N.Y.
General Business Law Section 352-EEEEE
Conversions to condominium ownership for the preservation of expiring affordable housing in the city of New York
1.
As used in this section, the following words and terms shall have the following meanings:(a)
“Annual update amendment”. An annual update amendment is an amendment to the preservation plan that shall be submitted to the attorney general every year that a dwelling unit is unsold, with the first such annual update amendment due within forty-five days of the anniversary of the acceptance of the post-closing amendment to the preservation plan. An annual update amendment shall supply the evidence, data and information required in this section, and such other information as the attorney general’s regulations shall require, so that the attorney general is satisfied that the preservation plan as amended discloses the information necessary for a reasonable investor to make their purchase decision and that the preservation plan is otherwise complete, current and accurate.(b)
“Bona fide purchaser”. A bona fide purchaser is either (i) a tenant in occupancy who enters into a purchase agreement for a dwelling unit pursuant to their or its exercise of one of the rights accorded to tenants in occupancy in subdivision five of this section, or(ii)
a bona fide non-tenant purchaser.(c)
“Bona fide non-tenant purchaser”. A bona fide non-tenant purchaser is a purchaser of a dwelling unit who has represented that they or a member or members of their immediate family intend to occupy the dwelling unit when it becomes vacant. A bona fide non-tenant purchaser shall not include any purchaser who is an offeror, the selling agent, or the managing agent or is a principal of the offeror, the selling agent or the managing agent or is related to the sponsor, the selling agent or the managing agent or to any principal of the sponsor or the selling agent or the managing agent by blood, marriage or adoption or as a business associate, an employee, a shareholder or a limited partner; except that such a purchaser other than the offeror or a principal of the sponsor may be included as a bona fide non-tenant purchaser if the offeror has submitted proof satisfactory to the department of law establishing that the purchaser is bona fide.(d)
“Commercially reasonable good faith effort”. A commercially reasonable good faith effort on the part of an offeror of a preservation plan shall, at minimum, include (i) the filing of an annual update amendment to the preservation plan;(ii)
all of the condominium’s dwelling units other than any income-restricted rental units as the units being offered for sale under the preservation plan, each at an offering price that is consistent with comparable dwelling units recently sold within the locality; and(iii)
entering into a written agreement with a licensed real estate broker or selling agent in connection with the sale of dwelling units offered for sale under the preservation plan. For the avoidance of doubt, a commercially reasonable good faith effort shall not require an offeror to sell dwelling units at a price substantially below the market-rate for comparable units recently sold within the locality, nor shall it require an offeror to offer for sale dwelling units that are occupied by non-purchasing tenants.(e)
“Condominium”. A condominium shall also include a qualified leasehold condominium as defined in subdivision twelve of Real Property Law § 339-E (Definitions)section three hundred thirty-nine-e of the real property law.(f)
“Consummation of the preservation plan”. Consummation of the preservation plan shall refer to the filing of the declaration for the condominium and the first transfer of title to at least one purchaser under the preservation plan following a declaration of effectiveness by the department of law declaring the preservation plan effective.(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 preservation plan is submitted to the department of law or on the date the attorney general has accepted the preservation plan for filing, and the spouses of any such tenants on such date, and who have elected, within sixty days of the date the preservation plan is submitted to the department of law or on the date the attorney general has accepted the preservation 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 preservation 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 preservation 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 on the terms then offered to tenants in occupancy.(h)
“Eligible project”. An eligible project shall refer to a building or group of buildings or development with one hundred or more dwelling units built after nineteen hundred ninety-six that is the subject of a preservation plan under this section, which shall meet the criteria set forth in subdivision two of this section. An eligible project shall not include any building or group of buildings or development owned under article two, four or five of the private housing finance law. For the avoidance of doubt, no building, group of buildings or development other than an eligible project shall convert to condominium status under this section, the status of which shall be confirmed by the relevant housing finance agency prior to the date of submission of the preservation plan.(i)
“Eligible senior citizens”. Non-purchasing tenants who are sixty-two years of age or older on the date the preservation plan is submitted to the department of law or on the date the attorney general has accepted the preservation plan for filing, and the spouses of any such tenants on such date, and who have elected, within sixty days of the date the preservation plan is submitted to the department of law or on the date the attorney general has accepted the preservation 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.(j)
“Extended affordability term”. The extended affordability term for the income-restricted rental units shall be in perpetuity for so long as the building or group of buildings or development are in existence, and subject to any obligation to rebuild in the event of condemnation, damage or destruction required by the regulatory agreement with the relevant housing finance agency.(k)
