N.Y. General Business Law § 352-eeeee: Conversions to condominium ownership for the preservation of expiring affordable housing in the city of New York

* § 352-eeeee. Conversions to condominium ownership for the

preservation of expiring affordable housing in the city of New York. 1.

As used in this section, the following words and terms shall have the

following meanings:

(a) "Annual update amendment". An annual update amendment is an

amendment to the preservation plan that shall be submitted to the

attorney general every year that a dwelling unit is unsold, with the

first such annual update amendment due within forty-five days of the

anniversary of the acceptance of the post-closing amendment to the

preservation plan. An annual update amendment shall supply the evidence,

data and information required in this section, and such other

information as the attorney general's regulations shall require, so that

the attorney general is satisfied that the preservation plan as amended

discloses the information necessary for a reasonable investor to make

their purchase decision and that the preservation plan is otherwise

complete, current and accurate.

(b) "Bona fide purchaser". A bona fide purchaser is either (i) a

tenant in occupancy who enters into a purchase agreement for a dwelling

unit pursuant to their or its exercise of one of the rights accorded to

tenants in occupancy in subdivision five of this section, or (ii) a bona

fide non-tenant purchaser.

(c) "Bona fide non-tenant purchaser". A bona fide non-tenant purchaser

is a purchaser of a dwelling unit who has represented that they or a

member or members of their immediate family intend to occupy the

dwelling unit when it becomes vacant. A bona fide non-tenant purchaser

shall not include any purchaser who is an offeror, the selling agent, or

the managing agent or is a principal of the offeror, the selling agent

or the managing agent or is related to the sponsor, the selling agent or

the managing agent or to any principal of the sponsor or the selling

agent or the managing agent by blood, marriage or adoption or as a

business associate, an employee, a shareholder or a limited partner;

except that such a purchaser other than the offeror or a principal of

the sponsor may be included as a bona fide non-tenant purchaser if the

offeror has submitted proof satisfactory to the department of law

establishing that the purchaser is bona fide.

(d) "Commercially reasonable good faith effort". A commercially

reasonable good faith effort on the part of an offeror of a preservation

plan shall, at minimum, include (i) the filing of an annual update

amendment to the preservation plan; (ii) all of the condominium's

dwelling units other than any income-restricted rental units as the

units being offered for sale under the preservation plan, each at an

offering price that is consistent with comparable dwelling units

recently sold within the locality; and (iii) entering into a written

agreement with a licensed real estate broker or selling agent in

connection with the sale of dwelling units offered for sale under the

preservation plan. For the avoidance of doubt, a commercially reasonable

good faith effort shall not require an offeror to sell dwelling units at

a price substantially below the market-rate for comparable units

recently sold within the locality, nor shall it require an offeror to

offer for sale dwelling units that are occupied by non-purchasing

tenants.

(e) "Condominium". A condominium shall also include a qualified

leasehold condominium as defined in subdivision twelve of section three

hundred thirty-nine-e of the real property law.

(f) "Consummation of the preservation plan". Consummation of the

preservation plan shall refer to the filing of the declaration for the

condominium and the first transfer of title to at least one purchaser

under the preservation plan following a declaration of effectiveness by

the department of law declaring the preservation plan effective.

(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 preservation plan is submitted to the

department of law or on the date the attorney general has accepted the

preservation plan for filing, and the spouses of any such tenants on

such date, and who have elected, within sixty days of the date the

preservation plan is submitted to the department of law or on the date

the attorney general has accepted the preservation 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 preservation 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 preservation 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 on the terms then offered to tenants in occupancy.

(h) "Eligible project". An eligible project shall refer to a building

or group of buildings or development with one hundred or more dwelling

units built after nineteen hundred ninety-six that is the subject of a

preservation plan under this section, which shall meet the criteria set

forth in subdivision two of this section. An eligible project shall not

include any building or group of buildings or development owned under

article two, four or five of the private housing finance law. For the

avoidance of doubt, no building, group of buildings or development other

than an eligible project shall convert to condominium status under this

section, the status of which shall be confirmed by the relevant housing

finance agency prior to the date of submission of the preservation plan.

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

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

submitted to the department of law or on the date the attorney general

has accepted the preservation plan for filing, and the spouses of any

such tenants on such date, and who have elected, within sixty days of

the date the preservation plan is submitted to the department of law or

on the date the attorney general has accepted the preservation 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 that such election shall not

preclude any such tenant from subsequently purchasing the dwelling unit

on the terms then offered to tenants in occupancy.

