Bill Text: NY A07743 | 2019-2020 | General Assembly | Introduced

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Bill Title: Modifies certain requirements for the conversion to cooperative or condominium ownership of certain rental property, removes eviction plans and requires non-eviction plans to have written purchase agreements executed and delivered for at least fifty-one percent of all dwelling units in the building or group of buildings or development by bona fide tenants in occupancy before such plan may be declared effective.

Spectrum: Partisan Bill (Democrat 6-0)

Status: (Introduced - Dead) 2020-01-08 - referred to housing [A07743 Detail]

Download: New_York-2019-A07743-Introduced.html

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                STATE OF NEW YORK
        ________________________________________________________________________

                                          7743

                               2019-2020 Regular Sessions

                   IN ASSEMBLY

                                      May 17, 2019
                                       ___________

        Introduced  by M. of A. EPSTEIN -- read once and referred to the Commit-
          tee on Housing

        AN ACT to amend the general business law, the multiple dwelling law, the
          private housing finance law and the administrative code of the city of
          New York, in relation to  conversion  to  cooperative  or  condominium
          ownership;  and  to  repeal certain provisions of the general business
          law and the administrative code of the city of New York relating ther-
          eto

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Subdivision  2-a of section 352-e of the general business
     2  law is REPEALED and a new subdivision 2-a is added to read as follows:
     3    2-a. (a) As used in this subdivision, the following  words  and  terms
     4  shall have the following meanings:
     5    (i)  "Plan".  Every  offering statement or prospectus submitted to the
     6  department of law pursuant to this  section  for  the  conversion  of  a
     7  building  or  group  of buildings or development from residential rental
     8  status to cooperative or condominium ownership or other form of  cooper-
     9  ative interest in realty, other than an offering statement or prospectus
    10  for  such  conversion  pursuant  to  article two, eight or eleven of the
    11  private housing finance law.
    12    (ii) "Non-eviction plan". A plan which may not be  declared  effective
    13  until  written  purchase agreements have been executed and delivered for
    14  at least fifty-one percent of all dwelling  units  in  the  building  or
    15  group  of buildings or development by bona fide tenants in occupancy. As
    16  to tenants who were in occupancy on the date a letter was issued by  the
    17  attorney  general  accepting the plan for filing, the purchase agreement
    18  shall be executed and delivered pursuant to an  offering  made  in  good
    19  faith  without  fraud  and discriminatory repurchase agreements or other
    20  discriminatory inducements.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11354-01-9
        A. 7743                             2

     1    (iii) "Purchaser under the plan". A person who owns the  shares  allo-
     2  cated to a dwelling unit or who owns such dwelling unit itself.
     3    (iv) "Non-purchasing tenant". A person who has not purchased under the
     4  plan  and who is a tenant entitled to possession at the time the plan is
     5  declared effective or a person to whom a dwelling unit is rented  subse-
     6  quent to the effective date. A person who sublets a dwelling unit from a
     7  purchaser under the plan shall not be deemed a non-purchasing tenant.
     8    (b)  The  attorney general shall refuse to issue a letter stating that
     9  the offering statement or prospectus required in subdivision one of this
    10  section has been filed whenever it appears that the  offering  statement
    11  or  prospectus  offers  for  sale  residential cooperative apartments or
    12  condominium units pursuant to a plan unless:
    13    (i) The plan provides that it will be deemed abandoned, void and of no
    14  effect if it does not become effective within  twelve  months  from  the
    15  date  of  issue  of  the letter of the attorney general stating that the
    16  offering statement or prospectus has been accepted for  filing  and,  in
    17  the  event  of  such abandonment, no new plan for the conversion of such
    18  building or group of buildings or development shall be submitted to  the
    19  attorney general for at least fifteen months after such abandonment.
    20    (ii)  The  plan  provides a non-eviction plan, and provides further as
    21  follows:
    22    (1) The plan may not be declared effective until  at  least  fifty-one
    23  percent of those bona fide tenants in occupancy of all dwelling units in
    24  the  building  or group of buildings or development on the date the plan
    25  is declared effective shall have executed and delivered  written  agree-
    26  ments to purchase under the plan. As to tenants who were in occupancy on
    27  the  date a letter was issued by the attorney general accepting the plan
    28  for filing, the purchase  agreement  shall  be  executed  and  delivered
    29  pursuant to an offering made in good faith without fraud and discrimina-
    30  tory repurchase agreements or other discriminatory inducements.
    31    (2)  No  eviction  proceedings  will  be commenced at any time against
    32  non-purchasing tenants for failure  to  purchase  or  any  other  reason
    33  applicable  to expiration of tenancy; provided that such proceedings may
    34  be commenced for non-payment of rent, illegal use or  occupancy  of  the
    35  premises,  refusal of reasonable access to the owner or a similar breach
    36  by the non-purchasing tenant of such tenant's obligations to  the  owner
    37  of  the  dwelling  unit  or  the  shares allocated thereto; and provided
    38  further that an owner of a unit or of the shares allocated  thereto  may
    39  not  commence  an action to recover possession of a dwelling unit from a
    40  non-purchasing tenant on the grounds that such tenant seeks the dwelling
    41  unit for the use and occupancy of such tenant  or  the  family  of  such
    42  tenant.
    43    (3)  Non-purchasing  tenants  who  reside in dwelling units subject to
    44  government regulation as to rentals and continued occupancy prior to the
    45  conversion of the building or group of buildings or development to coop-
    46  erative or condominium ownership shall continue to be subject thereto.
    47    (4) The rentals of non-purchasing tenants who reside in dwelling units
    48  not subject to government regulation as to rentals and  continued  occu-
    49  pancy  and  non-purchasing  tenants  who  reside  in dwelling units with
    50  respect to which government regulation as to rentals and continued occu-
    51  pancy is eliminated or becomes inapplicable  after  the  plan  has  been
    52  accepted  for  filing  by  the  attorney general shall not be subject to
    53  unconscionable increases beyond ordinary rentals for  comparable  apart-
    54  ments during the period of their occupancy.  In determining comparabili-
    55  ty,  consideration  shall be given to such factors as building services,
    56  level of maintenance and operating expenses.
        A. 7743                             3