“Inclusionary housing unit”. An inclusionary housing unit is an income-restricted rental unit that is located within a building that received an increase in the maximum permitted floor area pursuant to sections 23-154 and 23-90 of the zoning resolution or is located in a mandatory inclusionary housing area, as such sections may be amended from time to time.(l)
“Inclusionary housing designated area”. An inclusionary housing designated area is a specified area in which the inclusionary housing program (also known as the voluntary inclusionary housing program) is applicable, pursuant to the regulations set forth for such areas in section 23-90 of the zoning resolution, as such section may be amended from time to time. The locations of inclusionary housing designated areas are identified in either (i) appendix “F” of the zoning resolution or (ii) in a special purpose district as described in section 15-011 of the zoning resolution, as such appendix or section may be amended from time to time.(m)
“Income-restricted rental unit”. An income-restricted rental unit shall refer to a dwelling unit located in a building or group of buildings or development of an eligible project that is the subject of a preservation plan submitted to the attorney general pursuant to this section, and such dwelling unit:(i)
meets the definition of a “low-income unit” as such term is defined in section forty-two of the internal revenue code and is subject to a regulatory agreement with a relevant housing finance agency; or(ii)
meets the definition of a “low-income unit” as such term is defined in subdivision (d) of section one hundred forty-two of the internal revenue code and is subject to a regulatory agreement with a relevant housing finance agency; or(iii)
previously met the definition of “low-income unit” pursuant to subparagraph (i) or (ii) of this paragraph, and notwithstanding the expiration of a regulatory agreement with a relevant housing finance agency, the owner of such dwelling unit affirms, under the penalty of perjury and provides other documentation to the satisfaction of the relevant housing finance agency, that it has continuously operated and rented the dwelling unit (A) as if it remained an income-restricted rental unit and (B) as if all of the restrictions of the expired regulatory agreement had continuously been extended or otherwise remained in effect; or(iv)
is a dwelling unit located within a building or group of buildings or development that, in accordance with provisions of subdivisions one through fifteen of Real Property Tax Law § 421-A (Affordable New York Housing Program)section four hundred twenty-one-a of the real property tax law, the relevant housing finance agency shall have required to be a unit affordable to families of low and moderate income;(v)
is a dwelling unit that is rented to persons of low income or families of low income as defined in subdivision nineteen of Private Housing Finance Law § 2 (Definitions)section two of the private housing finance law or as otherwise required by a federal, state, or local law or mandate; or(vi)
is a dwelling unit located in a building, group of buildings or development subject to a regulatory agreement due to bond financing provided by the relevant housing finance agency that required dwelling units be affordable to families of low or moderate income.(n)
“Mandatory inclusionary housing area”. A mandatory inclusionary housing area is a specified area in which the inclusionary housing program is applicable, pursuant to the regulations set forth for such areas in section 23-90 of the zoning resolution, as such section may be amended from time to time. The locations of mandatory inclusionary housing areas are identified in either (i) appendix “F” of the zoning resolution or (ii) in a special purpose district as described in section 15-011 of the zoning resolution, as such appendix or section may be amended from time to time.(o)
“Non-purchasing tenant”. A person who has not purchased under the preservation plan from offeror and who is a tenant entitled to possession at the time the preservation plan is declared effective or a person to whom a dwelling unit is rented from offeror after the preservation plan was declared effective, which solely for purposes of this section, shall include any person who is a tenant regardless of whether (i) such person was a tenant entitled to possession at the time the preservation plan was declared effective, or(ii)
such person rented a dwelling unit from offeror after the preservation plan was declared effective. A person who sublets a dwelling unit from a purchaser under the preservation plan shall not be deemed a non-purchasing tenant. A tenant entitled to possession of an income-restricted rental unit at the time the preservation plan is declared effective or a person to whom an income-restricted rental unit is rented from offeror or qualified owner after the preservation plan is declared effective is a non-purchasing tenant, notwithstanding that the income-restricted rental units are not offered for sale pursuant to such preservation plan.(p)
“Post-closing amendment”. A post-closing amendment is an amendment to a preservation plan filed with the attorney general confirming that the preservation plan has been consummated. A post-closing amendment must be submitted to the attorney general no more than forty-five days after the first closing of a dwelling unit to a bona fide purchaser under the preservation plan.(q)
“Preservation plan”. An offering statement or prospectus submitted to the department of law pursuant to this section for the conversion of a building or group of buildings or development of an eligible project from rental status to condominium ownership, wherein the offeror documents that it has entered into a regulatory agreement with a relevant housing finance agency in which it agreed to an extended affordability term for the income-restricted rental units with a relevant housing finance agency.(r)
“Purchaser under the preservation plan”. A purchaser under the preservation plan is a person who purchases a dwelling unit from offeror pursuant to the terms of a preservation plan that has been accepted for filing by the attorney general. A person or entity that acquires dwelling units and assumes certain obligations of offeror shall not be considered a purchaser under the preservation plan.(s)