(j) "Extended affordability term". The extended affordability term for

the income-restricted rental units shall be in perpetuity for so long as

the building or group of buildings or development are in existence, and

subject to any obligation to rebuild in the event of condemnation,

damage or destruction required by the regulatory agreement with the

relevant housing finance agency.

(k) "Inclusionary housing unit". An inclusionary housing unit is an

income-restricted rental unit that is located within a building that

received an increase in the maximum permitted floor area pursuant to

sections 23-154 and 23-90 of the zoning resolution or is located in a

mandatory inclusionary housing area, as such sections may be amended

from time to time.

(l) "Inclusionary housing designated area". An inclusionary housing

designated area is a specified area in which the inclusionary housing

program (also known as the voluntary inclusionary housing program) is

applicable, pursuant to the regulations set forth for such areas in

section 23-90 of the zoning resolution, as such section may be amended

from time to time. The locations of inclusionary housing designated

areas are identified in either (i) appendix "F" of the zoning resolution

or (ii) in a special purpose district as described in section 15-011 of

the zoning resolution, as such appendix or section may be amended from

time to time.

(m) "Income-restricted rental unit". An income-restricted rental unit

shall refer to a dwelling unit located in a building or group of

buildings or development of an eligible project that is the subject of a

preservation plan submitted to the attorney general pursuant to this

section, and such dwelling unit:

(i) meets the definition of a "low-income unit" as such term is

defined in section forty-two of the internal revenue code and is subject

to a regulatory agreement with a relevant housing finance agency; or

(ii) meets the definition of a "low-income unit" as such term is

defined in subdivision (d) of section one hundred forty-two of the

internal revenue code and is subject to a regulatory agreement with a

relevant housing finance agency; or

(iii) previously met the definition of "low-income unit" pursuant to

subparagraph (i) or (ii) of this paragraph, and notwithstanding the

expiration of a regulatory agreement with a relevant housing finance

agency, the owner of such dwelling unit affirms, under the penalty of

perjury and provides other documentation to the satisfaction of the

relevant housing finance agency, that it has continuously operated and

rented the dwelling unit (A) as if it remained an income-restricted

rental unit and (B) as if all of the restrictions of the expired

regulatory agreement had continuously been extended or otherwise

remained in effect; or

(iv) is a dwelling unit located within a building or group of

buildings or development that, in accordance with provisions of

subdivisions one through fifteen of section four hundred twenty-one-a of

the real property tax law, the relevant housing finance agency shall

have required to be a unit affordable to families of low and moderate

income;

(v) is a dwelling unit that is rented to persons of low income or

families of low income as defined in subdivision nineteen of section two

of the private housing finance law or as otherwise required by a

federal, state, or local law or mandate; or

(vi) is a dwelling unit located in a building, group of buildings or

development subject to a regulatory agreement due to bond financing

provided by the relevant housing finance agency that required dwelling

units be affordable to families of low or moderate income.

(n) "Mandatory inclusionary housing area". A mandatory inclusionary

housing area is a specified area in which the inclusionary housing

program is applicable, pursuant to the regulations set forth for such

areas in section 23-90 of the zoning resolution, as such section may be

amended from time to time. The locations of mandatory inclusionary

housing areas are identified in either (i) appendix "F" of the zoning

resolution or (ii) in a special purpose district as described in section

15-011 of the zoning resolution, as such appendix or section may be

amended from time to time.

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

preservation plan from offeror and who is a tenant entitled to

possession at the time the preservation plan is declared effective or a

person to whom a dwelling unit is rented from offeror after the

preservation plan was declared effective, which solely for purposes of

this section, shall include any person who is a tenant regardless of

whether (i) such person was a tenant entitled to possession at the time

the preservation plan was declared effective, or (ii) such person rented

a dwelling unit from offeror after the preservation plan was declared

effective. A person who sublets a dwelling unit from a purchaser under

the preservation plan shall not be deemed a non-purchasing tenant. A

tenant entitled to possession of an income-restricted rental unit at the

time the preservation plan is declared effective or a person to whom an

income-restricted rental unit is rented from offeror or qualified owner

after the preservation plan is declared effective is a non-purchasing

tenant, notwithstanding that the income-restricted rental units are not

offered for sale pursuant to such preservation plan.

(p) "Post-closing amendment". A post-closing amendment is an amendment

to a preservation plan filed with the attorney general confirming that

the preservation plan has been consummated. A post-closing amendment

must be submitted to the attorney general no more than forty-five days

after the first closing of a dwelling unit to a bona fide purchaser

under the preservation plan.