     1    (5) The rights granted under the plan to purchasers under the plan and
     2  to non-purchasing tenants may not be abrogated or reduced  notwithstand-
     3  ing any expiration of, or amendment to, this section.
     4    (6) After the issuance of the letter from the attorney general stating
     5  that the offering statement or prospectus required in subdivision one of
     6  this section has been filed, the offeror shall, on the thirtieth, sixti-
     7  eth,  eighty-eighth  and ninetieth day after such date and at least once
     8  every thirty days until the plan is declared effective or is  abandoned,
     9  as  the  case may be, and on the second day before the expiration of any
    10  exclusive purchase period provided in a  substantial  amendment  to  the
    11  plan,  (A)  file  with  the  attorney general a written statement, under
    12  oath, setting forth the percentage of bona fide tenants in occupancy  of
    13  all  dwelling units in the building or group of buildings or development
    14  who have executed and delivered written agreements to purchase under the
    15  plan as of the date of such statement, (B) before noon on the  day  such
    16  statement  is  filed  post a copy of such statement in a prominent place
    17  accessible to all tenants in each building covered by the plan.
    18    (iii) The attorney general finds that an excessive number of long-term
    19  vacancies did not exist on the date that the offering statement or pros-
    20  pectus was first submitted to the department of law.  "Long-term  vacan-
    21  cies"  shall  mean  dwelling  units  not leased or occupied by bona fide
    22  tenants for more than five months prior to the date of  such  submission
    23  to  the  department  of  law.  "Excessive"  shall mean a vacancy rate in
    24  excess of the greater of (1) ten percent and (2) a  percentage  that  is
    25  double  the  normal  average  vacancy  rate for the building or group of
    26  buildings or development for two years prior to  the  January  preceding
    27  the date the offering statement or prospectus was first submitted to the
    28  department of law.
    29    (iv)  The attorney general finds that, following the submission of the
    30  offering statement or prospectus to the department of law,  each  tenant
    31  in the building or group of buildings or development was provided with a
    32  written  notice  stating  that such offering statement or prospectus has
    33  been submitted to the department of law for filing. Such notice shall be
    34  accompanied by a copy of the offering  statement  or  prospectus  and  a
    35  statement  that  the  statements  submitted  pursuant  to  clause six of
    36  subparagraph (ii) of this paragraph, whichever is  applicable,  will  be
    37  available  for inspection and copying at the office of the department of
    38  law where the submission was made and at the office of the offeror or  a
    39  selling agent of the offeror. Such notice shall also be accompanied by a
    40  statement  that  tenants or their representatives may physically inspect
    41  the premises at any time subsequent to the submission of the plan to the
    42  department of law, during normal business hours,  upon  written  request
    43  made  by  them  to the offeror, provided such representatives are regis-
    44  tered architects or professional engineers licensed to practice  in  the
    45  state of New York. Such notice shall be sent to each tenant in occupancy
    46  on  the date the plan is first submitted to the department of law and to
    47  the clerk of the municipality wherein such building or group  of  build-
    48  ings or development is located.
    49    (c)  All  dwelling  units  occupied by non-purchasing tenants shall be
    50  managed by the same managing agent who manages all other dwelling  units
    51  in  the  building  or  group  of buildings or development. Such managing
    52  agent shall provide to non-purchasing tenants all services  and  facili-
    53  ties  required  by  law on a non-discriminatory basis. The offeror shall
    54  guarantee the obligation of the  managing  agent  to  provide  all  such
    55  services  and  facilities  until  such  time  as  the offeror surrenders
    56  control to the board of directors or board of managers,  at  which  time
        A. 7743                             4

