§ 352-e. Real estate syndication offerings. 1. (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 interests or investments in real
estate, mortgages or leases, including stocks, bonds, debentures,
evidences of interest or indebtedness, limited 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
(b) of this subdivision unless the security offering is exempted
hereunder or under 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
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
prospectus 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.

(b) The detailed terms of the transaction; a description of the
property, the nature of the interest, and how title thereto is to be
held; the gross and net income for a reasonable period preceding the
offering where applicable and available; the current gross and net
income where applicable and available; the basis, rate and method of
computing depreciation; a description of major current leases; the
essential terms of all mortgages; the names, addresses and business
background of the principals involved, the nature of their fiduciary
relationship and their financial relationship, past, present and future,
to the property offered to the syndicate and to those who are to
participate in its management; the interests and profits of the
promoters, offerors, syndicate organizers, officers, directors, trustees
or general partners, direct and indirect, in the promotion and
management of the venture; all restrictions, if any, on transfer of
participants' interests; a statement as to what stock or other security
involved in the transaction, if any, is non-voting; a statement as to
what disposition will be made of the funds received and of the
transaction if not consummated, which statement shall represent that all
moneys received from the sale of such securities until actually employed
in connection with the consummation of the transaction as therein
described, shall be kept in trust and that in the event insufficient
funds are raised through the offering or otherwise to effectuate the
purchase or purchases or other consummation of the contemplated
transaction, or that the intended acquisition shall not be completed for
any other reason or reasons, then such moneys, less such amounts
actually employed in connection with the consummation of the
transaction, shall be fully returned to the investor; which of the
securities offered are unsecured; clearly distinguish between leasehold
and fee ownership, between fact and opinion; a commitment to submit
annual reports to all participants, including an annual balance sheet
and profit and loss statement certified by an independent certified
public accountant; clearly distinguish between those portions of
promised distributions which are income and those which are a return of
principal or capital; in the case of qualified leasehold condominiums,
as defined in section three hundred thirty-nine-e of the real property
law, a disclosure of the unique requirements imposed on the unit owners
of such condominiums by the provisions of sections three hundred
thirty-nine-bb and three hundred thirty-nine-cc of such law; and such
additional information as the attorney general may prescribe in rules
and regulations promulgated under subdivision six hereof as will afford
potential investors, purchasers and participants an adequate basis upon
which to found their judgment and shall not omit any material fact or
contain any untrue statement of a material fact.

(c) All advertising in connection with an offering of securities
described in this subdivision shall be consistent with the
representations and information required to be set forth as hereinbefore
in this subdivision provided.

2. Unless otherwise provided by regulation issued by the attorney
general, the offering statement or statements or prospectus required in
subdivision one of this section shall be filed with the department of
law at its office in the city of New York, prior to the public offering
of the security involved. No offer, advertisement or sale of such
securities shall be made in or from the state of New York until the
attorney general has issued to the issuer or other offerer a letter
stating that the offering has been filed. The attorney general, not
later than thirty days after the submission of such filing, shall issue
such a letter or, in the alternative, a notification in writing
indicating deficiencies in the offering statement, statements or
prospectus; provided, however, that in the case of a building or group
of buildings to be converted to cooperative or condominium ownership
which is occupied in whole or in part for residential purposes, such
letter or notification shall be issued in not sooner than four months
and not later than six months from the date of submission of such
filing. The attorney general may also refuse to issue a letter stating
that the offering statement or statements or prospectus has been filed
whenever it appears that the offering statement or statements or
prospectus does not clearly set forth the specific property or
properties to be purchased, leased, mortgaged, or otherwise to be
acquired, financed or the subject of specific investment with a
substantial portion of the offering proceeds.

2-a. (a) For the purposes of this subdivision the following words
shall have the following meanings:

(i) "Plan". Every offering statement or prospectus submitted to the
department of law for the conversion of a building or group of buildings
or development from residential rental status to cooperative or
condominium ownership, other than a plan governed by the provisions of
either section three hundred fifty-two-eee or three hundred
fifty-two-eeee of this chapter, or a plan for such conversion pursuant
to article two, eight or eleven of the private housing finance law.