(q) "Preservation plan". An offering statement or prospectus submitted

to the department of law pursuant to this section for the conversion of

a building or group of buildings or development of an eligible project

from rental status to condominium ownership, wherein the offeror

documents that it has entered into a regulatory agreement with a

relevant housing finance agency in which it agreed to an extended

affordability term for the income-restricted rental units with a

relevant housing finance agency.

(r) "Purchaser under the preservation plan". A purchaser under the

preservation plan is a person who purchases a dwelling unit from offeror

pursuant to the terms of a preservation plan that has been accepted for

filing by the attorney general. A person or entity that acquires

dwelling units and assumes certain obligations of offeror shall not be

considered a purchaser under the preservation plan.

(s) "Qualified owner". A qualified owner refers to the entity approved

by the relevant housing finance agency on or before the date of

submission of a preservation plan to the department of law that will

own, operate and maintain the income-restricted rental unit or units

that are in the building, group of buildings or development that are the

subject of the preservation plan. The entity which is a qualified owner

shall only be either: (i) a housing development fund company

incorporated pursuant to article eleven of the private finance housing

law; or (ii) a community land trust or other charitable corporation

organized under the not-for-profit corporation law that has as its

primary charitable purpose the ownership, operation and maintenance of

multifamily housing for persons and families of low income as defined by

subdivision nineteen of section two of the private finance housing law.

(t) "Relevant housing finance agency". Relevant housing finance agency

shall refer to a city or state agency with oversight over

income-restricted rental units prior to the date of submission of a

preservation plan. For purposes of this section, a relevant housing

finance agency shall also refer to the city or state agency that will

continue to have oversight of income-restricted rental units after

consummation of the preservation plan and in accordance with the terms

of a regulatory agreement.

(u) "Regulatory agreement". A regulatory agreement shall refer to the

written agreement with a relevant housing finance agency that restricts

the income and rents of income-restricted rental units that is either:

(i) in effect prior to the date of submission of a preservation plan; or

(ii) in effect after consummation of the preservation plan. Any

regulatory agreement in effect at the date of the submission of the

preservation plan shall remain in effect until the consummation of the

preservation plan unless otherwise agreed to by the relevant housing

finance agency. A regulatory agreement that shall take effect after

consummation of the preservation plan shall require that at least twenty

percent of all units be income-restricted rental units, and require

further that all existing income-restricted rental units, as of the

effective date of this act, shall remain income-restricted in

perpetuity.

(v) "Rent stabilization". Rent stabilization shall mean, collectively,

the rent stabilization law of nineteen sixty-nine, and the emergency

tenant protection act of nineteen seventy-four together with any other

successor statutes thereto.

(w) "Zoning resolution". Zoning resolution shall refer to the zoning

resolution of the city of New York.

2. The attorney general shall refuse to accept for submission a

preservation plan for the conversion of a building or group of buildings

or development if the relevant housing finance agency has not confirmed

in writing through the issuance of a letter of support as described in

subdivision three of this section and that the preservation plan is for

an eligible project, which shall be defined as a building or group of

buildings or development that meets the definition of an eligible

project and one or more of the following requirements as of the date of

submission of the preservation plan:

(a) The preservation plan is for a building or group of buildings or

development that (i) receives a partial property tax exemption pursuant

to subdivisions one through fifteen of section four hundred twenty-one-a

of the real property tax law, (ii) contains income-restricted rental

units, and (iii) is not otherwise prohibited by any federal, state, or

local law, rule, or regulation or subject to an existing regulatory

agreement that prohibits the conversion of the dwelling units to

condominium ownership; or

(b) The preservation plan is for a building or group of buildings or

development that (i) receives low income housing tax credits pursuant to

section forty-two of the internal revenue code, (ii) contains

income-restricted rental units, (iii) is not subject to any agreement

providing for a right of first refusal with a not-for-profit corporation

unless evidence deemed satisfactory to the department of law has been

provided that such right of first refusal has either expired or that

such not-for-profit declined to exercise such right, and (iv) is not

otherwise prohibited by any federal, state, or local law, rule, or

regulation or subject to an existing regulatory agreement that prohibits

the conversion of the dwelling units to condominium ownership; or

(c) The preservation plan is for a building or group of buildings or

development that (i) receives bond financing under subsection (d) of

section one hundred forty-two of the internal revenue code, (ii)

