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A03057 Summary:

BILL NOA03057
 
SAME ASNo Same As
 
SPONSORDinowitz
 
COSPNSRColton, Gottfried
 
MLTSPNSRGlick
 
Amd 352-eeee, Gen Bus L
 
Prohibits upon the vacancy of an unsold condominium or cooperative dwelling unit, the rental of such unit unless the original offering plan provided for such rental and a majority of the members of the condominium or cooperative agree thereto; generally requires the sale of such units.
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A03057 Actions:

BILL NOA03057
 
01/22/2021referred to housing
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A03057 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3057
 
SPONSOR: Dinowitz
  TITLE OF BILL: An act to amend the general business law, in relation to the rights of cooperative and condominium sponsors and purchasers regarding the rental of vacant dwelling units   PURPOSE OR GENERAL IDEA OF BILL: This bill establishes a mechanism for addressing the problems created when a cooperative or condominium sponsor suspends efforts to sell apartments in the building being converted.   SUMMARY OF SPECIFIC PROVISIONS: The bill adds a new subdivision g to section 352-eeee of the General Business Law to provide that any unsold dwelling unit in a cooperative or condominium apartment building must be offered for sale when it becomes vacant, unless: (a) the offering plan stated that unsold dwell- ing units would not be sold when they became vacant and also warned purchasers of the risks of ownership in a building, where unsold dwell- ing units are not offered for sale; or (b) the sponsor or unit owner obtains the consent of a majority of the unaffiliated members of the beard of the cooperative or condominium. If neither of these conditions are met, then the apartment must be offered for sale for a period of at least one year. If the apartment cannot be sold during that time period, then the sponsor or unit owner may rent the apartment for up to one year, and the sponsor must send a copy of the lease to the board of directors of the cooperative corporation or the board of managers of the condominium association, After the termination of the lease period, the apartment must be offered for sale again for another one-year period. The prohibition against renting the apartment, except with the permis- sion of the board or after a one-year sale period, continues to apply until the apartment is sold. The bill also includes an exemption from this sale requirement for owners who have purchased a dwelling for their own personal use or the use of a family member but who are not presently occupying the unit. In addition, the requirement does not apply to units owned by the cooper- ative corporation or the condominium association. The term "unsold dwelling unit" is defined for the purposes of this new subdivision as the shares and proprietary lease in a cooperative or a unit in a condo- minium that was not sold by the sponsor, and includes units designated by the sponsor as "unsold shares" and "unsold units."   JUSTIFICATION: Cooperative and condominium apartment ownership in New York State is founded upon the principle of joint ownership of a building by its tenants. This unique form of ownership allows individual residents to hold an equity interest in their dwellings, while at the same time creating a mutual interest among all of the unit owners in the care and upkeep of the building. This concept of joint ownership forms the basis for the offering plan which is filed with the Attorney General, and which offers the dwelling units for sale to the public, As a general rule, these offering plans explicitly state that the principal purpose of the offering plan is to sell the apartments for use as homes by purchasers. Unfortunately, in some circumstances building sponsors have stopped offering units for sale long before all the units have been sold. in many instances the sponsor's intention in converting the build- ing to cooperative or condominium ownership was to remove vacant apart- ments from the rem regulation laws, and to allow the sponsor to charge market rents for the vacant apartments. As a result of the sponsor's decision to rent the units rather than sell them, many apartment purchasers have found that they are not residing in a building where the other tenants are also owners, as was intended by the statutory provisions authorizing building conversions. Instead, they are minority owners in a building that remains operated as a rental by the sponsor (who acts as the landlord) and in which vacant apartments are rented rather than being offered for sale. The consequence of the sponsor's action is that the building continues to be maintained by the sponsor in the same manner as when the building was a rental, but the purchasers are now required to contribute to the cost of its maintenance and repair. As minority shareholders or unit owners, however, these individ- uals have virtually no control over how the building is operated. More- over, as a result of the large number of unsold apartments in their building, the purchasers find themselves unable to sell or refinance their apartments. These factors effectively trap the purchasers into their existing apartments, which in many cases they can no longer afford or are no longer adequate for their growing families. These consequences are particularly inequitable because the determination of the sponsor to stop selling apartments was never• disclosed to the purchasers of the initial apartments. These purchasers were, in effect, defrauded into believing that ultimately all of the apartments would be sold, and that they would be living in a building that is entirely owned by individuals with common goals and interests. This bill seeks to address this problem by establishing a process for determining whether a building sponsor may choose not to sell vacant apartments. Specifically, the bill provides that vacant, unsold apartments must be put on the market unless the offering plan specified that such apartments would not be offered for sale. In the event the offering plan did not contain the requisite disclosure, then a majority of the members of the board of directors or board of managers who are not affiliated with the sponsor must vote to permit the sponsor or other unit owner to withhold the apartment or unit from sale. In those circumstances where the apartment must be offered for sale, the apartment must remain on the market for at least one year. If the apartment remains unsold after that time period, then the sponsor or unit owner may rent the apartment for up to one year, after which it must be offered for sale again for another one-year period. The prohibi- tion against renting the apartment, except with the permission of the board or after a one-year sale period, continues to apply until the apartment is sold. The bill contains an exemption from this sale requirement for owners who have purchased a dwelling for their own personal use or the use of a family member but who are not presently occupying the unit. Finally, the sale requirement does not apply to units owned by the cooperative corporation or the condominium associ- ation.   PRIOR LEGISLATIVE HISTORY: 2019-20-A.3187- Referred to Housing 2017-18-A.1815- Third Reading Calendar/S.2366- Referred to Housing, Construction and Community Development 2015-16-A.2148 - Third Reading Calendar/S.3593- Referred to Housing, Construction and Community Development 2013-14-A.583- Referred to Housing/S.1828- Referred to Housing, Construction and Community Development 2011-12-A.1287- Referred to Housing/S.3256- Referred to Housing, Construction and Community Development 2009-10-A.835- Referred to Housing 2007-08-A.3132- Referred to Housing 2005-06-A.1462- Referred to Housing 2003-04-A.3293-A- Referred to Housing 2001-02-A.8686- Referred to Housing   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: The bill takes effect immediately and applies to all dwelling units in cooperative and condominium buildings that become vacant after such effective date.
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A03057 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          3057
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 22, 2021
                                       ___________
 