(ii) "Non-purchasing tenant". A person who has not purchased under the
plan and who is a tenant entitled to possession at the time the plan is
declared effective or a person to whom a dwelling unit is rented
subsequent to the effective date. A person who sublets a dwelling unit
from a purchaser under the plan shall not be deemed a non-purchasing
tenant.

(iii) "Eligible senior citizens". Non-purchasing tenants who are
sixty-two years of age or older on the date the attorney general has
accepted the plan for filing, and the spouses of any such tenants on
such date, and who have elected, within sixty days of the date the
attorney general has accepted the plan for filing, on forms promulgated
by the attorney general and presented to such tenants by the offeror, to
become non-purchasing tenants under the provisions of this subdivision;
provided that such election shall not preclude any such tenant from
subsequently purchasing the dwelling unit on the terms then offered to
tenants in occupancy.

(iv) "Eligible disabled persons". Non-purchasing tenants who have an
impairment which results from anatomical, physiological or psychological
conditions, other than addiction to alcohol, gambling, or any controlled
substance, which are demonstrable by medically acceptable clinical and
laboratory diagnostic techniques, and which are expected to be permanent
and which prevent the tenant from engaging in any substantial gainful
employment on the date the attorney general has accepted the plan for
filing, and the spouses of any such tenants on such date, and who have
elected, within sixty days of the date the attorney general has accepted
the plan for filing, on forms promulgated by the attorney general and
presented to such tenants by the offeror, to become non-purchasing
tenants under the provisions of this subdivision; provided, however,
that if the disability first occurs after acceptance of the plan for
filing, then such election may be made within sixty days following the
onset of such disability unless during the period subsequent to sixty
days following the acceptance of the plan for filing but prior to such
election, the offeror accepts a written agreement to purchase the
apartment from a bona fide purchaser; and provided further that such
election shall not preclude any such tenant from subsequently purchasing
the dwelling unit or the shares allocated thereto on the terms then
offered to tenants in occupancy.

(b) The attorney general shall refuse to issue a letter stating that
the offering statement or prospectus required in subdivision one of this
section has been filed whenever it appears that the offering statement
or prospectus offers for sale residential cooperative apartments or
condominium units pursuant to a plan unless the plan provides that:

(i) No eviction proceedings will be commenced, except as hereinafter
provided, at any time against either eligible senior citizens or
eligible disabled persons. The rentals of eligible senior citizens and
eligible disabled persons who reside in dwelling units not subject to
government regulation as to rentals and continued occupancy and eligible
senior citizens and eligible disabled persons who reside in dwelling
units with respect to which government regulation as to rentals and
continued occupancy is eliminated or becomes inapplicable after the plan
has been accepted for filing shall not be subject to unconscionable
increases beyond ordinary rentals for comparable apartments during the
period of their occupancy considering, in determining comparability,
such factors as building services, level of maintainance and operating
expenses; provided that such proceedings may be commenced against such
tenants for non-payment of rent, illegal use or occupancy of the
premises, refusal of reasonable access to the owner or a similar breach
by the tenant of his obligations to the owner of the dwelling unit or
the shares allocated thereto and provided further that an owner of a
unit or of the shares allocated thereto may not commence an action to
recover possession of a dwelling unit from a non-purchasing tenant on
the grounds that he seeks the dwelling unit for the use and occupancy of
himself or his family.

(ii) Eligible senior citizens and eligible disabled persons who reside
in dwelling units subject to government regulation as to rentals and
continued occupancy shall continue to be subject thereto.

(iii) The rights granted under the plan to eligible senior citizens
and eligible disabled persons may not be abrogated or reduced
notwithstanding any expiration of, or amendment to, this section.

(iv) Any offeror who disputes the election by a person to be an
eligible senior citizen or an eligible disabled person must apply to the
attorney general within thirty days of the receipt of the election forms
for a determination by the attorney general of such person's
eligibility. The attorney general shall, within thirty days thereafter,
issue his determination of eligibility. The foregoing shall, in the
absence of fraud, be the sole method for determining a dispute as to
whether a person is an eligible senior citizen or an eligible disabled
person. The determination of the attorney general shall be reviewable
only through a proceeding under article seventy-eight of the civil
practice law and rules, which proceeding must be commenced within thirty
days after such determination by the attorney general becomes final.