contains income-restricted rental units, and (iii) is not otherwise

prohibited by any federal, state, or local law, rule, or regulation or

subject to an existing regulatory agreement that prohibits the

conversion of the dwelling units to condominium ownership; or

(d) The preservation plan is for a building or group of buildings or

development, that (i) contains one or more inclusionary housing units,

(ii) is not otherwise prohibited by any federal, state, or local law,

rule, or regulation or subject to an existing regulatory agreement that

prohibits the conversion of the dwelling units to condominium ownership,

and (iii) contains a representation that an agreement has been reached

with the relevant housing finance agency to increase the total number of

income-restricted rental units in the building or group of buildings or

development to thirty percent for the extended affordability term upon

consummation of the preservation plan; or

(e) The preservation plan is for a building or group of buildings or

development that (i) contains exclusively moderate income units as

required for bond financing with the relevant housing finance agency,

(ii) the total number of income-restricted rental units in the building

or group of buildings or development is less than twenty percent, (iii)

is not subject to an existing regulatory agreement that prohibits the

conversion of the dwelling units to condominium ownership, and (iv)

contains a representation that an agreement has been reached with the

relevant housing finance agency to increase the total number of

income-restricted rental units in the building or group of buildings or

development to at least twenty percent for the extended affordability

term upon consummation of the preservation plan.

3. At the time of submission of the preservation plan, the offeror

shall provide a letter of support from the relevant housing finance

agency demonstrating that a regulatory agreement has been entered into

between the offeror, the qualified owner, and the relevant housing

finance agency regarding the income-restricted rental units during the

extended affordability term, and that such regulatory agreement will,

among other things, require the offeror to include the following

disclosures in the preservation plan:

(a) A list of the proposed income-restricted rental units;

(b) The proposed qualified owner of the income-restricted rental

units, which qualified owner shall take title to the income-restricted

rental units no later than three hundred sixty-five days from the date

of consummation of the preservation plan;

(c) The operating expenses and revenues applicable to the

income-restricted rental units, which shall be reflected in the updated

Schedule A and Schedule B for the first year of operation of the

condominium, the allocation of common interests, projected common

charges, estimated real estate taxes, and rents to be collected from

each income-restricted rental unit, and the allocation of common

expenses under section three hundred thirty-nine-m of the real property

law, applicable to the income-restricted rental units, which shall be

used to limit certain condominium expenses allocable to the

income-restricted rental units and to cover any shortfall in the revenue

from rent to cover the costs of operation of the income-restricted

rental units;

(d) A description of any financing encumbering the income-restricted

rental units, and whether a tax exemption or abatement is in place to

reduce real estate taxes for the income-restricted rental units;

(e) A description of any regulatory agreement or agreements to be

recorded against the income-restricted rental units and the term thereof

and the relevant housing finance agency or agencies with supervisory

oversight;

(f) A description of the provisions of the declaration and by-laws for

the condominium that provides for the special allocation of common

expenses in accordance with section three hundred thirty-nine-m of the

real property law, and any specific requirements set forth in a

regulatory agreement requiring unit owners in the condominium to cover

any shortfall in the revenue from rent to cover the costs of operation

of the income-restricted rental units;

(g) A description of the contemplated structure of the board of

managers of the condominium, including specifically an explanation as to

how the interests of the qualified owner of the income-restricted rental

units are to be adequately represented;

(h) A description of the building-wide amenities and a representation

that the declaration and by-laws for the condominium shall require that

tenants of the income-restricted rental units be provided an opportunity

to use commonly accessible amenities of the condominium and not unique

to an individual unit, including but not limited to: pools, fitness

centers, storage spaces, parking, and roofs or gardens accessible on a

building-wide basis, and that the tenants of the income-restricted

rental units may only be charged a nominal and reasonable fee for such

use, as approved by the relevant housing finance agency in accordance

with the regulatory agreement, and which shall not be treated as rent

under any rental agreement;

(i) The name, address and contact details for the relevant housing

finance agency or agencies with supervisory oversight of the

income-restricted rental units and the occupants within;

(j) That the regulatory agreement contains a provision which requires

that once a vacancy occurs of an income-restricted rental unit, after

consummation of the preservation plan, then said unit shall only be

leased to low income households whose annual household income is not

greater than sixty percent of area median income at the time of the

initial lease, and such unit shall be marketed and leased in compliance

with the relevant housing finance agency's leasing requirements, which

may include leasing through New York city's housing connect portal;

(k) A representation by offeror that the regulatory agreement includes

and accounts for (i) all of the existing on-site income-restricted

rental units in an existing building or group of buildings or

development, or (ii) all of the income-restricted rental units

associated with an existing building or group of buildings or

development located on a zoning lot where one or more buildings were set

aside as affordable housing for purposes of qualifying for a partial

property tax exemption pursuant to section four hundred twenty-one-a of

the real property tax law;

