Plans subject to this Part must comply with the format and minimum disclosure requirements set forth herein in addition to the requirements of provisions of article 23-A of the General Business Law and article 9B of the Real Property Law or the laws regulating condominiums in the State where the property is located.
The outside front cover of the offering plan shall contain the following information in the following order:
The format and order set forth below must be followed in the table of contents. Include headings for the subjects not marked with an asterisk. In addition, a limited number of headings may be added to the plan. Headings for subjects that are marked with an asterisk may be omitted if the subject matter is not applicable to the offering. Omissions, other than headings marked with an asterisk in the table of contents, and additions should be expressly noted and explained in the transmittal letter. Alternative wording for headings to meet particular facts are set forth in parentheses. Documentation listed in Part II of the table of contents shall be included in full in Part II of the plan. The texts of such documents which will be binding upon the sponsor or the board of managers, such as the purchase agreement, the power of attorney, the unit deed, the condominium declaration, and the bylaws of the condominium shall be consistent with the disclosures in the plan and shall conform to the requirements of this section.
TABLE OF CONTENTS
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PART I
PAGE
*SPECIAL RISKS ___________________________________
INTRODUCTION
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__________________________________________________
DESCRIPTION OF PROPERTY AND IMPROVEMENTS ______________________________________________________
*LOCATION AND AREA INFORMATION ______________________________________________________
*HOMEOWNERS ASSOCIATION
__________________________________________________
__________________________________________________
OFFERING PRICES AND RELATED INFORMATION,
SCHEDULE A
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__________________________________________________
BUDGET FOR FIRST YEAR OF CONDOMINIUM OPERATION,
SCHEDULE B ______________________________________
*BUDGET FOR INDIVIDUAL ENERGY COSTS, SCHEDULE B-1
__________________________________________________
__________________________________________________
*BUDGET FOR HOMEOWNERS ASSOCIATION,
SCHEDULE C
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*COMPLIANCE WITH REAL PROPERTY LAW SECTION 339(i) _____________________________________________________
*COMMERCIAL UNITS
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CHANGES IN PRICES AND UNITS
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*ACCOUNTANT'S CERTIFIED STATEMENTS OF OPERATION
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*RIGHTS OF EXISTING COMMERCIAL OR PROFESSIONAL TENANTS
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*INTERIM LEASES
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PROCEDURE TO PURCHASE
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*FINANCING FOR QUALIFIED PURCHASERS
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ASSIGNMENT OF PURCHASE AGREEMENTS
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EFFECTIVE DATE
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TERMS OF SALE
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UNIT CLOSING COSTS AND ADJUSTMENTS
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RIGHTS AND OBLIGATIONS OF THE SPONSOR
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CONTROL BY THE SPONSOR
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BOARD OF MANAGERS
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RIGHTS AND OBLIGATIONS OF THE UNIT OWNERS AND THE BOARD OF MANAGERS
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REAL ESTATE TAXES
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INCOME TAX DEDUCTIONS TO UNIT OWNERS AND TAX STATUS OF THE CONDOMINIUM
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OPINION(S) OF COUNSEL
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RESERVE FUND
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WORKING CAPITAL FUND
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*MANAGEMENT AGREEMENT, CONTRACTS AND LEASES
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IDENTITY OF PARTIES
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REPORTS TO UNIT OWNERS
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DOCUMENTS ON FILE
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GENERAL
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*RESERVATION OF AIR AND DEVELOPMENTAL RIGHTS
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SPONSOR'S STATEMENT OF SPECIFICATIONS OR BUILDING CONDITION
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PART II
PURCHASE AGREEMENT
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__________________________________________________
POWER OF ATTORNEY
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FORM OF UNIT DEED
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__________________________________________________
*FORM OF MORTGAGE, NOTE AND RELATED FINANCING
DOCUMENTS
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*FORM OF SWORN STATEMENT BY ASSIGNEE
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DESCRIPTION OF PROPERTY AND SPECIFICATIONS OR BUILDING CONDITION
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*FLOOR PLANS
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*ASBESTOS REPORT
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* HOUSING MERCHANT IMPLIED WARRANTY LAW
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DECLARATION OF CONDOMINIUM
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CONDOMINIUM BYLAWS
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*HOMEOWNERS ASSOCIATION ORGANIZATIONAL DOCUMENTS
__________________________________________________
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CERTIFICATE OF INCORPORATION
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__________________________________________________
BYLAWS and HOMEOWNERS ASSOCIATION RULES
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__________________________________________________
DECLARATION OF COVENANTS AND RESTRICTIONS
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CERTIFICATIONS
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SPONSOR AND PRINCIPALS
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SPONSOR'S ENGINEER (OR ARCHITECT)
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SPONSOR'S EXPERT CONCERNING ADEQUACY OF BUDGET
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*SPONSOR'S EXPERT CONCERNING ADEQUACY OF COMMON
__________________________________________________
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CHARGES PAYABLE BY THE COMMERCIAL UNIT OWNERS(S)
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__________________________________________________
This section, if applicable, must be on a separate page following the table of contents. All features of a plan which involve significant risk or are reasonably likely to affect disproportionately or unusually the common charges or obligations of unit owners in future years of condominium operation must be conspicuously disclosed and highlighted. A brief description of the nature of the risk should be given in this section and a more thorough description should be given in a referenced later section. Uncertainties as to whether a risk should be described in this section should be resolved in favor of inclusion.