“Qualified owner”. A qualified owner refers to the entity approved by the relevant housing finance agency on or before the date of submission of a preservation plan to the department of law that will own, operate and maintain the income-restricted rental unit or units that are in the building, group of buildings or development that are the subject of the preservation plan. The entity which is a qualified owner shall only be either:(i)
a housing development fund company incorporated pursuant to article eleven of the private finance housing law; or(ii)
a community land trust or other charitable corporation organized under the not-for-profit corporation law that has as its primary charitable purpose the ownership, operation and maintenance of multifamily housing for persons and families of low income as defined by subdivision nineteen of section two of the private finance housing law.(t)
“Relevant housing finance agency”. Relevant housing finance agency shall refer to a city or state agency with oversight over income-restricted rental units prior to the date of submission of a preservation plan. For purposes of this section, a relevant housing finance agency shall also refer to the city or state agency that will continue to have oversight of income-restricted rental units after consummation of the preservation plan and in accordance with the terms of a regulatory agreement.(u)
“Regulatory agreement”. A regulatory agreement shall refer to the written agreement with a relevant housing finance agency that restricts the income and rents of income-restricted rental units that is either:(i)
in effect prior to the date of submission of a preservation plan; or(ii)
in effect after consummation of the preservation plan. Any regulatory agreement in effect at the date of the submission of the preservation plan shall remain in effect until the consummation of the preservation plan unless otherwise agreed to by the relevant housing finance agency. A regulatory agreement that shall take effect after consummation of the preservation plan shall require that at least twenty percent of all units be income-restricted rental units, and require further that all existing income-restricted rental units, as of the effective date of this act, shall remain income-restricted in perpetuity.(v)
“Rent stabilization”. Rent stabilization shall mean, collectively, the rent stabilization law of nineteen sixty-nine, and the emergency tenant protection act of nineteen seventy-four together with any other successor statutes thereto.(w)
“Zoning resolution”. Zoning resolution shall refer to the zoning resolution of the city of New York.2.
The attorney general shall refuse to accept for submission a preservation plan for the conversion of a building or group of buildings or development if the relevant housing finance agency has not confirmed in writing through the issuance of a letter of support as described in subdivision three of this section and that the preservation plan is for an eligible project, which shall be defined as a building or group of buildings or development that meets the definition of an eligible project and one or more of the following requirements as of the date of submission of the preservation plan:(a)
The preservation plan is for a building or group of buildings or development that (i) receives a partial property tax exemption pursuant to subdivisions one through fifteen of Real Property Tax Law § 421-A (Affordable New York Housing Program)section four hundred twenty-one-a of the real property tax law, (ii) contains income-restricted rental units, and(iii)
is not otherwise prohibited by any federal, state, or local law, rule, or regulation or subject to an existing regulatory agreement that prohibits the conversion of the dwelling units to condominium ownership; or(b)
The preservation plan is for a building or group of buildings or development that (i) receives low income housing tax credits pursuant to section forty-two of the internal revenue code, (ii) contains income-restricted rental units, (iii) is not subject to any agreement providing for a right of first refusal with a not-for-profit corporation unless evidence deemed satisfactory to the department of law has been provided that such right of first refusal has either expired or that such not-for-profit declined to exercise such right, and(iv)
is not otherwise prohibited by any federal, state, or local law, rule, or regulation or subject to an existing regulatory agreement that prohibits the conversion of the dwelling units to condominium ownership; or(c)
The preservation plan is for a building or group of buildings or development that (i) receives bond financing under subsection (d) of section one hundred forty-two of the internal revenue code, (ii) contains income-restricted rental units, and(iii)
is not otherwise prohibited by any federal, state, or local law, rule, or regulation or subject to an existing regulatory agreement that prohibits the conversion of the dwelling units to condominium ownership; or(d)
The preservation plan is for a building or group of buildings or development, that (i) contains one or more inclusionary housing units, (ii) is not otherwise prohibited by any federal, state, or local law, rule, or regulation or subject to an existing regulatory agreement that prohibits the conversion of the dwelling units to condominium ownership, and(iii)
contains a representation that an agreement has been reached with the relevant housing finance agency to increase the total number of income-restricted rental units in the building or group of buildings or development to thirty percent for the extended affordability term upon consummation of the preservation plan; or(e)
The preservation plan is for a building or group of buildings or development that (i) contains exclusively moderate income units as required for bond financing with the relevant housing finance agency, (ii) the total number of income-restricted rental units in the building or group of buildings or development is less than twenty percent, (iii) is not subject to an existing regulatory agreement that prohibits the conversion of the dwelling units to condominium ownership, and(iv)
contains a representation that an agreement has been reached with the relevant housing finance agency to increase the total number of income-restricted rental units in the building or group of buildings or development to at least twenty percent for the extended affordability term upon consummation of the preservation plan.3.
