2023 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; provided, however, that  for  a  building
containing  five  or  fewer units, and where the sponsor of the offering
plan offers the unit that they or  their  immediate  family  member  has
occupied  for  at  least  two years, the plan may not be effective until
written purchase agreements have been  executed  and  delivered  for  at
least  fifteen  percent of all dwelling units in the building subscribed
for by bona fide tenants  in  occupancy  or  bona  fide  purchasers  who
represent  that  they  intend  that they or one or more members of their
immediate family occupy the dwelling unit when it  becomes  vacant.  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)  (1) Subject to the provisions of clause two of this subparagraph,
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.
(2) For buildings containing five or fewer units, the plan may not  be
declared  effective until written purchase agreements have been executed
and delivered for at least fifteen percent of all dwelling units in  the
building  subscribed  for by bona fide tenants in occupancy or bona fide
purchasers who represent that they intend  that  they  or  one  or  more
members  of  their  immediate  family  occupy  the dwelling unit when it
becomes vacant, provided that the sponsor of the  offering  plan  offers

the unit that they or their immediate family member have occupied for at
least  two  years.  As  to  tenants  who were in occupancy on the date a
letter was issued by the attorney general accepting the plan filing, the
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.