New York Codes, Rules and Regulations › Title 13 - DEPARTMENT OF LAW › Chapter II - SECURITIES TRANSACTIONS AND PERSONNEL › Subchapter B - REAL ESTATE SYNDICATES › Part 20 - NEWLY CONSTRUCTED, VACANT OR NON-RESIDENTIAL CONDOMINIUMS › Section 20.2 - Procedure for submission

Current through Register Vol. 46, No. 28, July 10, 2024
(a)
				  The proposed offering plan and the exhibits described in this Part shall be
				  submitted to the New York Department of Law, Real Estate Finance Bureau, 28
				  Liberty Street, New York, NY 10005.
(b) The exhibits shall accompany the proposed
				  offering plan submitted to the Department of Law and shall be subject to the
				  sanctions of article 23-A of the General Business Law. A notation of "Orig" on
				  the list below means that at least one document must be a duly executed,
				  original document.
(c) The
				  following are to be included when submitting a proposed offering plan pursuant
				  to this Part.
(1) A transmittal letter
				  addressed to the Department of Law that is signed and affirmed by the
				  individual attorney who prepared the plan, containing the statements required
				  by section
				  20.4(a)  of this
				  Part without qualification or alteration in substance. As specified in
				  paragraph (5) of this subdivision, the transmittal letter must expressly
				  indicate any exhibit that is not included (apart from those noted) and set
				  forth the reasons for the omission and list any documents submitted as exhibit
				  B-20. Exemption applications submitted pursuant to section
				  20.1(i)  of this
				  Part must be annexed to and submitted with the transmittal letter. Omissions
				  and additions to the table of contents must be noted and explained. The
				  transmittal letter must note whether the offering plan is for a building or
				  development which is newly constructed, vacant or nonresidential and to what
				  extent any existing structures are being rehabilitated. Pursuant to section
				  20.3(j)(7)  of
				  this Part, the transmittal letter must note any commercial units and whether
				  they are being offered for sale. Pursuant to section
				  20.3(p)(14)  of
				  this Part the transmittal letter must note financing offered to purchasers
				  which contains any unusual risks. Pursuant to section
				  20.1(j)  of this
				  Part, the transmittal letter must note if the plan is an out-of-state plan. The
				  transmittal letter must also note if there is currently an investigation
				  pending by the Department of Law of the sponsor, a principal of the sponsor or
				  of the property to be constructed or to be converted to condominium
				  ownership.
(2) Checks (certified or
				  uncertified) for the filing fee under General Business Law section
				  352-e(7)(a) payable to
				  "New York State Department of Law" and stapled or clipped to the transmittal
				  letter, with form of receipt issued by the Department of Law. The filing fee is
				  based on the total amount of the offering price. For out-of-state condominiums
				  the offering price represents the total offering price of all unsold units at
				  the date of submission to the Department of Law. To expedite processing, the
				  sponsor should submit two checks, each in the amount of one-half of the total
				  fee. One of the two checks will be a non-refundable deposit. One check will be
				  returned if the Department of Law issues a final deficiency letter.
(3) Signed originals of the following forms:
(i) M-2 and M-10 forms, if new forms are
				  submitted as exhibits D-1 and D-2, with a check for the filing fee under
				  General Business Law section
				  359-e(5) attached;
				  and
(ii) RI-1 forms, submitted as
				  exhibit D-3.
(4) One
				  paper copy of a typed or printed, bound offering plan and one digital copy of
				  the offering plan.
(5) One paper
				  copy of all exhibits to the offering plan and one digital copy of all exhibits
				  to the offering plan. The paper copy of the exhibits shall be in a binder from
				  which documents can be removed easily, and the binder must be indexed with
				  tabs. The cover of the binder must be labeled with the name and the address of
				  the condominium and the name, address and telephone number of the attorney who
				  prepared the plan. Both the binder and the digital copy must contain an index
				  of the documents. The transmittal letter required by paragraph (1) of this
				  subdivision must note the omission of any exhibit, other than the exceptions
				  stated below and the reason for the omission. If exhibits A-4, B-3, B-4, B-8,
				  B-9, B-10, B-11, B-16, B-17, B-18, B-19, B-20, B-21, B-22, B-23, B-24 are
				  omitted solely because the exhibit is not applicable to the offering, the
				  omission need not be noted in the transmittal letter.
(i) Part A of the exhibits (certifications)
				  shall consist of the following documents. Photocopies or conformed copies of
				  the certifications must appear in the offering plan.
(A-1) Certification by the sponsor and the
				  sponsor's principals signed by "sponsors" and "principals" as defined in
				  section 20.1(c)  of this
				  Part (Orig); see section
				  20.4(b)  of this
				  Part.
