N.Y.
Real Property Law Section 339-MM
Establishment of reserve fund and dedicated capital fund for buildings converting to condominium ownership under section three hundred fi...
1.
Within thirty days after the consummation of a preservation plan, the offeror thereof (and/or its designee or designees and/or successor or successors) shall establish and transfer:(a)
to the condominium board of managers a reserve fund to be used exclusively for making capital repairs, replacements and improvements necessary for the health and safety of the residents (including residents of the income-restricted rental units) of such building or group of buildings or development. Such reserve fund shall be exclusive of any other funds required to be reserved under the preservation plan or applicable law or regulation of the attorney general, except a fund for capital repairs, replacements and improvements substantially similar in purpose to and in an amount not less than the reserve fund mandated by this section. Such reserve fund shall also be exclusive of any working capital fund or dedicated capital fund and shall not be subject to reduction for closing apportionments.(b)
to the qualified owner of the income-restricted rental units, and subject to the oversight of the relevant housing finance agency set forth in a regulatory agreement, a dedicated capital fund to be used exclusively for making unit repairs, replacements and improvements necessary for the health and safety of the residents of an income-restricted rental unit or units of such building or group of buildings or development. Such dedicated capital fund shall be exclusive and supplemental of any other funds required to be reserved under the preservation plan or applicable law or regulation. Such dedicated capital fund shall also be exclusive and supplemental of any reserve fund or working capital fund and shall not be subject to reduction for closing apportionments. The dedicated capital fund shall not be used towards any building-wide capital replacement, and instead shall be used solely for unit repairs, replacements and improvements of the income-restricted rental units. 1-a. In the event that the funds are insufficient, unless the relevant housing finance agency provides otherwise, repairs and capital improvements necessary for the health and safety of the residents in all common areas and building infrastructure shall be at the sole expense of the condominium board of managers. The relevant housing finance agency may establish penalties for failure to comply with legal and regulatory requirements.2.
(a) Such reserve fund shall be established in an amount equal to either (i) three percent of the total price or, (ii) (A) three percent of the actual sales price of all condominium units sold by the offeror at the time the preservation plan is declared effective, provided, however, that if such amount is less than one percent of the total price, then the fund shall be established as a minimum of one percent of the total price; plus (B) supplemental contributions to be made by the offeror at a rate of three percent of the actual sales price of condominium units for each unit held by the offeror and sold to bona fide purchasers subsequent to the effective date of the preservation plan and within five years of the consummation of the preservation plan, notwithstanding that the total amount contributed may exceed three percent of the total price; and provided, further, that if five years from thirty days after the consummation of the preservation plan the total contributions by the offeror to the fund are less than three percent of the total price the offeror shall pay the difference between the amount contributed and three percent of the total price. Supplemental contributions shall be made within thirty days of each sale.(b)
Such dedicated capital fund shall be established in an amount equal to one-half of one percent of the total price, and shall be transferred in full within thirty days of the date of consummation of the preservation plan into an account at a financial institution regulated by the department of financial services of the state of New York that shall have been opened by, and shall at all times be subject to the oversight authority of the relevant housing finance agency of the qualified owner of the income-restricted rental unit or units.3.
Notwithstanding the provisions of subdivisions one and two of this section, the contributions required pursuant to this section may be made earlier or in an amount greater than so provided, including as may be directed by the relevant housing finance agency. An offeror may claim and receive credit against the mandatory initial contribution to the reserve fund for the actual cost of capital replacements which such offeror has begun after the preservation plan is submitted for filing to the department of law and before the preservation plan is declared effective; provided, however, that any such replacements shall be set forth in the preservation plan together with their actual or estimated costs and further provided, that such credit shall not exceed the lesser of the actual cost of the capital replacements or one and a half percent of the total price.4.
The condominium board of managers shall report to unit owners and the relevant housing finance agency, and shall make available to all tenants in each building, on a semi-annual basis with respect to all deposits into and withdrawals from the reserve fund mandated by paragraph (a) of subdivision two of this section.5.
The offeror, not later than the thirtieth day following the acceptance of a preservation plan for filing by the department of law pursuant to General Business Law § 352-EEEEE (Conversions to condominium ownership for the preservation of expiring affordable housing in the city of New York)section three hundred fifty-two-eeeee of the general business law and until the consummation of the preservation plan, shall post and maintain in a prominent place, accessible to all tenants in each building covered by the preservation plan, a listing of all violations of record against such buildings as determined by the department of buildings of the city of New York and the department of housing preservation and development of the city of New York. All newly issued violations shall be posted within forty-eight hours of their issuance and maintained as described in this subdivision. The offeror may satisfy the requirements of this section by designating an agent on the premises with whom such listing shall be made available for inspection by the tenants. Any penalty for failure to comply with a state or local building and housing maintenance law or regulation shall be paid by, and the sole responsibility of, the condominium board of managers.6.
Any provision purporting to waive the provisions of this section in any contract to purchase, any agreement between an offeror and a unit purchaser, any agreement between an offeror and the condominium board of managers created under a preservation plan, any agreement between an offeror and the owner of the income-restricted rental unit or units shall be void as against public policy.7.
(a) Except as otherwise provided in paragraph (b) of this subdivision, any person who knowingly violates or assists in the violation of any provision of this section shall be subject to a civil penalty of one hundred dollars per day per unit for each day that a building is not in compliance with the provisions of such section; provided, however, that such civil penalty shall not exceed one thousand dollars per unit.(b)
Any person who violates or assists in the violation of subdivision two of this section shall also be subject to a civil penalty of one thousand dollars per day for each day that the reserve fund required by subdivision two of this section is not established; provided, however, that such civil penalty shall not exceed the amount required to be reserved pursuant to subdivision two of this section.(c)
Any other action or proceeding in any court of competent jurisdiction that may be appropriate or necessary for the enforcement of the provisions of this section may be brought in the name of the people of the state of New York by the attorney general, including actions to secure permanent injunctions enjoining any acts or practices which constitute a violation of any provision of this section, mandating compliance with the provisions of this section or for such other relief as may be appropriate. In any such action or proceeding, the attorney general may apply to any court of competent jurisdiction, or to a judge or justice thereof, for a temporary restraining order or preliminary injunction enjoining and restraining all persons from violating any provision of this section, mandating compliance with the provisions of this section, or for such other relief as may be appropriate, until the hearing and determination of such action or proceeding and the entry of final judgment or order therein. The court, or judge or justice thereof, to whom such application is made, is hereby authorized to make any or all of the orders specified in this paragraph, as may be required in such application, with notice, and to make such other or further orders or directions as may be necessary to render the same effectual. No undertaking shall be required as a condition of the granting or issuing of such order, or by reason thereof.(d)
Nothing contained in this section shall impair any rights, remedies or causes of action accrued or accruing to purchasers of condominium units with regard to the funding of the reserve fund and capital fund under this section. * NB Effective November 5, 2025 * NB Repealed November 5, 2031
Source:
Section 339-MM — Establishment of reserve fund and dedicated capital fund for buildings converting to condominium ownership under section three hundred fi..., https://www.nysenate.gov/legislation/laws/RPP/339-MM (updated May 16, 2025; accessed May 17, 2025).