At the time of submission of the preservation plan, the offeror shall provide a letter of support from the relevant housing finance agency demonstrating that a regulatory agreement has been entered into between the offeror, the qualified owner, and the relevant housing finance agency regarding the income-restricted rental units during the extended affordability term, and that such regulatory agreement will, among other things, require the offeror to include the following disclosures in the preservation plan:(a)
A list of the proposed income-restricted rental units;(b)
The proposed qualified owner of the income-restricted rental units, which qualified owner shall take title to the income-restricted rental units no later than three hundred sixty-five days from the date of consummation of the preservation plan;(c)
The operating expenses and revenues applicable to the income-restricted rental units, which shall be reflected in the updated Schedule A and Schedule B for the first year of operation of the condominium, the allocation of common interests, projected common charges, estimated real estate taxes, and rents to be collected from each income-restricted rental unit, and the allocation of common expenses under Real Property Law § 339-M (Common profits and expenses)section three hundred thirty-nine-m of the real property law, applicable to the income-restricted rental units, which shall be used to limit certain condominium expenses allocable to the income-restricted rental units and to cover any shortfall in the revenue from rent to cover the costs of operation of the income-restricted rental units;(d)
A description of any financing encumbering the income-restricted rental units, and whether a tax exemption or abatement is in place to reduce real estate taxes for the income-restricted rental units;(e)
A description of any regulatory agreement or agreements to be recorded against the income-restricted rental units and the term thereof and the relevant housing finance agency or agencies with supervisory oversight;(f)
A description of the provisions of the declaration and by-laws for the condominium that provides for the special allocation of common expenses in accordance with Real Property Law § 339-M (Common profits and expenses)section three hundred thirty-nine-m of the real property law, and any specific requirements set forth in a regulatory agreement requiring unit owners in the condominium to cover any shortfall in the revenue from rent to cover the costs of operation of the income-restricted rental units;(g)
A description of the contemplated structure of the board of managers of the condominium, including specifically an explanation as to how the interests of the qualified owner of the income-restricted rental units are to be adequately represented;(h)
A description of the building-wide amenities and a representation that the declaration and by-laws for the condominium shall require that tenants of the income-restricted rental units be provided an opportunity to use commonly accessible amenities of the condominium and not unique to an individual unit, including but not limited to: pools, fitness centers, storage spaces, parking, and roofs or gardens accessible on a building-wide basis, and that the tenants of the income-restricted rental units may only be charged a nominal and reasonable fee for such use, as approved by the relevant housing finance agency in accordance with the regulatory agreement, and which shall not be treated as rent under any rental agreement;(i)
The name, address and contact details for the relevant housing finance agency or agencies with supervisory oversight of the income-restricted rental units and the occupants within;(j)
That the regulatory agreement contains a provision which requires that once a vacancy occurs of an income-restricted rental unit, after consummation of the preservation plan, then said unit shall only be leased to low income households whose annual household income is not greater than sixty percent of area median income at the time of the initial lease, and such unit shall be marketed and leased in compliance with the relevant housing finance agency’s leasing requirements, which may include leasing through New York city’s housing connect portal;(k)
A representation by offeror that the regulatory agreement includes and accounts for (i) all of the existing on-site income-restricted rental units in an existing building or group of buildings or development, or(ii)
all of the income-restricted rental units associated with an existing building or group of buildings or development located on a zoning lot where one or more buildings were set aside as affordable housing for purposes of qualifying for a partial property tax exemption pursuant to Real Property Tax Law § 421-A (Affordable New York Housing Program)section four hundred twenty-one-a of the real property tax law;(l)
To the extent not already subject thereto prior to the consummation of the preservation plan, a representation by offeror that the regulatory agreement shall require all income-restricted rental units be subject to rent stabilization during the extended affordability term, and that no income-restricted rental units shall be removed from rent stabilization pursuant to the exemption for units owned as a condominium under section 26-504 of the administrative code of the city of New York; and(m)
The recording of the condominium declaration and commencement of condominium operations does not modify the requirement under Real Property Tax Law § 421-A (Affordable New York Housing Program)section four hundred twenty-one-a of the real property tax law that all residential rental apartments are subject to rent stabilization.4.