        Introduced by M. of A. DINOWITZ, COLTON, GOTTFRIED -- Multi-Sponsored by
          -- M. of A.  GLICK -- read once and referred to the Committee on Hous-
          ing
 
        AN  ACT  to amend the general business law, in relation to the rights of
          cooperative and condominium  sponsors  and  purchasers  regarding  the
          rental of vacant dwelling units

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 352-eeee of the general business law is amended  by
     2  adding a new subdivision 9 to read as follows:
     3    9.  (a) Whenever any unsold dwelling unit in a residential cooperative
     4  or condominium building becomes vacant, such dwelling unit  may  not  be
     5  rented and must be offered for sale unless either:
     6    (i)  the  original  offering plan which was accepted for filing by the
     7  attorney general expressly disclosed the possibility that unsold  dwell-
     8  ing  units  might  not be sold when they become vacant, and the offering
     9  plan contained a warning to purchasers of the risk entailed in  purchas-
    10  ing a unit in a building where unsold dwelling units are not offered for
    11  sale; or
    12    (ii)  the  sponsor  or  other  owner of the unsold dwelling unit first
    13  obtains the consent of a majority of those members  of  the  cooperative
    14  corporation  board  of  directors  or  condominium  association board of
    15  managers who are not affiliated with, employed by,  or  related  to  the
    16  sponsor or owner of the unsold dwelling unit or units to said rental.
    17    (b)  In the event that neither of the conditions set forth in subpara-
    18  graphs (i) and (ii) of paragraph (a) of this subdivision  are  met,  and
    19  such  dwelling  unit  remains  unsold and unoccupied for a period of one
    20  year from the date it becomes vacant, then  the  dwelling  unit  may  be
    21  rented  for  a  period  of up to one year. At the conclusion of such one
    22  year rental period, the unsold dwelling unit shall once again be  deemed
    23  to  have  become vacant, and the provisions of this subdivision shall be
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD05501-01-1

        A. 3057                             2
 
     1  applied once again. The prohibition against the sale or rental of unsold
     2  dwelling units except in accordance with the provisions of this subdivi-
     3  sion shall continue until the apartment is sold.
     4    (c)  If any unsold dwelling unit which becomes vacant is rented pursu-
     5  ant to the provisions of this subdivision, then the owner  of  the  unit
     6  being  rented shall immediately send a copy of the fully executed lease,
     7  as well as such other information as may be necessary so that  both  the
     8  owner of the unit and the tenant can be reached in the event of an emer-
     9  gency,  to  the board of directors of the cooperative corporation or the
    10  board of managers of the condominium association.
    11    (d) This subdivision shall not apply to any shareholder or unit  owner
    12  who  establishes  to  the reasonable satisfaction of a majority of those
    13  members of the cooperative corporation board of directors or condominium
    14  association board of managers who are not affiliated with, employed  by,
    15  or related to, the sponsor or owner of the unsold dwelling unit or units
    16  that  he or she purchased a dwelling unit for personal use or use by his
    17  or her immediate family member, but whose immediate family member is not
    18  presently occupying the dwelling unit, nor shall this subdivision  apply
    19  to  dwelling  units  owned  by  a cooperative corporation or condominium
    20  association or entities formed by either of them to hold units  obtained
    21  from  a sponsor. Immediate family member as used in this paragraph shall
    22  be  defined  as  the  shareholder's  spouse,  children,   grandchildren,
    23  parents, grandparents, brothers or sisters.
    24    (e) As used in this subdivision, the term "unsold dwelling unit" shall
    25  mean  an  apartment  in a cooperative housing corporation or a unit in a
    26  condominium that was not sold for occupancy by the purchaser  and  shall
    27  include, but not be limited to, cooperative shares and condominium units
    28  designated  by the sponsor or holder of unsold shares as "unsold shares"
    29  or "unsold units".
    30    § 2. This act shall take effect immediately and  shall  apply  to  all
    31  dwelling  units  in  cooperative  and  condominium buildings that become
    32  vacant on or after such effective date.
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