NY Gen Bus L § 352-EEEE (2021)
2021 New York Laws GBS - General Business Article 23-A - Fraudulent Practices in Respect to Stocks, Bonds and Other Securities 352-EEEE - Conversions to Cooperative or Condominium Ownership in the City of New York.

§ 352-eeee. Conversions to cooperative or condominium ownership in the city  of  New  York. 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 written purchase agreements have been executed and  delivered  for at  least  fifty-one  percent  of  all dwelling units in the building or group of buildings or development by  bona  fide  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, submitted prior to the effective date of the chapter of the laws of two thousand  nineteen  that  amended this  section, 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 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) 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.  (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 submitted to the department  of  law or 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 plan is submitted to the  department  of law or on 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  that  such election shall not preclude any such tenant 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 plan is submitted to the department of law or 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 plan is submitted to the department of law or on 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  article  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 fifteen  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 twelve 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 written purchase agreements have been executed  and  delivered  for  at  least  fifty-one percent  of  all dwelling units in the building or group of buildings or development subscribed for by bona fide tenants in occupancy on the date a letter was issued by the  attorney  general  accepting  the  plan  for filing  for  which  purchase  agreement  shall be executed and delivered pursuant  to  an  offering  made   without   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) 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.  (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) 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.  (viii)  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.  (ix) The plan may not be amended at any time to provide that it  shall be an eviction plan.  (x) 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.  (xi) 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 day 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.  (xii)  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 or she has, in writing, waived his or her 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.  (d) The plan provides, if it is an eviction plan, as follows:  (i) The plan may not be declared effective unless 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)  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.  (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 day 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 (xi) of paragraph (c) 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.   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  attorney general is hereby authorized and empowered to adopt, promulgate, amend and rescind suitable rules and  regulations  to  carry out  the  provisions  of  this section, including issuing waivers of the requirements of this section to the extent the  requirements  would  not carry out the intent of this section or the Martin Act.   8. The provisions of this section shall only be applicable in the city of New York.