Upon submission of the preservation plan to the department of law, each tenant in occupancy of any unit, including but not limited to any income-restricted rental unit, in the eligible project that is the subject of such preservation plan shall be provided with a written notice stating that such preservation plan has been submitted to the department of law. Written notice to each tenant in occupancy shall contain or be accompanied by:(a)
a copy of the proposed preservation plan that has been submitted to the department of law;(b)
a statement that tenants of the dwelling units being offered for sale pursuant to the preservation plan or their representatives may physically inspect the premises at any time subsequent to the submission of the preservation 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 by the office of the professions of the education department of the state of New York; and(c)
a statement to tenants of the income-restricted rental units that the dwelling units they occupy are not being offered for sale, but their tenancies shall continue undisturbed during and after the conversion of the property to condominium ownership. The statement shall also disclose that all income-restricted rental units shall be subject to rent stabilization throughout the extended affordability term.5.
The tenants in occupancy of dwelling units being offered for sale on the date the attorney general accepts the preservation plan for filing shall have the exclusive right to purchase their dwelling units for ninety days after the preservation plan has been accepted for filing by the attorney general, during which time the offering price available to the tenant in occupancy shall not be increased and a tenant’s dwelling unit shall not be shown to a third party unless such tenant has, in writing, waived their 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 six months from said expiration date to purchase said dwelling unit on the same terms and conditions as are contained in any executed contract to purchase said dwelling unit entered into by a purchaser under the preservation plan, 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 purchase agreement to said tenant.6.
The preservation plan shall also disclose that the offeror shall:(a)
market and sell all the dwelling units (other than the income-restricted rental units) in the building or group of buildings or development, as each such dwelling unit becomes vacant, to a purchaser under the preservation plan through the use of commercially reasonable good faith efforts;(b)
fund the reserve fund and dedicated capital fund in the manner and amounts as provided in Real Property Law § 339-MM (Establishment of reserve fund and dedicated capital fund for buildings converting to condominium ownership under section three hundred fi...)section three hundred thirty-nine-mm of the real property law;(c)
file an annual update amendment every year which shall include an updated Schedule A of all dwelling units being offered for sale under the preservation plan; and(d)
exercise commercially reasonable good faith efforts to sell at least fifty-one percent of the total number of dwelling units offered for sale under the preservation plan (excluding any income-restricted rental units not offered for sale) within five years from the date of consummation of the preservation plan.7.
After the issuance of the letter from the attorney general stating that the preservation plan 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 preservation 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 preservation plan:(a)
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 preservation plan was accepted for filing by the attorney general who have executed and delivered written agreements to purchase under the preservation plan as of the date of such written statement under oath; and(b)
before noon on the day such statement is filed post a copy of such written statement under oath in a prominent place accessible to all tenants in each building covered by the preservation plan.8.
A preservation plan shall not be declared effective until written purchase agreements have been executed and delivered for at least fifteen percent of all dwelling units offered for sale in the building or group of buildings or development from either (a) bona fide tenants who were in occupancy on the date a letter was issued by the attorney general accepting the preservation plan for filing or (b) bona fide non-tenant purchasers. 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. A negotiated reduction from the original offering price extended shall not, by itself, be deemed a discriminatory inducement.9.