(A-2) Certification by the
				  sponsor's engineer or architect concerning the description of the property and
				  building condition in Part II of the plan and at exhibit C-1 (Orig); see
				  section 20.4(c)  of this
				  Part.
(A-3) Certification by expert
				  on adequacy of budget for the first year of condominium operation (Orig); see
				  section 20.4(d)  of this
				  Part.
(A-4) Certification by expert
				  on adequacy of common charges payable by the commercial unit owner(s) (Orig);
				  see section
				  20.4(e)  of this
				  Part.
(ii) Part B of the
				  exhibits (general) shall consist of the following documents:
(B-1) Title company report, including a
				  report on housing or building code violations of record, if applicable, dated
				  or updated within 30 days of submission (Orig).
(B-2) A projection from a qualified expert or
				  local supplier of the consumption, rate and total cost for furnishing heat, hot
				  water and other utilities. If unit owners directly pay the cost of heating
				  their own units, include a similar projection for heat, hot water and
				  electricity for individual units.
(B-3) Proposed management
				  agreement.
(B-4) Copies of any
				  contract which (i) will be binding on the condominium for $2,500 or more per
				  year, or (ii) has a term in excess of two years, or (iii) is with the sponsor,
				  a business associate or affiliate of the sponsor, or a principal of the
				  sponsor.
(B-5) Copy of a letter
				  from an insurance company or its authorized agent, stating proposed insurance
				  coverage and amounts, and the annual premium or premiums.
(B-6) Copy of an opinion from an independent,
				  licensed insurance broker, insurance appraiser or real estate appraiser
				  representing that the fire insurance coverage budgeted in the plan is adequate
				  (i) so that the insured shall not be a co-insurer if the policy contains a
				  co-insurance provision, or (ii) to cover replacement cost if the policy is for
				  an agreed amount which waives co-insurance. If the policy represents
				  replacement cost coverage, indicate the replacement cost per square
				  foot.
(B-7) Copy of a fee quotation
				  from a certified public accountant for preparing the yearly financial
				  statements for the condominium.
(B-8) Copy of section 352-a/section 352-b
				  Designation of Secretary of State as agent (applicable only to out-of-state
				  issuers, sponsors, principals and/or selling agents), and filing
				  receipt.
(B-9) For condominiums
				  located outside New York State, copy of statutes and regulations concerning the
				  registration and formation of condominiums. All condominiums located outside
				  New York State must include evidence of compliance with local laws and
				  regulations concerning the registration and formation of
				  condominiums.
(B-10) Copy of the
				  form of promissory note and mortgage required by sponsor if the plan offers
				  financing, together with any other document which significantly affects a
				  purchaser's obligations for financing offered by sponsor.
(B-11) Copy of any mortgage financing
				  commitment letter pertaining to end loans or to building construction loans,
				  and amendments or extensions of the commitment letter.
(B-12) Copy of sponsor's or present owner's
				  deed to the property, and copy of contract of sale between owner and sponsor if
				  sponsor is contract vendee.
(B-13)
				  Copy of a specimen title insurance policy, applicable to individual units,
				  which unconditionally insures that a valid condominium has been established. At
				  closing, the policy shall not contain an exception indicating the existence of
				  a mortgage or other liens affecting the unit insured and any other
				  unit.
(B-14) Original letter from a
				  title company stating it has reviewed the declaration, the by-laws and other
				  relevant documents and is prepared to insure title to purchasers in accordance
				  with exhibit B-13 of this subparagraph and is prepared to insure that a valid
				  condominium will be established upon the recording of the declaration and
				  by-laws and the filing of the floor plans as required by the New York
				  Condominium Act or applicable state and local law.
(B-15) If applicable, an estimate of the
				  assessed valuation after completion of construction or rehabilitation from the
				  local tax assessor. If not available, an estimate of the assessed valuation
				  after completion of construction or rehabilitation from a real estate broker,
				  appraiser, attorney or other professional familiar with the tax assessment
				  practices in the locality in which the property is located.
(B-16) If applicable, copies of any documents
				  relating to tax exemption or abatement benefits. Copy of proof of the level and
				  duration of benefits described in plan should be included.
(B-17) Copy of the agreements or other
				  documents of local taxing authorities relating to the separate assessment of
				  each condominium unit for real estate taxes, if available.
(B-18) Copy of the escrow agreement between
				  the sponsor and the board of managers relating to the payment of real estate
				  taxes pending the separate assessment of each condominium unit for real estate
				  taxes, if applicable.
(B-19) Copy
				  of documentary evidence that the holder of any mortgage existing after the
				  conveyance of the first unit will either:
(a)
				  consent to the formation of a condominium and acknowledge that its lien will be
				  limited to unsold condominium units; or
(b) subordinate the lien of its mortgage to
				  the declaration of condominium; or
(c) release its lien on the condominium unit
				  being conveyed.