(c) The provisions of this subdivision shall be applicable in any
city, town or village not covered by the provisions of section three
hundred fifty-two-eeee of this chapter, or which has not elected to be
covered by section three hundred fifty-two-eee of this chapter, provided
the local legislative body elects, by majority vote to adopt by
resolution, coverage provided by this section. A certified copy of such
resolution shall be filed in the office of the attorney general at
Albany and shall become effective on the date of such filing.

2-b. In the case of offerings of cooperatives, condominiums, interest
in homeowners association and other cooperative interests in realty,
including homes subject to deed or covenant or agreements requiring
investment therein, the attorney general may refuse to issue a letter of
acceptance unless the offering statement, prospectus or plan shall
provide that all deposits, down-payments or advances made by purchasers
of residential units shall be held in a special escrow account pending
delivery of the completed apartment or unit and a deed or lease
whichever is applicable, unless insurance of such funds in a form
satisfactory to the attorney general has been obtained prior thereto. In
addition to the general regulatory authority provided in this section,
the attorney general is hereby authorized to adopt, promulgate, amend
and rescind suitable rules and regulations to carry out the provisions
of this subdivision, including, but not limited to, determining when
escrow funds may be released, the nature of escrowees, and other terms
and conditions relating thereto deemed necessary in the public interest.

2-c. Payment of legal fees for representation of a tenant or tenant's
association in a residential building undergoing conversion to
cooperative or condominium ownership shall not be made from any reserve
fund, working capital fund, or other fund established to cover expenses,
repairs and capital improvements of buildings converted to cooperative
or condominium ownership, unless made pursuant to a retainer agreement
entered into before this subdivision shall have become a law. Payment of
legal fees may be made, however, from another fund specifically
designated for such purpose.

2-d. (a) For the purposes of this subdivision the term "self-dealing
contract" shall be defined as any contract or portion thereof which is
entered into after October eighth, nineteen hundred eighty, and which:

(i) provides for operation, maintenance, or management of a
condominium or cooperative association in a conversion project, or of
property serving the condominium or cooperative unit owners in such
projects;

(ii) is between such unit owners or such association and the developer
or an affiliate of the developer;

(iii) was entered into while such association was controlled by the
developer through special developer control or because the developer
held a majority of the votes in such association;

(iv) is for a period of more than three years, including any automatic
renewal provisions which are exercisable at the sole option of the
developer or an affiliate of the developer; and

(v) may not be terminated without penalty by such unit owners or such
association.

(b) In the case of offerings of cooperatives, condominiums or other
interests in realty covered by the provisions of section six hundred
eight of the Condominium and Cooperative Abuse Relief Act of 1980, 15
U.S.C. 3607, the attorney general shall refuse to issue a letter of
acceptance unless the offering statement, prospectus or plan provides
that the tenant shareholders or owners entitled to vote to terminate a
self-dealing contract pursuant to such section twice be notified of such
right in writing (i) once within thirty days of the date that the right
to terminate pursuant to subsection (b) of such section commences and
(ii) secondly at least six months prior to the date that such right to
terminate will expire.

3. No offering literature shall be employed in the offering of
securities as defined in subdivision one of this section except by the
offering statement or statements filed in the department of law pursuant
to the provisions of this section. All advertising in whatever form,
including periodicals or on radio or television shall contain a
statement that no offer of such securities is made except by such
offering statement or statements.

4. In all literature employed in the offer and sale of securities
defined in subdivision one of this section and in all advertising in
connection therewith there shall be contained, in easily readable print
on the face thereof, a statement that the filing of an offering
statement or statements or prospectus as required by subdivision one of
this section with the department of law does not constitute approval of
the issue or the sale thereof by the department of law or the attorney
general of this state.