Those written statements under oath that the offeror is required to file with the attorney general pursuant to subdivision seven of this section shall also include:(a)
the total number of written agreements to purchase under the preservation plan received from bona fide non-tenant purchasers;(b)
the total number of written agreements to purchase under the preservation plan received from all bona fide tenants in occupancy;(c)
the percentage of dwelling units under contract, calculated by adding the number of written purchase agreements for a unit that were received from (i) all bona fide tenants in occupancy plus (ii) all bona fide non-tenant purchasers and then dividing the sum of those two numbers by the total number of dwelling units offered for sale under the preservation plan;(d)
whether or not the offeror intends to claim a credit against the mandatory initial contribution the offeror is obligated to deposit into the condominium’s reserve fund pursuant to subdivision three of Real Property Law § 339-MM (Establishment of reserve fund and dedicated capital fund for buildings converting to condominium ownership under section three hundred fi...)section three hundred thirty-nine-mm of the real property law for the actual cost of capital replacements which the offeror has begun after the preservation plan was submitted for filing to the department of law but before the preservation plan is declared effective, together with their actual or estimated costs which credit shall not exceed the actual cost of the credit;(e)
whether or not the offeror shall be making its reserve fund contributions required pursuant to section three hundred thirty-nine-mm earlier or in an amount greater than required; and(f)
a representation that no purchaser counted for purposes of declaring the preservation plan effective is the offeror, the selling agent or the managing agent, or is a principal of the offeror, the selling agent, or the managing agent or is related to any principal of the offeror, any principal of the selling agent or any principal of the managing agent by blood, marriage, or adoption, or is an affiliate, business associate, an employee, a shareholder, a member, a manager, a director, an officer, a limited partner of the offeror, selling agent or managing agent.10.
The preservation plan shall provide 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 preservation plan has been accepted for filing and, in the event of such abandonment, no new plan, including but not limited to a preservation 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.11.
No closings of title of a dwelling unit to a purchaser under the preservation plan shall take place until the attorney general shall have also accepted for filing an amendment that declares the preservation plan effective. Within forty-five days of the first closing of title of a dwelling unit to a purchaser under the preservation plan, the offeror shall submit to the attorney general its post-closing amendment to the preservation plan. Thereafter, the preservation plan shall continually be updated with the filing of an annual update amendment, no later than thirty days from the anniversary of the date the attorney general accepted the post-closing amendment for filing. An offeror or successor offeror shall only be relieved of its obligation to file an annual update amendment to the preservation plan after the last dwelling unit offered for sale is conveyed to a purchaser under the preservation plan.12.
After the date of acceptance for filing of the post-closing amendment, the offeror or successor offeror shall continue to make commercially reasonable good faith efforts to sell the dwelling units it owns.13.
The attorney general shall refuse to accept for filing an annual update amendment to the preservation plan unless:(a)
The annual update amendment discloses, in addition to the other disclosures required elsewhere in this section or the regulations of the attorney general, the following data and information:(i)
an accounting of the dwelling units sold and closed by the offeror in the preceding twelve months, with an indication if the dwelling unit was conveyed to a purchaser under the preservation plan or to a successor offeror;(ii)
an inventory of the offeror’s unsold dwelling units at the end of the preceding twelve months, in form and substance as shall satisfy the attorney general; and(iii)
all the information, data and literature presented by the board of managers in its semi-annual reports on the status of the reserve fund as required under subdivision five of Real Property Law § 339-MM (Establishment of reserve fund and dedicated capital fund for buildings converting to condominium ownership under section three hundred fi...)section three hundred thirty-nine-mm of the real property law.(b)
The annual update amendment shall be accompanied by an affidavit from a principal of the offeror attesting to the following data and information with respect to all the dwelling units the offeror then owns:(i)
the dwelling units’ identifying information and general location;(ii)
whether, on the date of submission of the annual update amendment, the unsold dwelling unit is subject to a fully executed purchase agreement, and if so, whether the purchaser is a purchaser under the preservation plan or otherwise;(iii)
whether, on the date of submission of the annual update amendment, the dwelling unit is occupied or vacant, and if occupied, an indication that occupancy is: (A) by a rent-regulated tenant; (B) by a market-rate tenant; (C) a month-to-month tenancy; (D) a tenancy at sufferance; or (E) other.(iv)
regardless of the occupancy status of a dwelling unit on the date of submission of the annual update amendment, an indication if the dwelling unit was vacant for more than one of the twelve preceding months. For each dwelling unit so indicated, the offeror shall also disclose: (A) the date range that the dwelling unit was vacant; (B) the date range for any period of time that the dwelling unit was marketed for sale; (C) date of sale; (D) the date the dwelling unit was leased by a tenant; and (E) the date the lease is set to expire (if applicable).14.
No eviction proceedings shall be commenced at any time against non-purchasing tenants for failure to purchase or for 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 their obligations to the owner of the dwelling unit; and provided further that an owner of a unit shall not commence an action to recover possession of a dwelling unit from a non-purchasing tenant on the grounds that they seek the dwelling unit for the use and occupancy of themself or their family’s use and occupancy.15.
