(a)Applicability.The offering statement or "offering plan" required by section 352-e of the General Business Law ("GBL") for a condominium that meets the requirements set forth below is subject to this Part, newly constructed, vacant or non-residential condominiums. Except as provided in paragraphs (4) and (5) of this subdivision, offerings subject to this Part are not subject to any other Part.
(1) The building is completely vacant of individuals residing in the building or entitled to residential occupancy on the date the proposed offering plan is submitted to the Department of Law or the building is to be newly constructed. In the case of a newly constructed out-of-state condominium, the building may be partially occupied by out-of-state purchasers.(2) The condominium is not organized as a time-sharing arrangement.(3) A condominium offering for vacant or occupied commercial or professional use only is subject to this Part, newly constructed, vacant or non-residential condominiums. In the case of a mixed use building the residential units must be completely vacant of individuals residing in the building or entitled to residential occupancy on the date the proposed offering plan is submitted to the Department of Law.(4) The conversion of a newly constructed, vacant or non-residential building to two or more condominium units along with the conversion of one or more of the condominium units to a cooperative apartment corporation ("condo-coop") is also subject to Part 21 of this Title, newly constructed, vacant or non-residential cooperatives.(5) If membership in a homeowners association or similar entity is included or is to be sold in conjunction with the offering of condominium units, the offering plan must also comply with the requirements of Part 22 of this Title, homeowners associations.(b)Standard of compliance.An offering plan must, at a minimum:
(1) contain in detail the terms of the transaction and be complete, current and accurate;(2) afford potential investors, purchasers, and participants an adequate basis upon which to found their judgment;(3) not omit any material fact;(4) not contain any untrue statement of a material fact;(5) not contain any fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale;(6) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and(7) not contain any representation or statement which is false, where the sponsor or the person who made such representation or statement: (ii) with reasonable effort could have known the truth;(iii) made no reasonable effort to ascertain the truth; or(iv) did not have knowledge concerning the representation or statement made.(c)Definitions.As used in this Part:
(1)Sponsor means any person, partnership, joint venture, corporation, company, trust, association or other entity which makes or takes part in a public offering or sale in or from the State of New York of securities consisting primarily of shares or participation interests or investments in real estate including condominium units and other cooperative interests in realty. Sponsor's obligations as sponsor continue until all units are sold. Sponsor shall not be deemed to include a selling agent who has complied with section 359-e of the General Business Law or an attorney or other expert retained by the sponsor solely to render professional advice or opinions in connection with the offering. Sponsor shall also be deemed to include owners of at least 10 units or 20 percent of the total number of units in the condominium, whichever is less, which are not purchased for occupancy by the owner or one or more members of his or her immediate family; such sponsor will be deemed, however, to be a sponsor with the obligations of a sponsor only in relationship to the units which such sponsor owns.(2)Principal(s) means all individual sponsors, all general partners of sponsors that are partnerships, all officers, directors and shareholders of a corporate sponsor that are actively involved in the planning or consummation of the offering, and all other individuals who both (i) own an interest in or control sponsor and (ii) actively participate in the planning or consummation of the offering, regardless of the form of organization of sponsor.(3)Purchase agreement means any executed written agreement to purchase a condominium unit. Purchaser means any person, partnership, joint venture, corporation, company, trust, association or other entity which executes and delivers to the sponsor or selling agent a purchase agreement. To purchase means to execute a purchase agreement.(4)Presentation date means the date of completion of service, as defined in subdivision (d) of this section, of a copy of the plan or amendment filed with the Department of Law.(5)Building means building or group of buildings.(6)Consummation of the plan means filing the declaration of condominium and the first transfer of title to a condominium unit to at least one purchaser under the plan following a declaration of effectiveness by the sponsor and acceptance of the amendment by the Department of Law confirming or declaring the plan effective.(7)Filing means the issuance of a letter from the Attorney General stating that an offering plan or amendment has been accepted for filing.