(B-20)
				  Copy of any other material document(s), each of which should be described in
				  the transmittal letter.
(B-21) For
				  rehabilitated buildings, an affidavit by sponsor stating how the building
				  became vacant, that there was no harassment, and whether any apartments were
				  vacated pursuant to vacate orders. If so, provide copy of vacate
				  order.
(B-22) An affidavit by
				  sponsor stating that no money has been taken during any market test pursuant to
				  Cooperative Policy Statement No. 1, if applicable.
(B-23) Copies of all existing and proposed
				  professional and commercial leases and subleases, and concession
				  agreements.
(B-24) Rent-roll
				  certified by sponsor, managing agent or current owner as of a date that is
				  within 60 days prior to submission, including the name of each commercial or
				  professional tenant, unit number, rent, term, and termination date of lease
				  (Orig).
(B-25) Copy of the escrow
				  agreement between the sponsor and the attorney(s) acting as escrow agent. If
				  the model form is not used, so indicate. Copy of bank forms to be used to open
				  any escrow account.
(B-26) Copy of
				  surety bonds or letter of credit proposed to secure down payments and any
				  underlying agreement or related agreement, and any undertaking called for in
				  the regulations or proposed to be furnished.
(iii) Part C of the exhibits (engineering)
				  shall consist of the following documents:
(C-1) Architect's or engineer's detailed
				  description of the property and building condition with the architect's or
				  engineer's seal and original signature. The description must be dated within 90
				  days of submission to the Department of Law and conform to the requirements of
				  section 20.7  of this Part; see exhibit
				  A-2. The Department of Law may in its discretion require a further inspection
				  and report.
(C-2) Asbestos report,
				  except in the case of newly constructed buildings, dated within 90 days of
				  submission to the Department of Law. The report must conform to the
				  requirements of section
				  20.7(ac)  of this
				  Part.
(C-3) Copy of currently valid
				  temporary, partial or permanent certificate of occupancy or its equivalent. If
				  a certificate of occupancy is not available because the building was
				  constructed before the municipality began to issue certificates of occupancy,
				  include an affidavit from the sponsor that the proposed use by the condominium
				  is identical to the original use of the building. If no certificate of
				  occupancy has yet been issued, so indicate and forward to the Department of Law
				  when issued.
(C-4) Copy of approved
				  building plans, if available, or if required by General Business Law section
				  352-e e or if required by local law, any
				  specifications required by government agencies having jurisdiction, and copies
				  of all required construction permits from government agencies having
				  jurisdiction.
(iv) Part
				  D of the exhibits (other information) shall consist of the following documents:
(D-1) Signed M-10 form(s), broker-dealer
				  statement, for the selling agents (Orig), unless exempted by General Business
				  Law section
				  359-e, and signed M-2 form(s),
				  salespersons' statements, for all individual employees who act as salespersons
				  (Orig) unless exempted by General Business Law section
				  359-e. Forms do not have to be submitted
				  if currently valid registration forms are on file with the Department of Law
				  from prior offerings and a copy of the form is submitted as exhibit
				  D-1.
(D-2) Signed M-10 form(s) for
				  the sponsoring entity which shall include all officers, directors, partners or
				  principals who are "dealers" for purposes of General Business Law section
				  359-e (Orig). Forms do not have to be
				  submitted if currently valid registration forms are on file with the Department
				  of Law from prior offerings and a copy of the form is submitted as exhibit
				  D-2.
(D-3) Signed RI-1 form(s),
				  registrant information form(s), concerning prior convictions, judgments,
				  administrative actions, bankruptcy, employment and business affiliations for
				  all principals of the sponsor (Orig).
(D-4) Sponsor's affidavit that sponsor's net
				  worth is or will be sufficient to meet the requirements of General Business Law
				  section
				  352-k and all of the unsecured obligations
				  sponsor assumes in the offering plan including sponsor's obligations for unsold
				  units (Orig).
(D-5) An affidavit
				  from sponsor and principals of sponsor, as defined in section
				  20.1(c)  of this
				  Part, stating whether sponsor and principals of sponsor have taken part in real
				  estate syndications of securities consisting of participation interests or
				  investments in real estate, including limited partnership interests or private
				  or public offerings of cooperative interests in realty, including condominiums,
				  in or from New York, which were initially offered during the preceding five
				  years. State the addresses of the realty, the name of the syndication or
				  partnership and whether it received an exemption and the approximate date the
				  offering plan was filed and the date of the closing with the apartment
				  corporation for cooperatives or the date of first unit closing for
				  condominiums.
(D-6) Completed
				  statistical information card (available from the Department of Law).