N.Y. General Business Law § 352-eee: Conversions to cooperative or condominium ownership in certain cities, towns and villages located in the counties of Nassau, Westchester ...

§ 352-eee. Conversions to cooperative or condominium ownership in

certain cities, towns and villages located in the counties of Nassau,

Westchester and Rockland. 1. As used in this section, the following

words and terms shall have the following meanings:

(a) "Plan". Every offering statement or prospectus submitted to the

department of law pursuant to section three hundred fifty-two-e of this

article for the conversion of a building or group of buildings or

development from residential rental status to cooperative or condominium

ownership or other form of cooperative interest in realty, other than an

offering statement or prospectus for such conversion pursuant to article

two, eight or eleven of the private housing finance law.

(b) "Non-eviction plan". A plan which may not be declared effective

until at least fifteen percent of those bona fide tenants in occupancy

of all dwelling units in the building or group of buildings or

development on the date the plan is declared effective shall have

executed and delivered written agreements to purchase under the plan. As

to tenants who were in occupancy on the date a letter was issued by the

attorney general accepting the plan for filing, the purchase agreement

shall be executed and delivered pursuant to an offering made in good

faith without fraud and discriminatory repurchase agreements or other

discriminatory inducements.

(c) "Eviction plan". A plan which, pursuant to the provisions of this

section, can result in the eviction of a non-purchasing tenant by reason

of the tenant failing to purchase pursuant thereto, and which may not be

declared effective until written agreements to purchase under the plan

pursuant to an offering made in good faith without fraud and with no

discriminatory repurchase agreements or other discriminatory inducements

shall have been executed and delivered by: (i) at least fifty-one

percent of the bona fide tenants in occupancy of all dwelling units in

the building or group of buildings or development on the date the

offering statement or prospectus was accepted for filing by the attorney

general excluding, for the purposes of determining the number of bona

fide tenants in occupancy on such date, eligible senior citizens and

eligible disabled persons; and (ii) at least thirty-five percent of the

bona fide tenants in occupancy of all dwelling units in the building or

group of buildings or development on the date the offering statement or

prospectus was accepted for filing by the attorney general including,

for the purposes of determining the number of bona fide tenants in

occupancy on such date eligible senior citizens and eligible disabled

persons.

(d) "Purchaser under the plan". A person who owns the shares allocated

to a dwelling unit or who owns such dwelling unit itself.

(e) "Non-purchasing tenant". A person who has not purchased under the

plan and who is a tenant entitled to possession at the time the plan is

declared effective or a person to whom a dwelling unit is rented

subsequent to the effective date. A person who sublets a dwelling unit

from a purchaser under the plan shall not be deemed a non-purchasing

tenant.

(f) "Eligible senior citizens". Non-purchasing tenants who are

sixty-two years of age or older on the date the plan is declared

effective and the spouses of any such tenants on such date; provided

that such tenant shall not be precluded from subsequently purchasing the

dwelling unit on the terms then offered to tenants in occupancy.

(g) "Eligible disabled persons". Non-purchasing tenants who have an

impairment which results from anatomical, physiological or psychological

conditions, other than addiction to alcohol, gambling, or any controlled

substance, which are demonstrable by medically acceptable clinical and

laboratory diagnostic techniques, and which are expected to be permanent

and which prevent the tenant from engaging in any substantial gainful

employment on the date the attorney general has accepted the plan for

filing, and the spouses of any such tenants on such date, and who have

elected, within sixty days of the date the attorney general has accepted

the plan for filing, on forms promulgated by the attorney general and

presented to such tenants by the offeror, to become non-purchasing

tenants under the provisions of this section; provided, however, that if

the disability first occurs after acceptance of the plan for filing,

then such election may be made within sixty days following the onset of

such disability unless during the period subsequent to sixty days

following the acceptance of the plan for filing but prior to such

election, the offeror accepts a written agreement to purchase the

apartment from a bona fide purchaser; and provided further that such

election shall not preclude any such tenant from subsequently purchasing

the dwelling unit or the shares allocated thereto on the terms then

offered to tenants in occupancy.

