NY State Senate Bill 2009-S447

Senate Bill S447

2009-2010 Legislative Session

Provides for correction of all code violations prior to transfer to cooperative or condominium ownership

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Archive: Last Bill Status - In Senate Committee Housing, Construction And Community Development Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jan 06, 2010	referred to housing, construction and community development
Jan 07, 2009	referred to housing, construction and community development

2009-S447 (ACTIVE) - Details

Current Committee:: Senate Housing, Construction And Community Development
Law Section:: General Business Law
Laws Affected:: Amd §352-e, Gen Bus L
Versions Introduced in 2011-2012 Legislative Session:: S2585

2009-S447 (ACTIVE) - Summary

Requires the sponsor of a plan to convert a building or buildings to cooperative or condominium ownership to cure all serious violations of record of any local or state law with respect to its building and grounds which are the subject of such cooperative or condominium offering.

2009-S447 (ACTIVE) - Sponsor Memo

                                 BILL NUMBER:  S447

 TITLE OF BILL :
An act to amend the general business law, in relation to the physical
condition of a building being converted to cooperative or condominium
ownership


 PURPOSE/SUMMARY OF PROVISIONS :
This bill would require a sponsor of a cooperative or condominium
conversion to correct, or' promise to correct, serious violations of
local and state codes concerning building and housing conditions
before the sponsor's conversion plan could be accepted for filing by
the Attorney General.

 JUSTIFICATION :
In 1982 the Attorney General formalized a long-standing practice by
promulgating regulations requiring that an offering plan for a
building undergoing conversion to cooperative or condominium ownership
state that "prior to closing or within a reasonable period of time
thereafter,sponsor will cause to be cured all violations of record as
of the closing date (except violations caused by the acts or omissions
of tenants of the building in their own units) and will eliminate all
dangerous or hazardous conditions that sponsor has notice of and
comply with all work orders from mortgages." 13 NYCRR SS18.3(hh) (3).
These regulations were challenged by sponsors unwilling to do the work

needed to make their buildings safe. A lower court held by the
Attorney General had no authority to promulgate and enforce the
regulations.  COUNCIL FOR OWNER HOUSING, INC. V. ABRAMS, 506 N.Y.S. 2d
1014 (Supreme Court, Albany County, 1987). An appeal was taken to the
Appellate Division, Third Department, which unanimously affirmed, 125
A. D. 2d 10. On November 22, 1988, the Court of Appeals affirmed the
Appellate Division decision, thus barTing the Attorney General from
thereafter' enforcing the regulations. 72 N.Y.2d (1988).

As a result of this decision, sponsors of buildings undergoing
conversion will not be required to correct conditions in such
buildings which have been determined by local building inspectors to
be in violations of law, or which would constitute such violations.
Many of the violations may be dangerous or hazardous to the health and
safety of the prospective purchasers of the cooperative shares or
condominium units (whether resident tenants or outside purchasers), as
well as to non-purchasers tenants who remain there. Furthermore, the
legal obligation to correct such conditions -- and liability for not
doing so -- passes to those purchasers.

This bill will ensure that no conversion in New York City or in
municipalities in Nassau, Rockland or Westchester Counties which have
adopted General Business Law Section 352-e, will be completed, i.e.
title may not be transferred, unless

(1) all serious violations of record and all dangerous or hazardous
conditions that would constitute violations are cured or

(2) the Sponsor has set aside in an escrow account enough money to
Cure all such violations and conditions, or has placed into a reserve
fund an amount in excess of that required by state or local law which
is specifically allocated and adequate to cure all such violations and
conditions.

All sponsors of offering plans which were not declared effective as of
November 22, 1988 are now free to amend their plans to remove their
obligation to Cure violations. Section 3 of this bill clarifies that
all plans which are not yet declared effective would be subject to its
provisions.

 FISCAL IMPLICATIONS :
None.

 EFFECTIVE DATE :
Immediately; applicable to all plans which have been submitted but not
yet declared effective.

2009-S447 (ACTIVE) - Bill Text download pdf

                            
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                   447

                       2009-2010 Regular Sessions

                            I N  S E N A T E

                               (PREFILED)

                             January 7, 2009
                               ___________

Introduced  by  Sen.  KRUGER -- read twice and ordered printed, and when
  printed to be committed to the Committee on Housing, Construction  and
  Community Development

AN  ACT  to  amend the general business law, in relation to the physical
  condition of a building being converted to cooperative or  condominium
  ownership

  THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:

  Section 1. Paragraph (a) of subdivision 1  of  section  352-e  of  the
general business law, as amended by chapter 1085 of the laws of 1968, is
amended to read as follows:
  (a)  It  shall  be illegal and prohibited for any person, partnership,
corporation, company, trust or association, or  any  agent  or  employee
thereof,  to  make  or take part in a public offering or sale in or from
the state of New York of securities constituted of participation  inter-
ests  or  investments  in  real  estate,  mortgages or leases, including
stocks, bonds, debentures, evidences of interest or indebtedness, limit-
ed partnership interests or other security or securities as  defined  in
section  three  hundred  fifty-two of this article, when such securities
consist primarily of participation interests or investments  in  one  or
more  real  estate  ventures, including cooperative interests in realty,
unless and until there shall have been filed with the department of law,
prior to such offering, a written statement or statements, to  be  known
as  an  "offering statement" or "prospectus" concerning the contemplated
offering  which  shall  contain  the  information  and   representations
required  by  [paragraph]  PARAGRAPHS  (b)  AND  (D) of this subdivision
unless the security offering is exempted hereunder or under  SUBDIVISION
TWO  OF  section  three hundred fifty-nine-f[, subdivision two,] of this
article by rule or action  of  the  attorney  general.  The  term  "real
estate"  as  used  in  the  paragraph  shall not include mineral, oil or

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.