BECAUSE SPONSOR IS RETAINING THE UNCONDITIONAL RIGHT TO RENT RATHER THAN SELL UNITS AFTER THE PLAN HAS BEEN CONSUMMATED, THIS PLAN MAY NOT RESULT IN THE CREATION OF A CONDOMINIUM IN WHICH A MAJORITY OF THE UNITS ARE OWNED BY OWNER-OCCUPANTS OR INVESTORS UNRELATED TO THE SPONSOR. (SEE SPECIAL RISKS SECTION OF THE PLAN.)
Further disclose, in the Special Risks section, that because sponsor is not limiting the conditions under which it will rent rather than sell units after the plan has been consummated, there is no commitment to sell more units than the 15 percent necessary to declare the plan effective and owner-occupants may never gain effective control and management of the condominium.
PURCHASERS FOR THEIR OWN OCCUPANCY MAY NEVER GAIN CONTROL OF THE BOARD OF MANAGERS UNDER THE TERMS OF THIS PLAN. (SEE SPECIAL RISKS SECTION OF THE PLAN.)
Disclose further that owner-occupants and non-resident owners, including sponsor, may have inherent conflicts on how the condominium shall be managed because of their different reasons for purchasing, i.e., purchase as a home as opposed to as an investment.
The introduction must:
This section should:
This section should:
The plan must describe all projected income and expenses for the first year of condominium operation in schedule B.
Schedule B
Budget For First Year of Condominium Operation
Beginning ____1, 20_
Projected Income
Common Charges_ $__ ____________________________________________
* Commercial_ $__ ____________________________________________
* Laundry_ $__ ____________________________________________
* Other (Explain)_ $__ ____________________________________________
TOTAL_ $__ ____________________________________________
Projected Expenses
Labor_ $__ ____________________________________________
Heating_ $__ ____________________________________________
Utilities (electricity and gas)_ $__ ____________________________________________
Water charges and sewer rents_ $__ ____________________________________________
Repairs, maintenance and supplies_ $__ ____________________________________________
* Service contracts_ $__ ____________________________________________
Insurance_ $__ ____________________________________________
Management fees_ $__ ____________________________________________
Legal fees and audit fees_ $__ ____________________________________________
* Other_ $__ ____________________________________________
* Interest on promissory notes payable to sponsor_ $__ ____________________________________________
* Contingency_ $__ ____________________________________________
* Homeowners association dues_ $__ ____________________________________________
* Yearly reserve fund_ $__ ____________________________________________
TOTAL
$__
Include an opinion from a licensed real estate broker, appraiser or other expert who does not have any beneficial interest in the sponsor or in the profitability of the project. The opinion must be signed by a duly authorized signatory or by the firm and must state:
If one or more of the condominium units in a mixed-use building is to be used for commercial, professional, retail or other than residential or combined residential/home occupation purposes:
In the case of an occupied building include certified statements of income and expense, prepared on an annual basis, for the two most recent fiscal years of operation prepared by an independent certified public accountant. No report need be filed for a fiscal year which ends less than three months prior to the date the proposed offering plan is submitted to the Department of Law. If the building has been in operation for less than two years, include a statement for the period since the building began operations. If, after the plan is filed but before it is declared effective, a more recent fiscal year has ended and the sponsor has had three additional months after the end of the more recent fiscal year to prepare a certified statement, sponsor must amend the plan to include the certified statement for the more recent fiscal year.