(8)Digital copy means a copy is identical in content to a paper copy except that it is recorded electronically in read-only .pdf format or other electronic format that the Department of Law determines to be acceptable. Digital copies of the plan shall include all the supporting documents included in Part II of the plan. Digital copies of the exhibits to the plan shall include all documents referenced in section 20.2(c)(5) of this Part, as applicable. Digital copies of the amendment shall include all exhibits, back-up documents, and other supplemental documents annexed to the amendment, as applicable. The Department of Law shall periodically issue a Guidance Document as defined by State Administrative Procedure Act section 102(14), setting forth particular guidelines and procedures for the submission of digital copies. Such Guidance Document will be available on the Department of Law's website, as required by State Administrative Procedure Act section 202(e).(9)Interim lessee means a purchaser under the plan who takes occupancy to his or her contracted-for unit prior to closing title. The rights and obligations of the interim lessee must be set forth in writing executed by both sponsor and purchaser.(d)Service.(1) Unless otherwise provided by statute or regulation, any document required to be served by this Part shall be served on: (i) commercial or professional tenants;(ii) purchasers who have executed and delivered purchase agreements to the sponsor or selling agent and whose purchase agreements are in effect;(iv) any other person entitled to service pursuant to local law or regulation (collectively "offerees"), in the following manner:(a) personal delivery; or(b) mailing by regular mail or registered or certified mail with or without return receipt requested, addressed to the offeree at the last known residence of such offeree or, if the offeree has provided written information of an alternative address for notices, addressed to the offeree at the alternative address. If sponsor has no information of the last known residence address, but has written information of the place of business or employment of such offeree, the mailing shall be addressed to such last business or employment address.(2) Service by personal delivery shall be deemed complete upon delivery. Service by mailing shall be presumed complete on the fifth day after the date of mailing. An affidavit of service identifying the offerees served, stating the manner of service and the date of service is a document required to be retained under section 20.3(ad) of this Part. The completion of service shall be the latest date on which service upon all offerees is deemed or presumed complete.(3) Service on unit owners may be satisfied by service on the board of managers if the sponsor is no longer in control of the board of managers and the amendment is solely limited to price changes.(e)Notice to commercial or professional tenants and affidavit of service.Within three business days from the date the proposed offering plan is first submitted to the Department of Law, sponsor shall serve each commercial or professional tenant with a copy of the proposed offering plan together with the following notice:
Date of Notice: ___________________________________________
"We have submitted to the New York State Department of Law, Real Estate Finance Bureau, a proposed offering plan for the conversion of (insert address and name of building, if any) to a commercial or professional condominium. The final offering plan has not yet been filed with the Department of Law. The law requires us to disclose all material information concerning the building and the conversion process in this proposed offering plan. A copy of the proposed offering plan is available for inspection and copying at the office of sponsor (or selling agent) located at (insert address of sponsor or selling agent) and the Department of Law. The law requires the Department of Law, within not more than 30 days from the date of submission of the proposed offering plan, either to file the offering plan or to indicate how the offering plan is deficient. No condominium units may be sold or offered for sale and no purchase agreements may be executed unless and until the Department of Law files the final offering plan. A copy of the filed plan will then be served on each commercial or professional tenant. You may send written comments on the proposed offering plan to the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005. You may also send your written comments to (insert name and address of sponsor or selling agent)." An affidavit of service of the notice must be submitted to the Department of Law within three (3) business days following completion of service on all commercial or professional tenants.
(f)Time of review.After submission of the proposed offering plan for filing, the Department of Law shall issue a letter to the sponsor or sponsor's attorney stating that the plan is filed, or indicating deficiencies. The Department of Law shall issue such a letter for an offering plan subject to this Part no later than 30 days after submission of the proposed offering plan. The Department of Law may issue a deficiency letter whenever it appears that the proposed offering plan is deficient in one or more respects. The Department of Law may, in its discretion, deem an offering plan as not submitted if the proposed offering plan and exhibits are incomplete and therefore do not meet the requirements of section 20.2 of this Part, procedure for submission.