2. The attorney general shall refuse to issue a letter stating that

the offering statement or prospectus required in subdivision one of

section three hundred fifty-two-e of this chapter has been filed

whenever it appears that the offering statement or prospectus offers for

sale residential cooperative apartments or condominium units pursuant to

a plan unless:

(a) The plan provides that it will be deemed abandoned, void and of no

effect if it does not become effective within twelve months from the

date of issue of the letter of the attorney general stating that the

offering statement or prospectus has been accepted for filing and, in

the event of such abandonment, no new plan for the conversion of such

building or group of buildings or development shall be submitted to the

attorney general for at least fifteen months after such abandonment.

(b) The plan provides either that it is an eviction plan or that it is

a non-eviction plan.

(c) The plan provides, if it is a non-eviction plan, as follows:

(i) The plan may not be declared effective until at least fifteen

percent of those bona fide tenants in occupancy of all dwelling units in

the building or group of buildings or development on the date the plan

is declared effective shall have executed and delivered written

agreements to purchase under the plan. As to tenants who were in

occupancy on the date a letter was issued by the attorney general

accepting the plan for filing, the purchase agreement shall be executed

and delivered pursuant to an offering made in good faith without fraud

and discriminatory repurchase agreements or other discriminatory

inducements.

(ii) No eviction proceedings will be commenced at any time against

non-purchasing tenants for failure to purchase or any other reason

applicable to expiration of tenancy; provided that such proceedings may

be commenced for non-payment of rent, illegal use or occupancy of the

premises, refusal of reasonable access to the owner or a similar breach

by the non-purchasing tenant of his obligations to the owner of the

dwelling unit or the shares allocated thereto; and provided further that

an owner of a unit or of the shares allocated thereto may not commence

an action to recover possession of a dwelling unit from a non-purchasing

tenant on the grounds that he seeks the dwelling unit for the use and

occupancy of himself or his family.

(iii) Non-purchasing tenants who reside in dwelling units subject to

government regulation as to rentals and continued occupancy prior to the

conversion of the building or group of buildings or development to

cooperative or condominium ownership shall continue to be subject

thereto.

(iv) The rentals of non-purchasing tenants who reside in dwelling

units not subject to government regulation as to rentals and continued

occupancy and non-purchasing tenants who reside in dwelling units with

respect to which government regulation as to rentals and continued

occupancy is eliminated or becomes inapplicable after the plan has been

accepted for filing by the attorney general shall not be subject to

unconscionable increases beyond ordinary rentals for comparable

apartments during the period of their occupancy. In determining

comparability, consideration shall be given to such factors as building

services, level of maintenance and operating expenses.

(v) The plan may not be amended at any time to provide that it shall

be an eviction plan.

(vi) The rights granted under the plan to purchasers under the plan

and to non-purchasing tenants may not be abrogated or reduced

notwithstanding any expiration of, or amendment to, this section.

(vii) After the issuance of the letter from the attorney general

stating that the offering statement or prospectus required in

subdivision one of section three hundred fifty-two-e of this article has

been filed, the offeror shall, on the thirtieth, sixtieth, eighty-eighth

and ninetieth day after such date and at least once every thirty days

until the plan is declared effective or is abandoned, as the case may

be, and on the second day before the expiration of any exclusive

purchase period provided in a substantial amendment to the plan, (1)

file with the attorney general a written statement, under oath, setting

forth the percentage of bona fide tenants in occupancy of all dwelling

units in the building or group of buildings or development who have

executed and delivered written agreements to purchase under the plan as

of the date of such statement, (2) before noon on the day such statement

is filed post a copy of such statement in a prominent place accessible

to all tenants in each building covered by the plan.

(d) The plan provides, if it is an eviction plan, as follows:

(i) The plan may not be declared effective unless: (1) at least

fifty-one percent of the bona fide tenants in occupancy of all dwelling

units in the building or group of buildings or development on the date

the offering statement or prospectus was accepted for filing by the

attorney general excluding, for the purposes of determining the number

of bona fide tenants in occupancy on such date, eligible senior citizens

and eligible disabled persons; and (2) at least thirty-five percent of

the bona fide tenants in occupancy of all dwelling units in the building

or group of buildings or development on the date the offering statement

or prospectus was accepted for filing by the attorney general including,

for the purposes of determining the number of bona fide tenants in

occupancy on such date eligible senior citizens and eligible disabled

persons; shall have executed and delivered written agreements to

purchase under the plan pursuant to an offering made in good faith

without fraud and with no discriminatory repurchase agreements or other

discriminatory inducements.