In the case of an occupied non-residential building, state that outside purchasers of occupied units buy subject to the existing leases. All leases may be inspected by potential purchasers at the office of the selling agent to ascertain the purchaser's obligations under the lease.
Describe the essential terms of the purchase agreement which must comply with this Part. State the purchase procedure, including to whom and when the purchase agreement must be returned and the deposit payment made.
The sponsor shall comply with the escrow and trust fund requirements of GBL sections 352-e(2-b) and 352-h and these regulations, and all funds paid by purchasers shall be handled in accordance with these statutes and regulations.
The following requirements shall apply to all offerings and shall be fully disclosed in all offering plans subject to this Part:
A sponsor may apply to the Attorney General to use security in the form of surety bonds or a letter of credit in lieu of escrow of such funds for use in newly constructed or gut rehabilitated developments upon showing of adequate insurance of such funds to the satisfaction of the Attorney General.
A sponsor whose application to use alternate security is approved by the Attorney General, may meet its obligation to insure the availability of such funds to purchasers by effectuating the issuance of surety bonds to such purchasers by a licensed insurance company which agrees to act as surety for the amount of such down payments or deposits.
A sponsor whose application to use alternate security is approved by the Attorney General, may meet its obligation to insure the availability of such funds to purchasers by effectuating the issuance of a letter of credit for the benefit of the purchasers by an issuer qualifying hereunder.
Where alternate security as provided under a filed offering plan is no longer needed by the sponsor, or new or additional alternate security cannot be obtained by a sponsor or its successor, sponsor shall submit an amendment for filing which provides that any future purchase deposits or down payments shall be held in any escrow account in accordance with paragraph (3) of this subdivision. Such amendment shall not affect the sponsor's obligation to account for funds previously released to the sponsor unless the funds representing all such deposits or down payments are restored to the escrow account.
Disclose the terms of any commitment by sponsor or a lender procured by sponsor to finance the purchase of units. The terms shall include and are not limited to the following:
State the maximum amount (which may be expressed as a percentage of the offering price) available for a unit and the minimum term of the mortgage. If the financing offered is not self liquidating over the term, state how the amount of the balance or "balloon" due on maturity will be calculated and explain the risk that refinancing may not be available on the same or better terms. Highlight as a special risk if the principal balance is due in less than five years. If the sponsor is providing the financing, state whether the sponsor will refinance or extend the mortgage at maturity. State the maximum amount of financing available to purchasers generally through a bulk commitment.
Sponsor must discuss whether financing is available to all purchasers. If not, discuss the method of allocation of such. If sponsor procures financing with an institutional lender, it is sufficient to refer to the institution's credit standards.
State the annual interest rate over the term of the mortgage. If the mortgage has a variable or adjustable rate, indicate the initial interest rate or (if not a fixed rate) explain how it will be established, the method of calculating adjustments, any limits on increases or decreases, when adjustments may be made, and the impact that adjustments will have on debt service payments and the principal balance. If the sponsor structures the financial terms of the transaction in such a manner as to result in possible taxable income to a purchaser, the financial and tax implications of such structuring must be disclosed. If the sponsor procures financing at an interest rate that is below the prevailing rate offered by the lender, disclose the prevailing interest rate and the interest rate offered to purchasers.
State when payments are due, and how payments are applied to interest and principal. For variable rate mortgages, adjustable rate mortgages or negative amortization mortgages, disclose how initial payments are allocated to interest and principal, disclose the impact that interest rate changes will have on the allocation of payments to interest and principal and on itemized deductions available to unit owners. If any mortgage is a "negative amortization" mortgage, highlight as a special risk and explain the meaning of a "negative amortization" mortgage and the additional risks and costs to the unit owner.