                                                           LBD03601-01-9

S. 447                              2

timber leases or properties, or buildings,  structures,  land  or  other
realty  housing  or  containing  business  offices or industry, owned or
leased by the issuer, where the issuer is not primarily engaged  in  the
business  of  buying and selling such building or other realty or leases
or interests therein. The circulation or  dissemination  of  a  non-firm
offer  (including circulation or dissemination of a preliminary prospec-
tus pursuant to section ten  (b)  of  the  securities  act  of  nineteen
hundred  thirty-three,  and  the  rules  thereto appertaining) shall not
constitute making or taking part in a public offering within the meaning
of this section.
  S 2. Subdivision 1 of section 352-e of the  general  business  law  is
amended by adding a new paragraph (d) to read as follows:
  (D)  THE  PHYSICAL  CONDITION OF A BUILDING BEING CONVERTED TO COOPER-
ATIVE OR CONDOMINIUM OWNERSHIP. THE OFFERING STATEMENT, REFERRED  TO  IN
SUBDIVISION  (A)  OF  THIS  SECTION, SHALL PROVIDE THAT THE SPONSOR OF A
PLAN TO CONVERT A BUILDING OR BUILDINGS TO  COOPERATIVE  OR  CONDOMINIUM
OWNERSHIP  SHALL  CAUSE TO BE CURED (I) ALL SERIOUS VIOLATIONS OF RECORD
OF LOCAL OR STATE LAW OR REGULATIONS REGARDING CONDITIONS IN THE  BUILD-
ING  OR  GROUNDS OF THE REAL PROPERTY WHICH IS THE SUBJECT OF THE OFFER-
ING, EXISTING ON THE DATE OF EFFECTIVENESS OF  THE  PLAN,  EXCEPT  THOSE
WHICH, IF NOT CORRECTED, WOULD NOT LEAD TO DANGEROUS OR HAZARDOUS CONDI-
TIONS,  AS  CERTIFIED BY A REGISTERED ARCHITECT OR PROFESSIONAL ENGINEER
RETAINED BY THE SPONSOR, AND (II) ALL DANGEROUS AND HAZARDOUS CONDITIONS
IN SUCH REAL PROPERTY EXISTING ON THE DATE OF EFFECTIVENESS OF THE  PLAN
WHICH  A  REGISTERED  ARCHITECT OR PROFESSIONAL ENGINEER RETAINED BY THE
SPONSOR CERTIFIES ARE NOT IN COMPLIANCE WITH APPLICABLE STATE  OR  LOCAL
LAWS  OR REGULATIONS. THE OFFERING PLAN MUST FURTHER PROVIDE THAT IF ANY
SUCH VIOLATIONS OR RECORD REFERRED TO IN SUBPARAGRAPH (I) OF THIS  PARA-
GRAPH  OR  DANGEROUS OR HAZARDOUS CONDITIONS REFERRED TO IN SUBPARAGRAPH
(II) OF THIS PARAGRAPH ARE NOT CORRECTED BY THE CLOSING DATE, THE  SPON-
SOR  SHALL PLACE IN ESCROW A SUM OF MONEY WHICH IS CERTIFIED BY A REGIS-
TERED ARCHITECT OR PROFESSIONAL ENGINEER  RETAINED  BY  THE  SPONSOR  AS
SUFFICIENT  TO  COVER  THE REMAINING COST OF CORRECTION. THE SPONSOR MAY
EXPEND THE ESCROW MONEY TO CURE SUCH VIOLATIONS OR DANGEROUS OR  HAZARD-
OUS  CONDITIONS.  IN THE EVENT THAT THE CORRECTIVE WORK IS NOT COMPLETED
WITHIN ONE YEAR OF THE CLOSING DATE, THE SUM IN ESCROW SHALL  BE  TURNED
OVER TO THE COOPERATIVE CORPORATION OR CONDOMINIUM BOARD OF MANAGERS AND
USED TO COMPLETE THE WORK. ANY ESCROW MONEY REMAINING AFTER ALL REQUIRED
WORK  IS  COMPLETED  SHALL BE RETURNED TO THE SPONSOR. WHERE THE SPONSOR
PLACES INTO A RESERVE FUND AN AMOUNT IN EXCESS OF THAT REQUIRED BY STATE
AND LOCAL LAW WHICH IS SPECIFICALLY ALLOCATED AND ADEQUATE TO CURE  SUCH
PARTICULAR  VIOLATION  OF RECORD OR DANGEROUS OR HAZARDOUS CONDITION, NO
MONEY NEEDS TO BE PLACED IN ESCROW FOR SUCH VIOLATION  OR  DANGEROUS  OR
HAZARDOUS CONDITION. IF THE SUM IN ESCROW OR SPECIFICALLY ALLOCATED IN A
RESERVE  FUND  IS  NOT  SUFFICIENT  TO CURE SUCH VIOLATIONS OF RECORD OR
DANGEROUS OR HAZARDOUS CONDITIONS THE SPONSOR  SHALL  REMAIN  LIABLE  TO
CURE SUCH VIOLATIONS OR DANGEROUS OR HAZARDOUS CONDITIONS.
  S  3.  This act shall take effect immediately and shall apply to every
offering statement or prospectus submitted to the  attorney  general  on
and  after  such  date  and  to  every  offering statement or prospectus
submitted to the attorney general which has not yet been declared effec-
tive.

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