5. No offering or sale whatever of securities described in subdivision
one of this section shall be made except on the basis of information,
statements, literature, or representations constituting the offering
statement or statements or prospectus described in such subdivision, and
no information, statements, literature, or representations shall be used
in the offering or sale of securities described in such subdivision
unless it is first so filed and the prospective purchaser furnished with
true copies thereof.

6. (a) The attorney general is hereby authorized and empowered to
adopt, promulgate, amend and rescind suitable rules and regulations to
carry out the provisions of this section, including regulations for the
method, contents and filing procedures with respect to the statements
required by subdivision one and the making of amendments thereto.

(b) The attorney general is hereby authorized and empowered to adopt,
promulgate, amend and rescind suitable rules and regulations relating to
the information furnished to investors of the sources of any
distribution or distributions made by any issuer in connection with the
sale of realty securities since January first, nineteen hundred
sixty-one within the provisions of section three hundred fifty-two-e and
section three hundred fifty-two-g of this article.

7. (a) The department of law shall collect the following fees for the
filing of each offering statement or prospectus as described in
subdivision one of this section: seven hundred fifty dollars for every
offering not in excess of two hundred fifty thousand dollars; for every
offering in excess of two hundred fifty thousand dollars, four-tenths of
one percent of the total amount of the offering but not in excess of
thirty thousand dollars of which one-half of said amount shall be a
nonrefundable deposit paid at the time of submitting the offering
statement to the department of law for review and the balance payable
upon the issuance of a letter of acceptance for filing said offering
statement. The department of law shall, in addition, collect a fee of
two hundred twenty-five dollars for each amendment to an offering
statement. For each application granted by the department of law which
permits the applicant to solicit public interest or public funds
preliminary to the filing of an offering statement or for the issuance
of a "no-filing required" letter, the department of law shall collect a
fee of two hundred twenty-five dollars. In the event the sponsor
thereafter files an offering statement, the fee paid for the preliminary
application shall be credited against the balance of the fee due and
payable on filing. For each application granted pursuant to section
three hundred fifty-two-g of this article, the department of law shall
collect a fee of two-tenths of one percent of the amount of the offering
of securities; however, the minimum fee shall be seven hundred fifty
dollars and the maximum fee shall be thirty thousand dollars. All
revenue from that portion of any fee imposed pursuant to this paragraph,
which exceeds twenty thousand dollars shall be paid by the department of
law to the state comptroller to be deposited in and credited to the real
estate finance bureau fund, established pursuant to section eighty of
the state finance law.

(b) The attorney general may, in his discretion, require an inspection
to be made by the department of law in connection with a real estate
syndication, cooperative, or condominium offering, of lands and property
thereon, situated outside of the state of New York, involved in such
offering. In such case, prior to the acceptance of such filing, there
shall be remitted to the department of law an amount equivalent to the
cost of travel from New York to the location of the property involved in
the offering and return, as estimated by the department of law, and a
further reasonable amount estimated to be necessary to cover the
additional expenses of such inspection. The department of law shall
return to the person making the remittance any amount advanced in excess
of the actual expenses incurred, and where there is a deficiency, the
department of law shall be empowered to collect the difference between
the actual expenses and the amount advanced.

(c) Notwithstanding the provisions of paragraph (a) of this
subdivision, the department of law shall not collect any fees for the
filing of an offering statement or prospectus or any amended filings
thereto as described in subdivision one of this section whenever a
conversion of a mobile home park, building or group of buildings or
development from residential rental status to cooperative or condominium
ownership is being made pursuant to article eighteen, nineteen or twenty
of the private housing finance law.

8. Within four months after the end of its fiscal year, every
syndicate which shall have been required to file an offering statement
or statements or prospectus under subdivision one of this section shall
file with the department of law at its office in the city of New York an
annual report of the syndicate operation, including an annual balance
sheet and profit and loss statement certified by an independent
certified public accountant. The department of law shall collect a fee
of five dollars for the filing of each such annual report.

9. Each offering statement or prospectus as described in subdivision
one of this section, and all exhibits or documents referred to therein
shall be available for inspection by any person who shall have purchased
a security described in this section or shall have participated in the
offering of such security.