State whether and when the unpaid principal balance may be prepaid in whole or in part, the number of days of prior notice that must be given, and any charges for prepayment. Disclose any restrictions on the ability of a purchaser to prepay the entire unpaid principal at any time.
State the amount and type of insurance required to be carried for the benefit of the sponsor or any mortgage lender procured by the sponsor.
Describe the requirements for escrow and reserve deposits, including those for taxes, water and sewer charges, capital reserves or otherwise and whether and how such requirements may be modified.
State when the financing commitment expires.
Describe the amount of late charges and how they are assessed.
Disclose the amount of additional costs or charges to purchasers in connection with such financing including, for example, points, origination fees, lender's or any other legal fees, processing fees, application fees, insurance and appraisal fees.
Describe major restrictions on a unit owner's right to alter, improve, sell, lease, purchase, own, occupy, finance or otherwise acquire, use or dispose of a unit.
Describe the material events of default entitling the lender to accelerate the principal indebtedness and describe grace periods granted to unit owners.
The attorney who prepared the plan must note such financing in the transmittal letter to the Department of Law required by section 20.2(c)(1) of this Part.
The plan must explain that the offer to sell is contingent upon the plan's being declared effective and upon compliance with the relevant conditions and time periods described in the offering plan. Sponsor must conform with the following provisions in determining whether, when and how the plan will be declared effective.
Describe the rights and obligations of sponsor under the plan and applicable law with respect to the offering including, but not limited to, the following elements:
Describe the extent to which sponsor will or may control the board of managers after the closing of the first unit and the consequences to purchasers of such reservation of control, subject to the following requirements:
Describe how the affairs of the condominium will be governed. Summarize the important sections of the bylaws and declaration of condominium, including the following:
Describe the rights and obligations of unit owners and the board of managers, including their rights and obligations with respect to:
State that each unit owner has the right to mortgage his or her unit and any restrictions on such right.
Describe all restrictions on occupancy and use of the unit by the unit owner, including the following:
In our opinion, the condominium will be eligible for tax-exempt status, if it elects such status, and unit owners will be entitled to income tax deductions (or the unit owners will be eligible for the real estate tax benefits described above). However, this opinion is not a guarantee; it is based on existing rules of law applied to the facts and documents referred to above. No assurances can be given that the tax laws upon which counsel base this opinion will not change. In no event will the sponsor, the sponsor's counsel, the board of managers of the condominium, the selling agent or any other person be liable if there are changes in the facts on which counsel relied in issuing this opinion or if there are changes in the applicable statutes, regulations, decisional law or Internal Revenue Service rulings on which counsel relied which cause the condominium to cease to meet the requirements of section 528 of the Internal Revenue Code of 1986, as amended, or the New York State Tax Law, as amended, and cause the unit owners not to be entitled to income tax deductions (or which cause unit owners not to be or to cease to be entitled to the benefits or the level or duration of benefits described above).
The offering plan must state in two separate sections of the plan whether the condominium will have funds for working capital and/or as a reserve for capital expenditures. The offering plan must comply with any applicable law concerning reserve funds and/or working capital funds. If such funds are provided, state the amount of the funds; whether the sponsor and purchasers contribute to the funds; what restrictions there are on the use of each fund; and when the funds will be available to the condominium. If a fund is called a reserve fund, it may be used only for capital expenditures, and the condominium's by-laws shall contain a provision authorizing the establishment of such a fund. Discuss whether the reserve fund, if any, will be sufficient to pay for the replacement of capital items likely to be needed within the first five years of condominium operation.
State that it is the obligation of the board of managers of the condominium to give all unit owners annually:
State that sponsor shall keep copies of the plan, all documents referred to in the plan and all exhibits submitted to the Department of Law in connection with the filing of the plan, on file and available for inspection without charge and copying at a reasonable charge at a specified location for six years from the date of first closing. State that the sponsor shall deliver to the board of managers a copy of all documents filed with the appropriate recording office at the time of the closing of the first unit.
Describe any other material facts concerning the sponsor, the selling agent, the managing agent, any of their principals, the property, the offering, and prospective purchasers' rights and obligations including the following:
Include the following provisions:
N.Y. Comp. Codes R. & Regs. Tit. 13 § 20.3