No eviction proceedings shall be commenced, except as provided in this subdivision, 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 preservation plan has been accepted for filing shall not be subject to unconscionable increases which, solely for the purposes of this subdivision, and notwithstanding any exemptions for housing accommodations owned as condominiums provided for under subdivision seven of Real Property Law § 214 (Covered housing accommodations)section two hundred fourteen of the real property law, and regardless of whether such non-purchasing tenant has a rent that exceeds two hundred forty-five percent of the fair market rent, all rent increases for eligible senior citizens and eligible disabled persons shall be considered unconscionable if such increases exceed the permissible increases provided for under the good cause eviction law under article six-A of the real property law; 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 their obligations to the owner of the dwelling unit.16.
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.17.
The rights granted under the preservation plan to eligible senior citizens and eligible disabled persons shall not be abrogated or reduced notwithstanding any expiration of, or amendment to, this section.18.
Any offeror who disputes the election by a person to be an eligible senior citizen or an eligible disabled person shall 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 a 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 shall be commenced within thirty days after such determination by the attorney general becomes final.19.
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 condominium ownership shall continue to be subject thereto.20.
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 preservation plan has been accepted for filing by the attorney general shall not be subject to unconscionable increases which, solely for the purposes of this subdivision, and notwithstanding any exemptions for housing accommodations owned as condominiums provided for under subdivision seven of Real Property Law § 214 (Covered housing accommodations)section two hundred fourteen of the real property law, in the event the rent of a non-purchasing tenant shall be less than two hundred forty-five percent of the fair market rent, then such increases for such non-purchasing tenant shall be governed by article six-A of the real property law.21.
The rights granted under the preservation plan to purchasers under the preservation plan and to non-purchasing tenants shall not be abrogated or reduced notwithstanding any expiration of, or amendment to, this section.22.
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.23.
The attorney general shall refuse to accept for filing a preservation plan when the attorney general determines:(a)
that one or more of the income-restricted rental units within the building, group of buildings or development was vacant on the date of submission; or(b)
of the dwelling units that are not income-restricted rental units, an excessive number of long-term vacancies existed on the date that the preservation plan was first submitted to the department of law. For purposes of this subdivision, “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; and “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 preservation plan was first submitted to the department of law.24.
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 of the board of managers, at which time the board of managers of the condominium shall assume responsibility for the provision of all services and facilities required by law on a non-discriminatory basis. Such managing agent shall also ensure that non-purchasing tenants be provided an opportunity to use commonly accessible amenities of the condominium and not unique to an individual unit, including but not limited to pools, fitness centers, storage spaces, parking and roofs or gardens accessible on a building-wide basis, and that the tenants of the income-restricted rental units may only be charged a nominal and reasonable fee for such use, as approved by the relevant housing finance agency in accordance with the regulatory agreement, and which shall not be treated as rent under any rental agreement.25.
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 their use or occupancy of their 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 they deem it appropriate, an order restraining the owner from selling the dwelling unit itself or from proceeding with the preservation plan of conversion; provided that nothing contained herein shall be deemed to preclude the tenant from applying on their own behalf for similar relief.26.
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.27.
Notwithstanding the requirements of this section regarding the preservation of an income-restricted rental unit or units as permanently affordable, and to the extent permitted under existing law as it relates to the income-restricted rental unit or units, the income-restricted rental unit or units in a building or group of buildings or development of an eligible project may be converted to a limited equity housing cooperative pursuant to article eleven of the private housing finance law under a separate offering statement or prospectus, if the relevant housing finance agency ensures that the proposed offering statement or prospectus discloses that the regulatory agreement provides as follows:(a)
the offering prices are affordable to the existing tenants and/or the qualified low-income purchasers who meet the definition of persons of low income or families of low income as defined by subdivision nineteen of Private Housing Finance Law § 2 (Definitions)section two of the private housing finance law;(b)
any tenant of an income-restricted rental unit that chooses not to buy the income-restricted rental unit such tenant occupies shall continue to be protected under rent stabilization throughout the process of conversion to a limited equity housing cooperative and thereafter, and that no existing tenant of an income-restricted rental unit shall be evicted solely due to such tenant’s decision not to purchase their income-restricted rental unit;(c)
the regulatory agreement and certificate of incorporation of the limited equity housing cooperative shall ensure that the income-restricted rental units converted to a limited equity housing cooperative shall be reserved for occupancy by persons of low income and families of low income in perpetuity;(d)
the regulatory agreement and certificate of incorporation of the limited equity housing cooperative shall ensure that, notwithstanding the creation of a separate condominium, any obligations that the non-income-restricted rental unit owners may have to ensure the financial viability and delivery of services in a non-discriminatory manner, prior to the date of conversion to a limited equity housing cooperative, shall not be abrogated and shall remain in full force and effect;(e)
the relevant housing finance agency shall have oversight authority over the limited equity housing cooperative in the regulatory agreement, condominium declaration, condominium by-laws and certificate of incorporation of the limited equity housing cooperative, including the ability to appoint a new board of directors of the limited equity housing cooperative in the event of a violation of a term of, or an event of default by the limited equity housing cooperative under any of its governing documents, requiring purchasers of such units to attend homeownership training, and providing for the procedures to sell the units upon vacancy; and(f)
that the ownership of the dedicated capital account by the qualified owner, and the funding of the dedicated capital account by the offeror of the preservation plan, shall each be subject to the oversight authority of the relevant housing finance agency as provided in Real Property Law § 339-MM (Establishment of reserve fund and dedicated capital fund for buildings converting to condominium ownership under section three hundred fi...)section three hundred thirty-nine-mm of the real property law.28.
