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 G.B.L. and article 9-B 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:
THIS IS AN EVICTION PLAN. SEE PAGE __.
If G.B.L., section 352-e(2-a), 352-eee or 352-eeee or other such local law is applicable, also state:
NONPURCHASING TENANTS OTHER THAN ELIGIBLE SENIOR CITIZENS AND ELIGIBLE DISABLED PERSONS WILL BE EVICTED.
THIS IS A NONEVICTION PLAN. NO NONPURCHASING TENANT WILL BE EVICTED BY REASON OF CONVERSION TO CONDOMINIUM OWNERSHIP.
THIS IS A PROPOSED OFFERING PLAN ("RED HERRING") TO CONVERT THIS BUILDING TO A CONDOMINIUM. IT HAS BEEN SUBMITTED TO THE NEW YORK STATE DEPARTMENT OF LAW, REAL ESTATE FINANCE BUREAU. CONDOMINIUM UNITS MAY NOT BE SOLD OR OFFERED FOR SALE UNTIL THE OFFERING PLAN IS FILED WITH THE DEPARTMENT OF LAW.
THIS OFFERING PLAN IS THE ENTIRE OFFER TO SELL THESE CONDOMINIUM UNITS. 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 CONDOMINIUM UNIT. FILING WITH THE DEPARTMENT OF LAW DOES NOT MEAN THAT THE DEPARTMENT OR ANY OTHER GOVERNMENT AGENCY HAS APPROVED THIS OFFERING.
The format and order set forth in this subdivision 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
PART I PAGE........................................................................................................................................
* SPECIAL RISKS
........................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* ELECTION FORMS FOR ELIGIBLE SENIOR CITIZENS AND
ELIGIBLE DISABLED PERSONS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
INTRODUCTION
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* LOCATION AND AREA INFORMATION
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
OFFERING PRICES AND RELATED INFORMATION,
SCHEDULE A
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
BUDGET FOR FIRST YEAR OF CONDOMINIUM OPERATION,
SCHEDULE B
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* BUDGET FOR INDIVIDUAL ENERGY COSTS,
SCHEDULE B-1
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* BUDGET FOR HOMEOWNERS' ASSOCIATION,
SCHEDULE C
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
COMPLIANCE WITH REAL PROPERTY LAW
SECTION 339 (i)
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* COMMERCIAL UNITS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
CHANGES IN PRICES AND UNITS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
ACCOUNTANT'S CERTIFIED STATEMENTS OF OPERATION
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* RIGHTS OF ELIGIBLE SENIOR CITIZENS AND ELIGIBLE
DISABLED PERSONS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
RIGHTS OF EXISTING TENANTS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
OBLIGATIONS OF OWNERS OF DWELLING UNITS OCCUPIED
BY NONPURCHASING TENANTS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* INTERIM LEASES
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
PROCEDURE TO PURCHASE
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
ASSIGNMENT OF PURCHASE AGREEMENTS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
EFFECTIVE DATE
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
TERMS OF SALE
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
UNIT CLOSING COSTS AND ADJUSTMENTS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
RIGHTS AND OBLIGATIONS OF THE SPONSOR
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
CONTROL BY THE SPONSOR
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
BOARD OF MANAGERS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
RIGHTS AND OBLIGATIONS OF THE UNIT OWNERS AND
THE BOARD OF MANAGERS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* HOMEOWNERS' ASSOCIATION
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
REAL ESTATE TAXES
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
INCOME TAX DEDUCTIONS TO UNIT OWNERS AND TAX STATUS
OF THE CONDOMINIUM
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
OPINION(S) OF COUNSEL
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* FINANCING FOR QUALIFIED PURCHASERS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
RESERVE FUND
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
WORKING CAPITAL FUND
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* MANAGEMENT AGREEMENT, CONTRACTS AND LEASES
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
IDENTITY OF PARTIES
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
SPONSOR'S PROFIT
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
REPORTS TO UNIT OWNERS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
DOCUMENTS ON FILE
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
GENERAL
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* RESERVATION OF AIR AND DEVELOPMENTAL RIGHTS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
SPONSOR'S STATEMENT OF BUILDING CONDITION
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
PART II PAGE...........................................................................................................................................................................................................................
