New York Codes, Rules and Regulations › Title 13 - DEPARTMENT OF LAW › Chapter II - SECURITIES TRANSACTIONS AND PERSONNEL › Subchapter B - REAL ESTATE SYNDICATES › Part 22 - NEWLY CONSTRUCTED, VACANT HOMEOWNERS ASSOCIATIONS OR NON-RESIDENTIAL PROPERTY OWNERS ASSOCIATIONS › Section 22.8 - Applications for no-action letters

Current through Register Vol. 46, No. 28, July 10, 2024
(a)
Applicability.
Upon application made in accordance with the requirements
					 of this section, the Department of Law may, in its discretion, issue a
					 "no-action letter" stating that it will not take any enforcement action because
					 the transaction described in the application does not require the filing of an
					 offering plan in compliance with section 352-e  of the General Business Law. A
					 no-action letter may be issued where the Department of Law determines that the
					 filing of an offering plan pursuant to General Business Law section
					 352-e is not necessary to effectuate the
					 purposes of General Business Law article 23-A or to protect the public
					 interest.
(b)
Application procedure.
(1) An
				  application for a no-action letter shall be submitted to the New York State
				  Department of Law, Real Estate Finance Bureau.
(2) Such application shall include the
				  following:
(i) An affidavit signed and sworn
				  to by the offeror(s) which states:
(a) The
				  name, residence and business address and legal status (corporation,
				  partnership, individual, etc.) of each offeror and its principals, and the
				  relationship of the offeror(s) to the property which is the subject of the
				  offering.
(b) A description of the
				  property which is to be cooperatively owned or maintained by the HOA.
(c) A description of the proposed
				  transaction, including the number of homes or lots being offered in conjunction
				  with membership in the HOA.
(d)
				  That the offeror(s) will comply with the escrow and trust fund provisions of
				  General Business Law section
				  352-e (2-b) and section 352-h and the
				  regulations adopted by the Attorney General pursuant thereto, and hold down
				  payments for the purchase of the property in trust for the benefit of the
				  purchasers and that such funds will not be commingled with the moneys of the
				  offeror(s) until actually employed in connection with the consummation of the
				  transaction.
(e) That the
				  offeror(s) will provide to each offeree the following information:
(1) a statement that the purchase price of
				  the home(s) or lot(s) includes the cost of membership in the HOA;
(2) a copy of any mortgage or ground lease
				  that will remain on HOA property after transfer to the association;
(3) a copy of any contract between the
				  sponsor and the HOA;
(4) a copy of
				  the proposed deed of HOA property from sponsor to the HOA;
(5) a copy of the recorded deed to the HOA
				  property by which sponsor derived title or a copy of the contract of sale
				  between the owner and sponsor if sponsor is the contract vendee;
(6) a copy of the most recent financial
				  statement of income and expenses for the operation of the property, if
				  applicable;
(7) information known
				  to the offeror(s) which may result in extraordinary expenses for members or for
				  the HOA including but not limited to, assessments, liabilities, dangerous or
				  hazardous conditions, pending litigation and administrative
				  proceedings;
(8) evidence of
				  compliance with local zoning laws and regulations,
e.g.,
construction permits, zoning resolutions, use permits, a certificate of
				  occupancy if HOA property includes any buildings;
(9) disclosure of escrow account as required
				  by section
				  22.3(k)(2)  of
				  this Part including the form for dispute resolution by the Attorney General;
				  and
(10) such other information as
				  the Department of Law may require to be presented to each offeree.
(f) That the offeror(s) agrees to
				  furnish a complete copy of the application for a no-action letter and a copy of
				  the no-action letter to each offeree prior to accepting any down
				  payment.
(g) That the offeror(s)
				  agrees to furnish, within five days after a request by the Department of Law,
				  copies of executed offeree affidavits required pursuant to clause
				  (
j
) of this subparagraph.
(h) That the use for which the unit(s) and
				  property are being offered will comply with the property's certificate of
				  occupancy, zoning, building and housing laws, rules and regulations. If the
				  proposed use will not comply with the legally permissible use, a discussion of
				  what steps must be taken to comply with or to change the legally permissible
				  use and identification of which party will assume responsibility for taking
				  such steps.
(i) Whether the
				  offeror(s) or its principals, have, within the preceding five years,
				  participated in any other applications for a no-action letter or have made any
				  other offerings which were not pursuant to an offering plan filed with the
				  Department of Law. If so, the address of any property which was the subject of
				  such application or offering.
(j)
				  That an affidavit will be obtained from each proposed offeree prior to the
				  closing on a unit that is subject to this application which will contain the
				  following representations;
(1) the offeree's
				  name, residence and business address and legal status (corporation,
				  partnership, individual, etc.);
(2)
				  that the offeree has read the affidavit of the offeror(s) submitted as part of
				  the application for a no-action letter;
(3) that the offeree understands that no
				  offering literature other than as required by the no-action letter will be
				  provided;
(4) that the offeree has
				  inspected the subject property.
(ii) A site plan indicating the property
				  which is to be commonly owned or maintained by the HOA.
(iii) Declaration of covenants, restrictions,
				  easements and liens or a road maintenance agreement.
(iv) The estimated monthly or annual
				  assessment and the current or proposed budget.
(v) Certification by an expert as to the
				  adequacy of projected income and expenses for the first year of operation or
				  back-up documentation substantiating each line item of the budget.
(vi) Transmittal letter. A transmittal letter
				  addressed to the Department of Law that is signed and affirmed under penalty of
				  perjury by the individual attorney who prepared the no-action application, and
				  containing the following unqualified statements must be submitted with the
				  application at the time the application is submitted:
"I am the attorney who prepared the no-action application
					 for the captioned property. I affirm as follows:
Enclosed for filing pursuant to Section
					 22.8 of 13 NYCRR Part 22 is an
					 application for a no-action letter for the captioned property.
I am fully familiar with the provisions of Article 23-A of
					 the General Business Law and the regulations promulgated by the Attorney
					 General in Part 22.
I prepared (or reviewed) all legal documents necessary to
					 form an HOA and, in my opinion, the HOA is duly organized, validly existing and
					 in good standing. [If the HOA is not in existence at the time the application
					 is submitted, state that counsel will cause the HOA to be formed in conformity
					 with applicable law.] I have prepared the application based on information from
					 the sponsor. I expressly disclaim any responsibility to have made an
					 independent inspection of the property or investigation of the information
					 furnished to me by sponsor.
I have no actual knowledge of any violation of Article 23-A
					 of the General Business Law or Part 22 of the regulations promulgated by the
					 Department of Law, nor do I have actual knowledge of any material fact omitted
					 or any untrue statement of a material fact included in the application."
(vii) A check in the amount
				  required by General Business Law section
				  352-e(7)(a) made payable
				  to the Department of Law.
(viii) A
				  Broker-Dealer Statement (Form M-10) for the offerors accompanied by a check in
				  the amount required by General Business Law section
				  359-e(5).
(ix) A statistical record card available from
				  the Department of Law.
(x) Where
				  the roads are subject to an offer of dedication to the locality, a copy of the
				  dedication agreement and documentation establishing that the sponsor has
				  substantially complied with conditions for dedication.
(xi) Such other documents and information as
				  the Department of Law may specify.