(l) To the extent not already subject thereto prior to the

consummation of the preservation plan, a representation by offeror that

the regulatory agreement shall require all income-restricted rental

units be subject to rent stabilization during the extended affordability

term, and that no income-restricted rental units shall be removed from

rent stabilization pursuant to the exemption for units owned as a

condominium under section 26-504 of the administrative code of the city

of New York; and

(m) The recording of the condominium declaration and commencement of

condominium operations does not modify the requirement under section

four hundred twenty-one-a of the real property tax law that all

residential rental apartments are subject to rent stabilization.

4. Upon submission of the preservation plan to the department of law,

each tenant in occupancy of any unit, including but not limited to any

income-restricted rental unit, in the eligible project that is the

subject of such preservation plan shall be provided with a written

notice stating that such preservation plan has been submitted to the

department of law. Written notice to each tenant in occupancy shall

contain or be accompanied by:

(a) a copy of the proposed preservation plan that has been submitted

to the department of law;

(b) a statement that tenants of the dwelling units being offered for

sale pursuant to the preservation plan or their representatives may

physically inspect the premises at any time subsequent to the submission

of the preservation 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 by the office of the professions of the education

department of the state of New York; and

(c) a statement to tenants of the income-restricted rental units that

the dwelling units they occupy are not being offered for sale, but their

tenancies shall continue undisturbed during and after the conversion of

the property to condominium ownership. The statement shall also disclose

that all income-restricted rental units shall be subject to rent

stabilization throughout the extended affordability term.

5. The tenants in occupancy of dwelling units being offered for sale

on the date the attorney general accepts the preservation plan for

filing shall have the exclusive right to purchase their dwelling units

for ninety days after the preservation plan has been accepted for filing

by the attorney general, during which time the offering price available

to the tenant in occupancy shall not be increased and a tenant's

dwelling unit shall not be shown to a third party unless such tenant

has, in writing, waived their 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 six months from said expiration date to purchase said

dwelling unit on the same terms and conditions as are contained in any

executed contract to purchase said dwelling unit entered into by a

purchaser under the preservation plan, 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 purchase agreement to said tenant.

6. The preservation plan shall also disclose that the offeror shall:

(a) market and sell all the dwelling units (other than the

income-restricted rental units) in the building or group of buildings or

development, as each such dwelling unit becomes vacant, to a purchaser

under the preservation plan through the use of commercially reasonable

good faith efforts;

(b) fund the reserve fund and dedicated capital fund in the manner and

amounts as provided in section three hundred thirty-nine-mm of the real

property law;

(c) file an annual update amendment every year which shall include an

updated Schedule A of all dwelling units being offered for sale under

the preservation plan; and

(d) exercise commercially reasonable good faith efforts to sell at

least fifty-one percent of the total number of dwelling units offered

for sale under the preservation plan (excluding any income-restricted

rental units not offered for sale) within five years from the date of

consummation of the preservation plan.

7. After the issuance of the letter from the attorney general stating

that the preservation plan has been accepted for filing, the offeror

shall, on the thirtieth, sixtieth, eighty-eighth and ninetieth day after

such date and at least once every thirty days until the preservation

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 preservation plan:

(a) 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 preservation plan was accepted for filing by the attorney

general who have executed and delivered written agreements to purchase

under the preservation plan as of the date of such written statement

under oath; and

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

written statement under oath in a prominent place accessible to all

tenants in each building covered by the preservation plan.

8. A preservation plan shall not be declared effective until written

purchase agreements have been executed and delivered for at least

fifteen percent of all dwelling units offered for sale in the building

or group of buildings or development from either (a) bona fide tenants

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

general accepting the preservation plan for filing or (b) bona fide

non-tenant purchasers. 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. A negotiated reduction from the original offering price

extended shall not, by itself, be deemed a discriminatory inducement.