It shall be unlawful for an offeror, its designees and/or successors to have or exercise voting control of the condominium’s board of managers for more than ninety days from the fifth anniversary date of the first closing of title to a dwelling unit, or whenever the unsold dwelling units constitute less than fifty percent of the common interests appurtenant to all dwelling units, whichever is sooner.29.
The attorney general may, in their discretion, waive the requirement in paragraph (d) of subdivision six of this section that an offeror sell at least fifty-one percent of the dwelling units offered for sale under the preservation plan when the offeror provides proof satisfactory to the attorney general that five years of commercially reasonable good faith efforts did not result in the sale of fifty-one percent of the dwelling units. If such waiver is granted, the offeror shall be required to disclose the new date by which it will sell at least fifty-one percent of the dwelling units offered for sale under the preservation plan in its subsequent annual update amendment. Any waiver granted hereunder shall not alleviate an offeror, its designees and/or successors of the obligation set forth in subdivision twenty-eight of this section.30.
Within three hundred and sixty-five days of the effective date of this section, the attorney general shall submit a notice of proposed rulemaking for publication in the state register which shall contain the suitable rules necessary to carry out the provisions of this section. The authority of the attorney general to promulgate, adopt, publish, notify, review, amend, modify, reconsider, or rescind any rule or regulation as may be conferred anywhere within this section shall comply with the state administrative procedure act in all respects. Notwithstanding the foregoing, an offeror may submit a preservation plan to the department of law regardless of whether the attorney general has adopted suitable rules to carry out this section, and the department of law shall not rely on the lack of rulemaking to refuse to accept a preservation plan for submission or filing if offeror has otherwise complied with the requirements of this section.31.
For any offering statement or prospectus (including, without limitation, a preservation plan and any amended filings thereto), submitted to the department of law pursuant to this section, the filing fees set forth in paragraph (a) of subdivision seven of § 352-E (Real estate syndication offerings)section three hundred fifty-two-e of this article shall not apply. Instead, an offeror shall tender the following filing fee with and for its submission:(a)
seven hundred fifty dollars for every offering not in excess of two hundred fifty thousand dollars;(b)
for every offering in excess of two hundred fifty thousand dollars, four-tenths of one percent of the total amount of the offering but not in excess of sixty thousand dollars, of which one-half of said amount shall be a nonrefundable deposit paid at the time of submitting the preservation plan to the department of law for review and the balance payable upon the attorney general’s issuance of a letter of acceptance of the preservation plan for filing;(c)
seven hundred fifty dollars for each price change amendment to a preservation plan;(d)
seven hundred fifty dollars for any other amendment to a preservation plan; and(e)
seven hundred fifty dollars for each such application, and an additional seven hundred fifty dollars for each and every amendment submitted in furtherance of such an application to permit an offeror to solicit public interest prior to the filing of a preservation plan to the department of law.32.
The relevant housing finance agency may promulgate regulations, rules, and other guidance documents necessary to carry out the provisions of this section, as it deems necessary.33.
The provisions of this section shall only be applicable in the city of New York.34.
The attorney general shall make any offering statement or prospectus (including, without limitation, a preservation plan and any amended filings thereto), submitted pursuant to this section available to the public in a searchable repository on its official internet website. * NB Effective November 5, 2025 * NB Repealed November 5, 2031
Source:
Section 352-EEEEE — Conversions to condominium ownership for the preservation of expiring affordable housing in the city of New York, https://www.nysenate.gov/legislation/laws/GBS/352-EEEEE (updated May 16, 2025; accessed May 17, 2025).