PURCHASE AGREEMENT
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* PURCHASER'S AFFIDAVIT OF INTENTION TO RESIDE
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
POWER OF ATTORNEY
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
FORM OF UNIT DEED
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* FORM OF MORTGAGE, NOTE AND RELATED FINANCING
DOCUMENTS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* FORM OF SWORN STATEMENT BY ASSIGNEE
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
DESCRIPTION OF PROPERTY AND BUILDING CONDITION
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
ASBESTOS REPORT
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
DECLARATION OF CONDOMINIUM
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
CONDOMINIUM BYLAWS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* HOMEOWNERS' ASSOCIATION ORGANIZATIONAL DOCUMENTS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
CERTIFICATE OF INCORPORATION
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
BYLAWS and HOMEOWNERS' ASSOCIATION RULES
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
DECLARATION OF COVENANTS AND RESTRICTIONS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* GENERAL BUSINESS LAW, SECTION 352-e(2-a), 352-eee or
352-eeee
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
* PART 23.8 ELIGIBLE SENIOR CITIZENS AND ELIGIBLE
DISABLED PERSONS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
CERTIFICATIONS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
SPONSOR AND PRINCIPALS
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
SPONSOR'S ENGINEER (OR ARCHITECT)
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
SPONSOR'S EXPERT CONCERNING ADEQUACY OF BUDGET
* SPONSOR'S EXPERT CONCERNING ADEQUACY OF COMMON
CHARGES PAYABLE BY THE COMMERCIAL UNIT OWNER(S)
...........................................................................................................................................................................................................................
...........................................................................................................................................................................................................................
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, 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, 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 should be managed because of their different reasons for purchasing, i.e., purchase as a home as opposed to as an investment.
If the offering plan is submitted to the Department of Law on or after September 1, 2016 subject to G.B.L. section 352-eee, and the sponsor executed a contract of sale for the building or group of buildings or acquired the building or group of buildings on or after September 1, 2016, include the eligible senior citizen and eligible disabled person election forms promulgated by the Department of Law, forms SH-5 and SH-2, respectively. If the offering plan is submitted to the Department of Law on or after September 1, 2016 subject to G.B.L. section 352-e(2-a) or 352-eeee, and the sponsor executed a contract of sale for the building or group of buildings or acquired the building or group of buildings on or after September 1, 2016, include the eligible senior citizen and eligible disabled person election forms promulgated by the Department of Law, forms SH-1 and SH-2, respectively.
The introduction must:
THE PURCHASE OF A CONDOMINIUM UNIT HAS MANY SIGNIFICANT LEGAL AND FINANCIAL CONSEQUENCES. THE ATTORNEY GENERAL STRONGLY URGES YOU TO READ THIS OFFERING PLAN CAREFULLY AND TO CONSULT WITH AN ATTORNEY BEFORE SIGNING A PURCHASE AGREEMENT.
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.. $ __............................................................................................................
TOTAL.. $ __............................................................................................................
Include an opinion from a licensed real estate broker or other expert appraiser who does not have any beneficial interest in the sponsor or in the profitability of the conversion. 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 is to be used for commercial, professional, retail or other than residential or combined residential/home occupation purposes:
Include certified statements of income and expenses, 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.
If the offering plan is submitted to the Department of Law on or after September 1, 2016 subject to G.B.L. section 352-e(2-a), 352-eee or 352-eeee (or in cases where applicable local law confers special rights for senior citizens, disabled persons, or other protected class of tenants), and the sponsor executed a contract of sale for the building or group of buildings or acquired the building or group of buildings on or after September 1, 2016, include the following information on the rights of eligible senior citizens and eligible disabled persons.
From time to time the Department of Law may promulgate model forms for the description of tenants' rights under various laws. The transmittal letter from the attorney who prepared the plan must note whether the applicable model forms are used.
The discussion of the obligations of owners of dwelling units occupied by nonpurchasing tenants shall include:
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.
State whether sponsor will permit the assignment or transfer of purchase agreements by tenants prior to the declaration of effectiveness. If they will be permitted:
The plan must explain that the offer to sell is contingent upon the plan 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 in the preceding paragraphs). However, this opinion is not a guarantee; it is based on existing rules of law applied to the facts and documents referred to in said paragraphs. 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 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 in the preceding paragraphs).
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 financing which shall not constitute a discriminatory inducement to tenant purchasers.
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. If the mortgage is not self-liquidating, also disclose any limitation on the ability of the purchasers to refinance on the same or better terms.
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 owners' 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 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; when the funds will be available to the condominium; and which capital replacements and repairs are to be credited against sponsor's contribution to the reserve fund. If a fund is called a reserve fund, it may be used only for capital expenditures, and the condominium's bylaws 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 as disclosed in the description of property and building condition.
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 § 23.3