(ii) No eviction proceedings will be commenced against a

non-purchasing tenant for failure to purchase or any other reason

applicable to expiration of tenancy until the later to occur of (1) the

date which is the expiration date provided in such non-purchasing

tenant's lease or rental agreement, and (2) the date which is three

years after the date on which the plan is declared effective.

Non-purchasing tenants who reside in dwelling units subject to

government regulation as to rentals and continued occupancy prior to

conversion shall continue to be subject thereto during the period of

occupancy provided in this paragraph. Thereafter, if a tenant has not

purchased, he may be removed by the owner of the dwelling unit or the

shares allocated to such dwelling unit.

(iii) No eviction proceedings will be commenced, except as hereinafter

provided, at any time against either eligible senior citizens or

eligible disabled persons. The rentals of eligible senior citizens and

eligible disabled persons who reside in dwelling units not subject to

government regulation as to rentals and continued occupancy and eligible

senior citizens and eligible disabled persons who reside in dwelling

units with respect to which government regulation as to rentals and

continued occupancy is eliminated or becomes inapplicable after the plan

has been accepted for filing shall not be subject to unconscionable

increases beyond ordinary rentals for comparable apartments during the

period of their occupancy considering, in determining comparability,

such factors as building services, level of maintenance and operating

expenses; provided that such proceedings may be commenced against such

tenants for non-payment of rent, illegal use or occupancy of the

premises, refusal of reasonable access to the owner or a similar breach

by the tenant of his obligations to the owner of the dwelling unit or

the shares allocated thereto; and provided further that an owner of a

unit or of the shares allocated thereto may not commence an action to

recover possession of a dwelling unit from a non-purchasing tenant on

the grounds that he seeks the dwelling unit for the use and occupancy of

himself or his family.

(iv) Eligible senior citizens and eligible disabled persons who reside

in dwelling units subject to government regulation as to rentals and

continued occupancy shall continue to be subject thereto.

(v) The rights granted under the plan to eligible senior citizens and

eligible disabled persons may not be abrogated or reduced

notwithstanding any expiration of, or amendment to, this section.

(vi) Any offeror who disputes the election by a person to be an

eligible senior citizen or an eligible disabled person must apply to the

attorney general within thirty days of the receipt of the election forms

for a determination by the attorney general of such person's

eligibility. The attorney general shall, within thirty days thereafter,

issue his determination of eligibility. The foregoing shall, in the

absence of fraud, be the sole method for determining a dispute as to

whether a person is an eligible senior citizen or an eligible disabled

person. The determination of the attorney general shall be reviewable

only through a proceeding under article seventy-eight of the civil

practice law and rules, which proceeding must be commenced within thirty

days after such determination by the attorney general becomes final.

(vii) After the issuance of the letter from the attorney general

stating that the offering statement or prospectus required in

subdivision one of section three hundred fifty-two-e of this article has

been accepted for filing, the offeror shall, on the thirtieth, sixtieth,

eighty-eighth and ninetieth days after such date and at least once every

thirty days until the plan is declared effective or abandoned, as the

case may be, and on the second day before the expiration of any

exclusive purchase period provided in a substantial amendment to the

plan, (1) file with the attorney general a written statement, under

oath, setting forth the percentage of bona fide tenants in occupancy of

all dwelling units in the building or group of buildings or development

on the date the offering statement or prospectus was accepted for filing

by the attorney general who have executed and delivered written

agreements to purchase under the plan as of the date of such statement,

and (2) before noon on the day such statement is filed post a copy of

such statement in a prominent place accessible to all tenants in each

building covered by the plan.

(viii) If the plan is amended before it is declared effective to

provide that it shall be a non-eviction plan, any person who has agreed

to purchase under the plan prior to such amendment shall have a period

of thirty days after receiving written notice of such amendment to

revoke his agreement to purchase under the plan.

