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 22.2 - Procedure for submission

Current through Register Vol. 46, No. 28, July 10, 2024
(a)
				  The proposed offering plan and the exhibits described below shall be submitted
				  to the New York State 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
				  22.4(a)  of this
				  Part without qualification or alteration in substance. As specified in
				  paragraph (4) of this subdivision, the transmittal letter must expressly
				  indicate any exhibit that is not included and set forth the reasons for the
				  omission and list any documents submitted as exhibit B-24. Exemption
				  applications submitted pursuant to section
				  22.1(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. Indicate if
				  provisions of Part 20 of this Title pursuant to section
				  22.1(a)(5)  of
				  this Part are applicable to this offering. 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
				  22.3(i)  of this
				  Part the transmittal letter must note any commercial units and whether they are
				  being offered for sale. Pursuant to section
				  22.3(l)  of this
				  Part the transmittal letter must note financing offered to purchasers which
				  contains any unusual risks. Pursuant to section
				  22.1(j)  of this
				  Part the transmittal letter must note if it is an out-of-state plan. The
				  transmittal letter must also note if sponsor is aware of any investigation
				  currently 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 HOA
				  ownership.
(2) Checks (certified or
				  uncertified) for filing fees 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. The filing fee is based on the total value of the fully improved common
				  property to be owned and maintained by the HOA. Such value will not include the
				  effect of the filing of the declaration of covenants, restrictions, easements
				  and liens against the property. Such valuation may be based upon construction
				  costs or an expert's appraisal. If no property is to be owned by the
				  association or is of minimal value, the filing fee will be the minimum fee
				  specified in General Business Law section
				  352-e(7)(a). If
				  additional phases increase the value of the common area, such additional fee
				  associated with the increase in value must be paid when an amendment disclosing
				  the additional phase is filed. 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 nonrefundable deposit. The other 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) R-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.
Loose leaf binders and rings are not acceptable.
(5) A questionnaire in a form
				  prescribed by the Department of Law, completed and signed by the individual
				  attorney who prepared the offering plan.
(6) 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 HOA 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 and the reason for the omission.
(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)
(A-1)
				  Certification by the sponsor and the sponsor's principals signed by "sponsor"
				  and "principals" as defined in section
				  22.1(c)  of this
				  Part (Orig); see section
				  22.4(b)  of this
				  Part.
(b)
(A-2) If the HOA includes any common property
				  other than (
1
) unimproved land, (
2
)
				  landscaped areas, playgrounds, park areas or picnic areas, (
3
)
				  roads constructed in accordance with local government specifications for public
				  roads, or (
4
) sewers and/or water lines constructed in
				  accordance with local government specifications, a certification by sponsor's
				  engineer or architect concerning the description of the common property in Part
				  II of the plan and at Exhibit C-2 (Orig); see section
				  22.4(c)  of this
				  Part.
(c)
(A-3) Certification by expert on adequacy of
				  budget for the first year of HOA operation (Orig); see section
				  22.4(d)  of this
				  Part.
(ii)
				  Part B of the exhibits (general) shall consist of the following documents:
(a)
(B-1)
				  Title company report including a report on housing or building code violations
				  of record, if applicable, for HOA property dated or updated within 30 days of
				  submission.
(b)
(B-2) If applicable, projection from a
				  qualified expert or local supplier of the consumption, rate and total cost for
				  furnishing heat, hot water, electricity and other utilities to HOA
				  property.
(c)
(B-3) Proposed management
				  agreement.
(d)
(B-4) Copies of any contracts which
				  (
1
) will be binding on the Board of Directors of the HOA for
				  $2,500 or more per year, (
2
) have a term in excess of two
				  years, or (
3
) are with the sponsor, a business associate or
				  affiliate of the sponsor or a principal of the sponsor.
(e)
(B-5)
				  Copy of certificate of incorporation and receipt from Secretary of State for
				  the HOA, if available. If the association will not be incorporated until just
				  prior to the first closing, the receipt should be submitted to the Department
				  of Law before any closing occurs.
(f)
(B-6)
				  If applicable, copy of a letter from an insurance company or its authorized
				  agent, stating proposed insurance coverage and amounts and the annual premium
				  or premiums.
(g)
(B-7) If HOA property includes any buildings,
				  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 (
1
) so that the
				  insured shall not be a co-insurer if the policy contains a co-insurance
				  provision, or (
2
) 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. If
				  there is mandatory common fire and casualty insurance coverage required by the
				  declaration or by the by-laws for the homes of the members of the HOA, a
				  similar opinion regarding the adequacy of such coverage.
(h)
(B-8)
				  Copy of a fee quotation from a certified public accountant for preparing the
				  yearly financial statements for the HOA.
(i)
(B-9)
				  Copy of sections 352-a and 352-b Designation of Secretary of State as agent for
				  service of process (applicable only to out-of-state issuers, sponsors,
				  principals and/or selling agents), and filing receipt.
(j)
(B-10)
				  Copy of an estimate by the local tax assessor of the assessed valuation of HOA
				  property as fully improved in accordance with the terms of the offering plan.