     1  the  cooperative corporation or the condominium association shall assume
     2  responsibility for the provision of all services and facilities required
     3  by law on a non-discriminatory basis.
     4    (d)  It  shall  be  unlawful for any person to engage in any course of
     5  conduct, including, but not limited to, interruption  or  discontinuance
     6  of  essential  services, which substantially interferes with or disturbs
     7  the comfort, repose, peace or quiet of any tenant in his use or occupan-
     8  cy of his dwelling unit or the facilities related thereto. The  attorney
     9  general  may  apply  to  a  court of competent jurisdiction for an order
    10  restraining such conduct and, if  he  deems  it  appropriate,  an  order
    11  restraining  the owner from selling the shares allocated to the dwelling
    12  unit or the dwelling unit itself or from proceeding  with  the  plan  of
    13  conversion;  provided  that  nothing contained herein shall be deemed to
    14  preclude the tenant from applying on his own behalf for similar relief.
    15    (e) Any local legislative body may adopt local laws  and  any  agency,
    16  officer  or public body may prescribe rules and regulations with respect
    17  to the continued occupancy  by  tenants  of  dwelling  units  which  are
    18  subject  to regulation as to rentals and continued occupancy pursuant to
    19  law, provided that in the event that any such local law, rule  or  regu-
    20  lation  shall  be  inconsistent with the provisions of this section, the
    21  provisions of this section shall control.
    22    (f) Any provision of a lease or other rental agreement which  purports
    23  to  waive  a  tenant's  rights under this subdivision or rules and regu-
    24  lations promulgated pursuant hereto shall be void as contrary to  public
    25  policy.
    26    § 2. Section 352-eee of the general business law is REPEALED.
    27    § 3. Section 352-eeee of the general business law is REPEALED.
    28    § 4. Paragraph 7 of subdivision a of section 26-408 of the administra-
    29  tive code of the city of New York is REPEALED.
    30    §  5.  The  opening  paragraph  of  subdivision a and subdivision c of
    31  section 26-504 of the administrative code  of  the  city  of  New  York,
    32  subdivision c as amended by chapter 289 of the laws of 1985, are amended
    33  to read as follows:
    34    Class  A  multiple dwellings not owned as a cooperative or as a condo-
    35  minium, except as provided in  section  three  hundred  [fifty-two-eeee]
    36  fifty-two-e of the general business law, containing six or more dwelling
    37  units which:
    38    c. Dwelling units in a building or structure receiving the benefits of
    39  section  11-243 or section 11-244 of the code or article eighteen of the
    40  private housing finance law, not owned as a cooperative or as  a  condo-
    41  minium,  except  as  provided  in section three hundred [fifty-two-eeee]
    42  fifty-two-e of the general business law and not subject to chapter three
    43  of this title. Upon the expiration or termination for any reason of  the
    44  benefits  of  section  11-243  or  section 11-244 of the code or article
    45  eighteen of the private housing finance law any such dwelling unit shall
    46  be subject to this chapter until the occurrence of the first vacancy  of
    47  such  unit  after  such benefits are no longer being received or if each
    48  lease and renewal thereof for such unit for the tenant in  residence  at
    49  the  time  of  the  expiration  of the tax benefit period has included a
    50  notice in at least twelve point type informing such tenant that the unit
    51  shall become subject to deregulation upon the  expiration  of  such  tax
    52  benefit period and states the approximate date on which such tax benefit
    53  period  is  scheduled to expire, such dwelling unit shall be deregulated
    54  as of the end of the tax benefit period; provided, however, that if such
    55  dwelling unit would have been subject to this chapter or  the  emergency
    56  tenant  protection  act  of nineteen seventy-four in the absence of this
        A. 7743                             5