(ix) The tenants in occupancy on the date the attorney general accepts

the plan for filing shall have the exclusive right to purchase their

dwelling units or the shares allocated thereto for ninety days after the

plan is accepted for filing by the attorney general, during which time a

tenant's dwelling unit shall not be shown to a third party unless he

has, in writing, waived his right to purchase; subsequent to the

expiration of such ninety day period, a tenant in occupancy of a

dwelling unit who has not purchased shall be given the exclusive right

for an additional period of six months from said expiration date to

purchase said dwelling unit or the shares allocated thereto on the same

terms and conditions as are contained in an executed contract to

purchase said dwelling unit or shares entered into by a bona fide

purchaser, such exclusive right to be exercisable within fifteen days

from the date of mailing by registered mail of notice of the execution

of a contract of sale together with a copy of said executed contract to

said tenant.

(e) The attorney general finds that an excessive number of long-term

vacancies did not exist on the date that the offering statement or

prospectus was first submitted to the department of law. "Long-term

vacancies" shall mean dwelling units not leased or occupied by bona fide

tenants for more than five months prior to the date of such submission

to the department of law. "Excessive" shall mean a vacancy rate in

excess of the greater of (i) ten percent and (ii) a percentage that is

double the normal average vacancy rate for the building or group of

buildings or development for two years prior to the January preceding

the date the offering statement or prospectus was first submitted to the

department of law.

(f) The attorney general finds that, following the submission of the

offering statement or prospectus to the department of law, each tenant

in the building or group of buildings or development was provided with a

written notice stating that such offering statement or prospectus has

been submitted to the department of law for filing. Such notice shall be

accompanied by a copy of the offering statement or prospectus and a

statement that the statements submitted pursuant to subparagraph (vii)

of paragraph (c) or subparagraph (vii) of paragraph (d) of this

subdivision, whichever is applicable, will be available for inspection

and copying at the office of the department of law where the submission

was made and at the office of the offeror or a selling agent of the

offeror. Such notice shall also be accompanied by a statement that

tenants or their representatives may physically inspect the premises at

any time subsequent to the submission of the plan to the department of

law, during normal business hours, upon written request made by them to

the offeror, provided such representatives are registered architects or

professional engineers licensed to practice in the state of New York.

Such notice shall be sent to each tenant in occupancy on the date the

plan is first submitted to the department of law and to the clerk of the

municipality wherein such building or group of buildings or development

is located.

3. All dwelling units occupied by non-purchasing tenants shall be

managed by the same managing agent who manages all other dwelling units

in the building or group of buildings or development. Such managing

agent shall provide to non-purchasing tenants all services and

facilities required by law on a non-discriminatory basis. The offeror

shall guarantee the obligation of the managing agent to provide all such

services and facilities until such time as the offeror surrenders

control to the board of directors or board of managers, at which time

the cooperative corporation or the condominium association shall assume

responsibility for the provision of all services and facilities required

by law on a non-discriminatory basis.

4. It shall be unlawful for any person to engage in any course of

conduct, including, but not limited to, interruption or discontinuance

of essential services, which substantially interferes with or disturbs

the comfort, repose, peace or quiet of any tenant in his use or

occupancy of his dwelling unit or the facilities related thereto. The

attorney general may apply to a court of competent jurisdiction for an

order restraining such conduct and, if he deems it appropriate, an order

restraining the owner from selling the shares allocated to the dwelling

unit or the dwelling unit itself or from proceeding with the plan of

conversion; provided that nothing contained herein shall be deemed to

preclude the tenant from applying on his own behalf for similar relief.

5. Any local legislative body may adopt local laws and any agency,

officer or public body may prescribe rules and regulations with respect

to the continued occupancy by tenants of dwelling units which are

subject to regulation as to rentals and continued occupancy pursuant to

law, provided that in the event that any such local law, rule or

regulation shall be inconsistent with the provisions of this section,

the provisions of this section shall control.

6. Any provision of a lease or other rental agreement which purports

to waive a tenant's rights under this section or rules and regulations

promulgated pursuant hereto shall be void as contrary to public policy.

7. The provisions of this section shall only be applicable in the

cities, towns and villages located in the counties of Nassau,

Westchester and Rockland which by resolution adopted by the respective

local legislative body of such city, town or village, elect that the

provisions hereof shall be applicable therein. A certified copy of such

resolution shall be filed in the office of the attorney general at

Albany and shall become effective on the date of such filing.