				  If not available, substitute an estimate by a real estate broker, appraiser,
				  attorney, or other professional familiar with the tax assessment practices in
				  the locality in which the property is located. Alternatively, an opinion by the
				  local tax assessor or a legal opinion by sponsor's counsel that the HOA
				  property as fully improved in accordance with the terms of the offering plan
				  will be assessed at an amount not greater than a nominal value and that any
				  value of the HOA property above a nominal value will be reflected in the
				  assessed valuation of individual homes or lots. In any event, the projected tax
				  must be reflected in the estimated budget for the first year of HOA
				  operation.
(k)
(B-11) For HOAs located outside of New York
				  State, copy of the statutes and regulations concerning the registration and
				  formation of HOAs, if any, and evidence of compliance with those laws or
				  regulations.
(l)
(B-12) Copy of sponsor's or present owner's
				  recorded deed to the HOA property or a copy of the contract of sale between the
				  owner and sponsor if sponsor is the contract vendee.
(m)
(B-13)
				  Copy of any contract between the sponsor and the HOA and a copy of the proposed
				  deed of HOA property from sponsor to the HOA.
(n)
(B-14)
				  Copy of the form of promissory note and mortgage required by sponsor or lender
				  if the sponsor offers or procures any type of financing together with any other
				  document which significantly affects a purchaser's obligations for financing
				  offered or procured by sponsor.
(o)
(B-15)
				  Copy of any mortgage financing commitment letter pertaining to end loans or to
				  building construction loans, and amendments or extensions of the commitment
				  letter.
(p)
(B-16) For rehabilitated projects, an
				  affidavit by sponsor stating how the premises became vacant, that there was no
				  harassment, and whether any units were vacated pursuant to vacate orders. If
				  so, provide copy of vacate orders.
(q)
(B-17)
				  An affidavit by sponsor stating that no money has been taken during any market
				  test pursuant to Cooperative Policy Statement Number 1, if
				  applicable.
(r)
(B-18) Copies of all existing and proposed
				  professional and commercial leases and subleases, and concession agreements
				  affecting HOA property.
(s)
(B-19)
				  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).
(t)
(B-20)
				  An appraisal by a licensed real estate broker or licensed appraiser in the area
				  where the property is located of the fully improved HOA property to be owned
				  and maintained by the HOA without regard to the effect of the filing of the
				  declaration of covenants, restrictions, easements and liens on the property
				  (Orig).
(u)
(B-21) Copy of the escrow agreement between
				  the sponsor and the attorney(s) acting as escrow agent. If the model form is
				  used, so indicate. Copy of bank forms to be used to open any account.
(v)
(B-22) If applicable, copy of surety bonds or
				  letter of credit used to secure down payments and any underlying agreement or
				  related agreement, and any undertaking.
(w)
(B-23)
				  Documentation associated with each identified footnote to the budget.
(x)
(B-24) Other material documents, each of
				  which should be described in the transmittal letter.
(iii) Part of C of the
				  exhibits (engineering) shall consist of the following documents:
(a)
(C-1) If
				  the HOA includes any property other than (
1
) unimproved land,
				  (
2
) landscaped areas, playgrounds, park areas or picnic areas,
				  (
3
) roads constructed in accordance with local government
				  specifications for public roads, or (
4
) sewers and/or water
				  lines constructed in accordance with local government specifications, an
				  architect's or engineer's detailed description of the HOA 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
				  22.7  of this Part; see Exhibit
				  A-2. The Department of Law may in its discretion require a further inspection
				  and report.
(b)
(C-2) Asbestos report for existing HOA
				  buildings, 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
				  22.7(v)  of this
				  Part.
(c)
(C-3) If HOA property includes any buildings,
				  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 HOA is identical to the original use of the buildings. If
				  no certificate of occupancy has yet been issued, so indicate and forward a copy
				  of such certificate to the Department of Law when issued.
(d)
(C-4)
				  Copy of approved building plans for HOA property, if available, or if required
				  by local law, any specifications required by governmental agencies having
				  jurisdiction and copies of all required construction permits and use permits,
e.g.,
swimming pool permit, air resources permit.
(e)
(C-5) Evidence of compliance with local
				  zoning laws and regulations,
e.g.,
a building permit.
(f)
(C-6) Copy of engineer's or architect's
				  drawing of site plan and improvements. A survey of the site may be substituted
				  for this item provided it clearly indicates all buildings, parking areas or
				  other improvements. This exhibit must be easily readable and must distinguish
				  common property from individual lots.
(iv) Part D of the exhibits (other
				  information) shall consist of the following documents:
(a)
(D-1)
				  Signed M-10 forms, 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. F orms 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.
(b)
(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.
(c)
(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)
(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
				  maintenance on unsold lots or homes (Orig). If the facts sworn to in this
				  affidavit change, sponsor shall immediately amend such affidavit and submit the
				  amended affidavit to the Department of Law.
(e)
(D-5)
				  An affidavit from sponsor and principals of sponsor, as defined in section
				  22.1(c)  of this
				  Part, stating whether sponsor and/or 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 are pending or 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 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
				  or HOAs (Orig).
(f)
(D-6) Completed statistical information card
				  (available from the Department of Law).