(g)Statutory compliance.Unless expressly provided herein, nothing contained in this Part shall be construed as limiting the requirements set forth in article 23-A of the General Business Law, and in article 9B of the Real Property Law ("the New York Condominium Act") or the laws regulating condominiums in the State where the property is located.
(h)Waiver.In the interests of justice, the Department of Law may waive compliance with any provision of these regulations and can permit variations of regulations so long as the variation is consistent with the purpose and intent of the regulation and statute or unless prohibited from doing so by statute or by final court order.
(i)Exemptions.Upon written application of the sponsor, or sponsor's attorney, the Department of Law, in its discretion, may exempt a plan from the application of any provision of this Part where it is found that enforcement of the provision is not necessary to effectuate the purposes of the General Business Law or to protect the investing public. The application shall:
(1) be annexed to and be submitted with the attorney's transmittal letter;(2) set forth the provisions from which the exemption is sought and the grounds for the exemption; and(3) be signed by sponsor or the sponsor's attorney. The transmittal letter and certifications required by section 20.4 of this Part shall be in the form required by this Part, without modification, and shall be based on the assumption that any exemption sought pursuant to this section has been granted. In the event that the Department of Law denies the application for exemption, the Department of Law may issue a deficiency letter as provided in subdivision (f) of this section. No additional fee is required for an exemption application.
(j)Out-of-state condominiums.A sponsor of a condominium located outside of New York State which makes or takes part in a public offering or sale in or from the State of New York of condominium units must file an offering plan with the Department of Law. To comply with this requirement, the sponsor of an out-of-state plan may file a complete offering plan drafted in accordance with New York law and this Part. In the alternative, the Department of Law may, in its discretion, allow the sponsor to file the offering plan approved by or filed with the state or jurisdiction in which the condominium is located and an addendum with such additional information as is required by the Department of Law. Sponsor must represent that the plan complies with all applicable local laws.
(k)Effectiveness of regulations.The effective date of these regulations is the date of filing with the Secretary of State. As of such date:
(1) This Part is effective immediately for offering plans that meet the requirements of subdivision (a) of this section.(2) Section 20.5 of this Part is effective for amendments to plans submitted after the effective date of these regulations that meet the requirements of subdivision (a) of this section, regardless of when such plans were filed.(3) Section 20.6 of this Part is effective for advertisements, appearing on or after the effective date of these regulations, for offering plans that meet the requirements of subdivision (a) of this section, regardless of when such plans were filed.(l)Withdrawals, abandonments and rejections.(1) If the offering plan is withdrawn prior to filing, written notice thereof shall be served simultaneously by the sponsor on the Department of Law and on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.(2) If the offering plan is to be abandoned after filing and the sponsor has accepted purchase agreements, the sponsor shall promptly submit an amendment to the Department of Law together with form RS-3 as promulgated by the Department of Law. If payments under purchase agreements have been received, the amount of such funds and the manner and time when these funds will be returned to purchasers must be disclosed. The funds must be returned within five days after the amendment abandoning the plan has been accepted for filing. If there are no outstanding purchase agreements the sponsor need not submit an amendment but shall submit a form RS-3 to the Department of Law which shall be served simultaneously by the sponsor on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.(3) If the offering plan is finally rejected by the Department of Law and there is no outstanding right to cure defects, the sponsor shall promptly serve notice of such rejection on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.(m)Disclaimers.The requirements set forth in section 20.3 of this Part apply to the offering plan generally and shall not be negated or contradicted by inconsistent provisions in other portions of the offering plan, or by provisions purporting to discharge liability or to terminate the continuing effect of representations in the offering plan upon an event such as the closing or the delivery of the deed. Disclaimer provisions, either direct or indirect, through stated reliance on an expert with respect to factual matters required to be represented or set forth in the offering plan, may not be included except as and to the extent permitted in these regulations.
N.Y. Comp. Codes R. & Regs. Tit. 13 § 20.1
Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016Amended New York State Register March 30, 2016/Volume XXXVIII, Issue 13, eff. 4/15/2016Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018