium units for each unit held by the offeror and sold to bona\nfide purchasers subsequent to the effective date of the preservation\nplan and within five years of the consummation of the preservation plan,\nnotwithstanding that the total amount contributed may exceed three\npercent of the total price; and provided, further, that if five years\nfrom thirty days after the consummation of the preservation plan the\ntotal contributions by the offeror to the fund are less than three\npercent of the total price the offeror shall pay the difference between\nthe amount contributed and three percent of the total price.\nSupplemental contributions shall be made within thirty days of each\nsale.\n (b) Such dedicated capital fund shall be established in an amount\nequal to one-half of one percent of the total price, and shall be\ntransferred in full within thirty days of the date of consummation of\nthe preservation plan into an account at a financial institution\nregulated by the department of financial services of the state of New\nYork that shall have been opened by, and shall at all times be subject\nto the oversight authority of the relevant housing finance agency of the\nqualified owner of the income-restricted rental unit or units.\n 3. Notwithstanding the provisions of subdivisions one and two of this\nsection, the contributions required pursuant to this section may be made\nearlier or in an amount greater than so provided, including as may be\ndirected by the relevant housing finance agency. An offeror may claim\nand receive credit against the mandatory initial contribution to the\nreserve fund for the actual cost of capital replacements which such\nofferor has begun after the preservation plan is submitted for filing to\nthe department of law and before the preservation plan is declared\neffective; provided, however, that any such replacements shall be set\nforth in the preservation plan together with their actual or estimated\ncosts and further provided, that such credit shall not exceed the lesser\nof the actual cost of the capital replacements or one and a half percent\nof the total price.\n 4. The condominium board of managers shall report to unit owners and\nthe relevant housing finance agency, and shall make available to all\ntenants in each building, on a semi-annual basis with respect to all\ndeposits into and withdrawals from the reserve fund mandated by\nparagraph (a) of subdivision two of this section.\n 5. The offeror, not later than the thirtieth day following the\nacceptance of a preservation plan for filing by the department of law\npursuant to section three hundred fifty-two-eeeee of the general\nbusiness law and until the consummation of the preservation plan, shall\npost and maintain in a prominent place, accessible to all tenants in\neach building covered by the preservation plan, a listing of all\nviolations of record against such buildings as determined by the\ndepartment of buildings of the city of New York and the department of\nhousing preservation and development of the city of New York. All newly\nissued violations shall be posted within forty-eight hours of their\nissuance and maintained as described in this subdivision. The offeror\nmay satisfy the requirements of this section by designating an agent on\nthe premises with whom such listing shall be made available for\ninspection by the tenants. Any penalty for failure to comply with a\nstate or local building and housing maintenance law or regulation shall\nbe paid by, and the sole responsibility of, the condominium board of\nmanagers.\n 6. Any provision purporting to waive the provisions of this section in\nany contract to purchase, any agreement between an offeror and a unit\npurchaser, any agreement between an offeror and the condominium board of\nmanagers created under a preservation plan, any agreement between an\nofferor and the owner of the income-restricted rental unit or units\nshall be void as against public policy.\n 7. (a) Except as otherwise provided in paragraph (b) of this\nsubdivision, any person who knowingly violates or assists in the\nviolation of any provision of this section shall be subject to a civil\npenalty of one hundred dollars per day per unit for each day that a\nbuilding is not in compliance with the provisions of such section;\nprovided, however, that such civil penalty shall not exceed one thousand\ndollars per unit.\n (b) Any person who violates or assists in the violation of subdivision\ntwo of this section shall also be subject to a civil penalty of one\nthousand dollars per day for each day that the reserve fund required by\nsubdivision two of this section is not established; provided, however,\nthat such civil penalty shall not exceed the amount required to be\nreserved pursuant to subdivision two of this section.\n (c) Any other action or proceeding in any court of competent\njurisdiction that may be appropriate or necessary for the enforcement of\nthe provisions of this section may be brought in the name of the people\nof the state of New York by the attorney general, including actions to\nsecure permanent injunctions enjoining any acts or practices which\nconstitute a violation of any provision of this section, mandating\ncompliance with the provisions of this section or for such other relief\nas may be appropriate. In any such action or proceeding, the attorney\ngeneral may apply to any court of competent jurisdiction, or to a judge\nor justice thereof, for a temporary restraining order or preliminary\ninjunction enjoining and restraining all persons from violating any\nprovision of this section, mandating compliance with the provisions of\nthis section, or for such other relief as may be appropriate, until the\nhearing and determination of such action or proceeding and the entry of\nfinal judgment or order therein. The court, or judge or justice thereof,\nto whom such application is made, is hereby authorized to make any or\nall of the orders specified in this paragraph, as may be required in\nsuch application, with notice, and to make such other or further orders\nor directions as may be necessary to render the same effectual. No\nundertaking shall be required as a condition of the granting or issuing\nof such order, or by reason thereof.\n (d) Nothing contained in this section shall impair any rights,\nremedies or causes of action accrued or accruing to purchasers of\ncondominium units with regard to the funding of the reserve fund and\ncapital fund under this section.\n * NB Repealed November 5, 2031\n