9. Those written statements under oath that the offeror is required to

file with the attorney general pursuant to subdivision seven of this

section shall also include:

(a) the total number of written agreements to purchase under the

preservation plan received from bona fide non-tenant purchasers;

(b) the total number of written agreements to purchase under the

preservation plan received from all bona fide tenants in occupancy;

(c) the percentage of dwelling units under contract, calculated by

adding the number of written purchase agreements for a unit that were

received from (i) all bona fide tenants in occupancy plus (ii) all bona

fide non-tenant purchasers and then dividing the sum of those two

numbers by the total number of dwelling units offered for sale under the

preservation plan;

(d) whether or not the offeror intends to claim a credit against the

mandatory initial contribution the offeror is obligated to deposit into

the condominium's reserve fund pursuant to subdivision three of section

three hundred thirty-nine-mm of the real property law for the actual

cost of capital replacements which the offeror has begun after the

preservation plan was submitted for filing to the department of law but

before the preservation plan is declared effective, together with their

actual or estimated costs which credit shall not exceed the actual cost

of the credit;

(e) whether or not the offeror shall be making its reserve fund

contributions required pursuant to section three hundred thirty-nine-mm

earlier or in an amount greater than required; and

(f) a representation that no purchaser counted for purposes of

declaring the preservation plan effective is the offeror, the selling

agent or the managing agent, or is a principal of the offeror, the

selling agent, or the managing agent or is related to any principal of

the offeror, any principal of the selling agent or any principal of the

managing agent by blood, marriage, or adoption, or is an affiliate,

business associate, an employee, a shareholder, a member, a manager, a

director, an officer, a limited partner of the offeror, selling agent or

managing agent.

10. The preservation plan shall provide that it will be deemed

abandoned, void and of no effect if it does not become effective within

fifteen months from the date of issue of the letter of the attorney

general stating that the preservation plan has been accepted for filing

and, in the event of such abandonment, no new plan, including but not

limited to a preservation plan, for the conversion of such building or

group of buildings or development shall be submitted to the attorney

general for at least twelve months after such abandonment.

11. No closings of title of a dwelling unit to a purchaser under the

preservation plan shall take place until the attorney general shall have

also accepted for filing an amendment that declares the preservation

plan effective. Within forty-five days of the first closing of title of

a dwelling unit to a purchaser under the preservation plan, the offeror

shall submit to the attorney general its post-closing amendment to the

preservation plan. Thereafter, the preservation plan shall continually

be updated with the filing of an annual update amendment, no later than

thirty days from the anniversary of the date the attorney general

accepted the post-closing amendment for filing. An offeror or successor

offeror shall only be relieved of its obligation to file an annual

update amendment to the preservation plan after the last dwelling unit

offered for sale is conveyed to a purchaser under the preservation plan.

12. After the date of acceptance for filing of the post-closing

amendment, the offeror or successor offeror shall continue to make

commercially reasonable good faith efforts to sell the dwelling units it

owns.

13. The attorney general shall refuse to accept for filing an annual

update amendment to the preservation plan unless:

(a) The annual update amendment discloses, in addition to the other

disclosures required elsewhere in this section or the regulations of the

attorney general, the following data and information:

(i) an accounting of the dwelling units sold and closed by the offeror

in the preceding twelve months, with an indication if the dwelling unit

was conveyed to a purchaser under the preservation plan or to a

successor offeror;

(ii) an inventory of the offeror's unsold dwelling units at the end of

the preceding twelve months, in form and substance as shall satisfy the

attorney general; and

(iii) all the information, data and literature presented by the board

of managers in its semi-annual reports on the status of the reserve fund

as required under subdivision five of section three hundred

thirty-nine-mm of the real property law.

(b) The annual update amendment shall be accompanied by an affidavit

from a principal of the offeror attesting to the following data and

information with respect to all the dwelling units the offeror then

owns:

(i) the dwelling units' identifying information and general location;

(ii) whether, on the date of submission of the annual update

amendment, the unsold dwelling unit is subject to a fully executed

purchase agreement, and if so, whether the purchaser is a purchaser

under the preservation plan or otherwise;

(iii) whether, on the date of submission of the annual update

amendment, the dwelling unit is occupied or vacant, and if occupied, an

indication that occupancy is:

(A) by a rent-regulated tenant;

(B) by a market-rate tenant;

(C) a month-to-month tenancy;

(D) a tenancy at sufferance; or

(E) other.

(iv) regardless of the occupancy status of a dwelling unit on the date

of submission of the annual update amendment, an indication if the

dwelling unit was vacant for more than one of the twelve preceding

months. For each dwelling unit so indicated, the offeror shall also

disclose:

(A) the date range that the dwelling unit was vacant;

(B) the date range for any period of time that the dwelling unit was

marketed for sale;

(C) date of sale;

(D) the date the dwelling unit was leased by a tenant; and

(E) the date the lease is set to expire (if applicable).