     1  subdivision, such dwelling unit shall, upon the expiration of such bene-
     2  fits, continue to be subject to this chapter  or  the  emergency  tenant
     3  protection  act  of  nineteen seventy-four to the same extent and in the
     4  same manner as if this subdivision had never applied thereto.
     5    § 6. Section 26-701 of the administrative code of the city of New York
     6  is amended to read as follows:
     7    §  26-701  Application.  The provisions of this chapter shall apply to
     8  conversions from rental to cooperative or condominium status of a build-
     9  ing or a group of buildings or a development for which a  plan  must  be
    10  filed with the state department of law pursuant to section three hundred
    11  [fifty-two-eeee] fifty-two-e of the general business law.
    12    § 7. Section 26-705 of the administrative code of the city of New York
    13  is amended to read as follows:
    14    §  26-705 Posting of violations. The offeror, not later than the thir-
    15  tieth day following the acceptance of a plan for  filing  by  the  state
    16  department  of  law  pursuant  to section three hundred [fifty-two-eeee]
    17  fifty-two-e of the general business law and until  the  closing  of  the
    18  conversion pursuant to such plan, shall post and maintain in a prominent
    19  place, accessible to all tenants in each building covered by the plan, a
    20  listing of all violations of record against such buildings as determined
    21  by  the  department of buildings and the department of housing preserva-
    22  tion and development. All newly issued violations shall be posted within
    23  forty-eight hours of their issuance and maintained as  described  above.
    24  The  offeror may satisfy the requirements of this section by designating
    25  an agent on the premises with whom such listing shall be made  available
    26  for inspection by the tenants.
    27    §  8.  Subdivision  9  of section 286 of the multiple dwelling law, as
    28  added by chapter 349 of the laws of 1982, is amended to read as follows:
    29    9. [No eviction plan for  conversion  to  cooperative  or  condominium
    30  ownership  for  a building which is, or a portion of which is an interim
    31  multiple dwelling shall be submitted for filing to the department of law
    32  pursuant to the general business law until a residential certificate  of
    33  occupancy  is  obtained as required by this article, and the residential
    34  occupants qualified for protection pursuant to this article are  offered
    35  one, two or three year leases, as elected by such persons, in accordance
    36  with  the  provisions  for establishment of initial legal regulated rent
    37  contained herein.] Non-eviction plans for such buildings may be  submit-
    38  ted  for  filing  only if the sponsor remains responsible for compliance
    39  with article seven-B and for all work in common areas required to obtain
    40  a residential certificate of occupancy. Cooperative conversion shall  be
    41  fully  in  accordance with section three hundred [fifty-two-eeee] fifty-
    42  two-e of the general business law, the requirements of the code  of  the
    43  local real estate industry stabilization association, and with the rules
    44  and regulations promulgated by the attorney general.
    45    §  9.  Paragraph  (g)  of subdivision 3 of section 1102 of the private
    46  housing finance law, as amended by chapter 121 of the laws of  1988,  is
    47  amended to read as follows:
    48    (g)  In  the case of a rental project, that the project shall be oper-
    49  ated initially as a rental property, and when located in the city of New
    50  York shall be subject to the rent stabilization law of nineteen  hundred
    51  sixty-nine,  and  when located in a municipality which has elected to be
    52  covered by the provisions of the  emergency  tenant  protection  act  of
    53  nineteen  seventy-four,  be  subject  to the provisions of such act. Any
    54  subsequent conversion to cooperative or condominium ownership during the
    55  period in which such property remains subject to the provisions of  this
    56  article shall only be allowed with the consent of the corporation and if
        A. 7743                             6

     1  done  pursuant to section three hundred [fifty-two-eeee or three hundred
     2  fifty-two-eee] fifty-two-e of the general business  law  shall  only  be
     3  allowed  pursuant  to  a  non-eviction  plan. The conversion of a rental
     4  project  to  cooperative or condominium ownership shall make the cooper-
     5  ative or condominium subject to the provisions of this article for coop-
     6  erative or condominium projects for the remaining term which the  rental
     7  project was to be subject to the provisions of this article.
     8    §  10.  Subdivision  8  of section 1152 of the private housing finance
     9  law, as added by chapter 639 of the laws of 1989, is amended to read  as
    10  follows:
    11    8.  If  the  eligible  project is a rental project, no conversion to a
    12  cooperative or condominium shall be permitted for  a  period  of  twenty
    13  years  after initial occupancy, and unless (i) the agency's share of the
    14  loan is prepaid upon such conversion, (ii) the conversion shall be  done
    15  pursuant  to  section  three hundred [fifty-two-eeee] fifty-two-e of the
    16  general business law as a non-eviction plan, and (iii) apartments  occu-
    17  pied  by  non-purchasing  tenants  continue  to  be  subject to the rent
    18  stabilization law of nineteen hundred sixty-nine as amended,  until  the
    19  occurrence of a vacancy.
    20    §  11.  This act shall take effect on the thirtieth day after it shall
    21  have become a law; provided that the amendments  to  section  26-504  of
    22  chapter 4 of title 26 of the administrative code of the city of New York
    23  made  by  section five of this act shall expire on the same date as such
    24  law expires and shall not affect the expiration of such law as  provided
    25  under section 26-520 of such law.