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, if applicable, the laws governing corporations which affect the creation and operation of the HOA in the state of incorporation of the HOA.
The outside front cover of the offering plan shall contain the following information in the following order:
THIS OFFERING PLAN IS THE ENTIRE OFFER TO SELL MEMBERSHIP INTERESTS IN THE HOMEOWNERS (OR PROPERTY OWNERS) ASSOCIATION. NEW YORK LAW REQUIRES THE SPONSOR TO DISCLOSE ALL MATERIAL INFORMATION IN THIS PLAN AND TO FILE THIS PLAN WITH THE NEW YORK STATE DEPARTMENT OF LAW PRIOR TO SELLING OR OFFERING TO SELL ANY MEMBERSHIP INTERESTS. FILING WITH THE DEPARTMENT OF LAW DOES NOT MEAN THAT THE DEPARTMENT OR ANY OTHER GOVERNMENT AGENCY HAS APPROVED THIS OFFERING.
The first page of the offering plan preceding the table of contents shall contain exclusively the following notice in bold type:
THIS OFFERING PLAN CONTAINS THE TERMS OF THE OFFER OF SALE AND THE OBLIGATIONS OF THE SPONSOR.
PLEASE READ IT CAREFULLY.
THE PROPERTY YOU ARE PURCHASING IS PART OF A PRIVATE SELF-GOVERNING SUBDIVISION WHICH MAY INITIALLY BE CONTROLLED BY THE SPONSOR.
YOUR OBLIGATIONS AS A LOT OWNER ARE INCLUDED IN THIS PLAN. THIS PLAN IS PREPARED AND ISSUED BY THE SPONSOR OF THIS SUBDIVISION. IT HAS BEEN FILED WITH THE ATTORNEY GENERAL OF THE STATE OF NEW YORK, DEPARTMENT OF LAW, REAL ESTATE FINANCE BUREAU, 28 LIBERTY STREET, NEW YORK, NY 10005.
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. 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 on the sponsor or the board of directors, such as the purchase agreement or contract of sale, the deed to the lot, the declaration of covenants, restrictions, easements and liens, and the by-laws of the HOA shall be consistent with the disclosures in the plan and shall conform to the requirements of this section.
TABLE OF CONTENTS
PART I
Page
* SPECIAL RISKS
_______________________________________________________
_______________________________________________________
INTRODUCTION
_______________________________________________________
_______________________________________________________
DESCRIPTION OF COMMON AREAS AND
FACILITIES TO BE OWNED OR MAINTAINED
BY THE HOMEOWNERS ASSOCIATION
_______________________________________________________
_______________________________________________________
* LOCATION AND AREA INFORMATION
_______________________________________________________
_______________________________________________________
BUDGET FOR FIRST YEAR OF HOA OPERATION
_______________________________________________________
_______________________________________________________
* ACCOUNTANT'S CERTIFIED STATEMENTS OF OPERATION
_______________________________________________________
_______________________________________________________
* EXISTING COMMERCIAL OR PROFESSIONAL TENANTS
_______________________________________________________
_______________________________________________________
* INTERIM LEASES
_______________________________________________________
_______________________________________________________
PROCEDURE TO PURCHASE
_______________________________________________________
_______________________________________________________
* FINANCING FOR QUALIFIED PURCHASERS
_______________________________________________________
_______________________________________________________
TERMS OF SALE
_______________________________________________________
_______________________________________________________
RIGHTS AND OBLIGATIONS OF THE SPONSOR
_______________________________________________________
_______________________________________________________
CONTROL BY THE SPONSOR
_______________________________________________________
_______________________________________________________
THE ASSOCIATION
_______________________________________________________
_______________________________________________________
OPINIONS OF COUNSEL
_______________________________________________________
_______________________________________________________
LOCAL GOVERNMENT APPROVAL
_______________________________________________________
_______________________________________________________
RESERVE FUND
_______________________________________________________
_______________________________________________________
WORKING CAPITAL FUND
_______________________________________________________
_______________________________________________________
* MANAGEMENT AGREEMENT, CONTRACTS AND LEASES
_______________________________________________________
_______________________________________________________
IDENTITY OF PARTIES
_______________________________________________________
_______________________________________________________
REPORTS TO MEMBERS
_______________________________________________________
_______________________________________________________
DOCUMENTS ON FILE
_______________________________________________________
_______________________________________________________
GENERAL
_______________________________________________________
_______________________________________________________
* SPONSOR'S STATEMENT OF SPECIFICATIONS OR BUILDING CONDITION
_______________________________________________________
_______________________________________________________
PART II
CONTRACT OF SALE
_______________________________________________________
_______________________________________________________
* FORM OF DEED TO HOA PROPERTY
_______________________________________________________
_______________________________________________________
* FORM OF MORTGAGE, NOTE AND RELATED FINANCING
_______________________________________________________
_______________________________________________________
DOCUMENTS
_______________________________________________________
_______________________________________________________
* DESCRIPTION OF PROPERTY AND SPECIFICATIONS OR BUILDING CONDITION
_______________________________________________________
_______________________________________________________
SITE PLAN
_______________________________________________________
_______________________________________________________
* PLOT PLAN
_______________________________________________________
_______________________________________________________
LOCATION MAP
_______________________________________________________
_______________________________________________________
* FLOOR PLANS OF HOA BUILDINGS
_______________________________________________________
_______________________________________________________
* ASBESTOS REPORT
_______________________________________________________
_______________________________________________________
* HOUSING MERCHANT IMPLIED WARRANTY LAW
_______________________________________________________
_______________________________________________________
DECLARATION OF COVENANTS, RESTRICTIONS, EASEMENTS AND LIENS
_______________________________________________________
_______________________________________________________
CERTIFICATE OF INCORPORATION OF HOA
_______________________________________________________
_______________________________________________________
ASSOCIATION BY-LAWS AND RULES
_______________________________________________________
_______________________________________________________
ESCROW AGREEMENT
_______________________________________________________
_______________________________________________________
CERTIFICATIONS
SPONSOR AND PRINCIPALS
* SPONSOR'S ENGINEER (OR ARCHITECT) ___________________
_______________________________________________________
SPONSOR'S EXPERT CONCERNING ADEQUACY OF BUDGET
_______________________________________________________
_______________________________________________________
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 association charges or obligations of HOA members in future years of HOA 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.