14. No eviction proceedings shall be commenced at any time against

non-purchasing tenants for failure to purchase or for 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 their obligations to the owner of the

dwelling unit; and provided further that an owner of a unit shall not

commence an action to recover possession of a dwelling unit from a

non-purchasing tenant on the grounds that they seek the dwelling unit

for the use and occupancy of themself or their family's use and

occupancy.

15. No eviction proceedings shall be commenced, except as provided in

this subdivision, 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

preservation plan has been accepted for filing shall not be subject to

unconscionable increases which, solely for the purposes of this

subdivision, and notwithstanding any exemptions for housing

accommodations owned as condominiums provided for under subdivision

seven of section two hundred fourteen of the real property law, and

regardless of whether such non-purchasing tenant has a rent that exceeds

two hundred forty-five percent of the fair market rent, all rent

increases for eligible senior citizens and eligible disabled persons

shall be considered unconscionable if such increases exceed the

permissible increases provided for under the good cause eviction law

under article six-A of the real property law; 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 their

obligations to the owner of the dwelling unit.

16. 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.

17. The rights granted under the preservation plan to eligible senior

citizens and eligible disabled persons shall not be abrogated or reduced

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

18. Any offeror who disputes the election by a person to be an

eligible senior citizen or an eligible disabled person shall 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 a 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 shall be commenced within

thirty days after such determination by the attorney general becomes

final.

19. 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

condominium ownership shall continue to be subject thereto.

20. 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 preservation

plan has been accepted for filing by the attorney general shall not be

subject to unconscionable increases which, solely for the purposes of

this subdivision, and notwithstanding any exemptions for housing

accommodations owned as condominiums provided for under subdivision

seven of section two hundred fourteen of the real property law, in the

event the rent of a non-purchasing tenant shall be less than two hundred

forty-five percent of the fair market rent, then such increases for such

non-purchasing tenant shall be governed by article six-A of the real

property law.

21. The rights granted under the preservation plan to purchasers under

the preservation plan and to non-purchasing tenants shall not be

abrogated or reduced notwithstanding any expiration of, or amendment to,

this section.

22. 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.

23. The attorney general shall refuse to accept for filing a

preservation plan when the attorney general determines: (a) that one or

more of the income-restricted rental units within the building, group of

buildings or development was vacant on the date of submission; or (b) of

the dwelling units that are not income-restricted rental units, an

excessive number of long-term vacancies existed on the date that the

preservation plan was first submitted to the department of law. For

purposes of this subdivision, "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;

and "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 preservation plan

was first submitted to the department of law.

24. 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 of the board of managers, at which time the board of managers of

the condominium shall assume responsibility for the provision of all

services and facilities required by law on a non-discriminatory basis.

Such managing agent shall also ensure that non-purchasing tenants be

provided an opportunity to use commonly accessible amenities of the

condominium and not unique to an individual unit, including but not

limited to pools, fitness centers, storage spaces, parking and roofs or

gardens accessible on a building-wide basis, and that the tenants of the

income-restricted rental units may only be charged a nominal and

reasonable fee for such use, as approved by the relevant housing finance

agency in accordance with the regulatory agreement, and which shall not

be treated as rent under any rental agreement.

25. 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 their use or

occupancy of their 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 they deem it appropriate, an

order restraining the owner from selling the dwelling unit itself or

from proceeding with the preservation plan of conversion; provided that

nothing contained herein shall be deemed to preclude the tenant from

applying on their own behalf for similar relief.

26. 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.

27. Notwithstanding the requirements of this section regarding the

preservation of an income-restricted rental unit or units as permanently

affordable, and to the extent permitted under existing law as it relates

to the income-restricted rental unit or units, the income-restricted

rental unit or units in a building or group of buildings or development

of an eligible project may be converted to a limited equity housing

cooperative pursuant to article eleven of the private housing finance

law under a separate offering statement or prospectus, if the relevant

housing finance agency ensures that the proposed offering statement or

prospectus discloses that the regulatory agreement provides as follows:

(a) the offering prices are affordable to the existing tenants and/or

the qualified low-income purchasers who meet the definition of persons

of low income or families of low income as defined by subdivision

nineteen of section two of the private housing finance law;

(b) any tenant of an income-restricted rental unit that chooses not to

buy the income-restricted rental unit such tenant occupies shall

continue to be protected under rent stabilization throughout the process

of conversion to a limited equity housing cooperative and thereafter,

and that no existing tenant of an income-restricted rental unit shall be

evicted solely due to such tenant's decision not to purchase their

income-restricted rental unit;

(c) the regulatory agreement and certificate of incorporation of the

limited equity housing cooperative shall ensure that the

income-restricted rental units converted to a limited equity housing

cooperative shall be reserved for occupancy by persons of low income and

families of low income in perpetuity;

(d) the regulatory agreement and certificate of incorporation of the

limited equity housing cooperative shall ensure that, notwithstanding

the creation of a separate condominium, any obligations that the

non-income-restricted rental unit owners may have to ensure the

financial viability and delivery of services in a non-discriminatory

manner, prior to the date of conversion to a limited equity housing

cooperative, shall not be abrogated and shall remain in full force and

effect;

(e) the relevant housing finance agency shall have oversight authority

over the limited equity housing cooperative in the regulatory agreement,

condominium declaration, condominium by-laws and certificate of

incorporation of the limited equity housing cooperative, including the

ability to appoint a new board of directors of the limited equity

housing cooperative in the event of a violation of a term of, or an

event of default by the limited equity housing cooperative under any of

its governing documents, requiring purchasers of such units to attend

homeownership training, and providing for the procedures to sell the

units upon vacancy; and

(f) that the ownership of the dedicated capital account by the

qualified owner, and the funding of the dedicated capital account by the

offeror of the preservation plan, shall each be subject to the oversight

authority of the relevant housing finance agency as provided in section

three hundred thirty-nine-mm of the real property law.

28. It shall be unlawful for an offeror, its designees and/or

successors to have or exercise voting control of the condominium's board

of managers for more than ninety days from the fifth anniversary date of

the first closing of title to a dwelling unit, or whenever the unsold

dwelling units constitute less than fifty percent of the common

interests appurtenant to all dwelling units, whichever is sooner.

29. The attorney general may, in their discretion, waive the

requirement in paragraph (d) of subdivision six of this section that an

offeror sell at least fifty-one percent of the dwelling units offered

for sale under the preservation plan when the offeror provides proof

satisfactory to the attorney general that five years of commercially

reasonable good faith efforts did not result in the sale of fifty-one

percent of the dwelling units. If such waiver is granted, the offeror

shall be required to disclose the new date by which it will sell at

least fifty-one percent of the dwelling units offered for sale under the

preservation plan in its subsequent annual update amendment. Any waiver

granted hereunder shall not alleviate an offeror, its designees and/or

successors of the obligation set forth in subdivision twenty-eight of

this section.

30. Within three hundred and sixty-five days of the effective date of

this section, the attorney general shall submit a notice of proposed

rulemaking for publication in the state register which shall contain the

suitable rules necessary to carry out the provisions of this section.

The authority of the attorney general to promulgate, adopt, publish,

notify, review, amend, modify, reconsider, or rescind any rule or

regulation as may be conferred anywhere within this section shall comply

with the state administrative procedure act in all respects.

Notwithstanding the foregoing, an offeror may submit a preservation plan

to the department of law regardless of whether the attorney general has

adopted suitable rules to carry out this section, and the department of

law shall not rely on the lack of rulemaking to refuse to accept a

preservation plan for submission or filing if offeror has otherwise

complied with the requirements of this section.

31. For any offering statement or prospectus (including, without

limitation, a preservation plan and any amended filings thereto),

submitted to the department of law pursuant to this section, the filing

fees set forth in paragraph (a) of subdivision seven of section three

hundred fifty-two-e of this article shall not apply. Instead, an offeror

shall tender the following filing fee with and for its submission:

(a) seven hundred fifty dollars for every offering not in excess of

two hundred fifty thousand dollars;

(b) for every offering in excess of two hundred fifty thousand

dollars, four-tenths of one percent of the total amount of the offering

but not in excess of sixty thousand dollars, of which one-half of said

amount shall be a nonrefundable deposit paid at the time of submitting

the preservation plan to the department of law for review and the

balance payable upon the attorney general's issuance of a letter of

acceptance of the preservation plan for filing;

(c) seven hundred fifty dollars for each price change amendment to a

preservation plan;

(d) seven hundred fifty dollars for any other amendment to a

preservation plan; and

(e) seven hundred fifty dollars for each such application, and an

additional seven hundred fifty dollars for each and every amendment

submitted in furtherance of such an application to permit an offeror to

solicit public interest prior to the filing of a preservation plan to

the department of law.

32. The relevant housing finance agency may promulgate regulations,

rules, and other guidance documents necessary to carry out the

provisions of this section, as it deems necessary.

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

city of New York.

34. The attorney general shall make any offering statement or

prospectus (including, without limitation, a preservation plan and any

amended filings thereto), submitted pursuant to this section available

to the public in a searchable repository on its official internet

website.

* NB Repealed November 5, 2031