The introduction must:
THE PURCHASE OF A HOME ASSOCIATED WITH MANDATORY MEMBERSHIP IN A HOMEOWNERS ASSOCIATION HAS MANY SIGNIFICANT LEGAL AND FINANCIAL CONSEQUENCES AND MAY BE ONE OF THE MOST IMPORTANT FINANCIAL TRANSACTIONS OF YOUR LIFE. THE ATTORNEY GENERAL STRONGLY URGES YOU TO READ THIS OFFERING PLAN CAREFULLY AND TO CONSULT WITH AN ATTORNEY BEFORE SIGNING A CONTRACT OF SALE.
The plan must describe all projected income and expenses for the first year of HOA operation in Schedule A.
SCHEDULE A
Budget For First Year Of HOA Operation
Beginning __1, 20_
Projected Income
Maintenance charges
* Other (explain)_ $__
TOTAL $__
Projected Expenses
* Labor_ $__ ___________________________________________
* Heating_ $__ __________________________________________
* Utilities (Electricity and gas for common property)_ $__ _________________________________________________________
* Water charges and sewer rents_ $__ _________________________________________________________
* Repairs, maintenance and supplies_ $__ _________________________________________________________
* Road Maintenance_ $__ _________________________________________________________
* Service Contracts_ $__ _________________________________________________________
* Snow Removal_ $__ _________________________________________________________
* Refuse Removal_ $__ _________________________________________________________
* Insurance_ $__ ________________________________________
* Management Fees_ $__ _________________________________________________________
Legal Fees_ $__ ________________________________________
Accounting Fees_ $__ _________________________________________________________
Taxes_ $__ ___________________________________________
_____________________________________________________
* Real Estate $__ _______________________________________
* Franchise and Corporate $ __ _________________________________________________________
Income $__ ___________________________________________
* Sales $__ ___________________________________________
* Reserve_ $__ ___________________________________________
* Other_ $__ __________________________________________
_____________________________________________________
TOTAL $__
In the case of an occupied non-residential premises or an operating HOA located out-of-state, 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 development has been in operation for less than two years, include a statement for the period since the development 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 months after that 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 nonresidential premises, state that outside purchasers of occupied units buy subject to the existing leases. State that 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 General Business Law 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 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 (2) 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 any escrow account.
Disclose the terms of any commitment by sponsor or a lender designated or procured by sponsor to finance the purchase of homes or lots. 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 home or lot 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 home or lot owners. If any mortgage is a "negative amortization" mortgage, highlight as a special risk and explain the meaning and the additional risks and costs to the home or lot 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 of 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 home or lot owner's right to alter, improve, sell, lease, purchase, own, occupy, finance or otherwise acquire, use or dispose of a home or lot.
Describe the material events of default entitling the lender to accelerate the principal indebtedness and describe grace periods granted to home or lot owners.
The attorney who prepared the plan must note such financing in the transmittal letter to the Department of Law required by section 22.2(c)(1) of this Part.
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 directors after the closing of the first home or lot and the consequences to purchasers of such reservation of control, subject to the following requirements:
This opinion is based solely on the facts and documents referred to above. No warranties are made that the tax laws upon which counsel bases this opinion will not change. In no event will the sponsor, the sponsor's counsel, the counsel to the HOA, the selling agent or any other person be liable if by reason of future changes in fact or applicable law, regulation, decisional law or Internal Revenue Service rulings, the tax status should cease to meet the requirements contained in this opinion.
If applicable, state when the local government approved any zoning changes or plans and drawings. Furnish a preliminary subdivision map or a legal opinion as to why a subdivision map is not necessary. Represent that sponsor will furnish a filed subdivision map when received. If use or ownership of waterways, wetlands or other environmentally sensitive areas are involved, fully disclose government jurisdiction, permits required, and restrictions on use, if applicable.
The offering plan shall state in two separate sections of the plan whether the HOA will have funds for working capital and/or as a reserve for capital expenditures. The offering plan shall 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; any restrictions on the use of each fund; and when the funds will be available to the HOA. If a fund is called a reserve fund, it may be used only for capital expenditures, and the HOA'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 HOA operation.
State that it is the obligation of the board of directors of the HOA to give all HOA members 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 directors a copy of all documents filed with the appropriate recording office at the time of the closing of the first home or lot.
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:
If applicable, include the following provisions:
N.Y. Comp. Codes R. & Regs. Tit. 13 § 22.3