Introduction

1
Types of Cooperative Housing Ownership Cooperatives Condominiums Homeowners' Associations

2
Basic New York Laws Martin Act Cooperative and Condominium Conversion Acts Rent Stabilization Law Rent Control Law Emergency Tenant Protection Act Condominium Act

3
The Conversion Process Step By Step Red Herrings Eviction and Non-Eviction Plans Senior Citizens and Disabled Persons Black Books

4
Tenants' Rights New York City Nassau, Rockland, and Westchester Counties Suffolk County and Upstate New York Glossary

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Introduction The conversion of a rental apartment building to a cooperative or condominium is a technical and complex process. New York State's laws governing such conversions generally provide more protection for tenants than those of any other state. However, within the state, laws and regulations differ according to the geographical location of the building or development. This handbook has been prepared to help tenants make informed and intelligent decisions when faced with conversion plans. Section 1 defines the different types of home ownership regulated by the Attorney General of New York State. Section 2 describes the basic laws that govern cooperative and condominium conversions in New York State. Section 3 presents a step-by-step overview of the conversion process and answers some of the questions most frequently asked by tenants about co-ops and condos. Section 4 summarizes the rights of a tenant residing in a building undergoing conversion. It outlines the relevant guidelines in effect in different areas of New York State, and explains their application to eviction and non-eviction plans. Tenants' rights depend upon the laws governing the conversion process in their area. A glossary at the end of this book provides a handy reference to the terminology of the conversion process. Experience has shown that a tenant, whose building is being converted to a co-op or condo may want to consult a lawyer to ensure that his/her rights are being protected. An attorney familiar with the conversion process will be able to explain it completely, and may be retained to represent the tenants in their negotiations with the building owner. If you are considering buying your apartment, you should also consult a lawyer and an accountant, just as you would if you were buying a house. An accountant will aid you in understanding the financial statements contained in the offering plan you receive before purchasing. This purchase may be the most important financial transaction of your life, and you should have all the facts needed to make an intelligent and well-informed decision.

Section 1 Types of Cooperative Housing Ownership

Cooperatives When a building is converted to cooperative ownership, legal title to the building is transferred to an apartment corporation which has been formed to take over ownership of the property. The residents of a cooperative do not actually buy their individual apartments. Rather, they buy the shares in the apartment corporation allocated to a particular apartment. The number of shares allocated to each apartment must be fair and reasonable, based on such factors as the number of rooms and the location and size of each unit. Ownership of the shares entitles the purchaser to a long-term proprietary lease for the apartment. This lease defines the purchaser's rights and obligations with respect to the possession, use and occupancy of the apartment. The cooperative corporation that owns the building must make the payments on any mortgages on the building, and pay the real estate taxes, fuel costs, payroll expenses for building employees, insurance, and the other expenses of operating the building. These expenses are referred to as the maintenance charges. The amount of these charges paid by the owner of each individual apartment is based upon the number of shares in the corporation allocated to the apartment. Maintenance charges will be increased periodically if taxes rise, if the costs of financing or services required to maintain the building increase, or if the tenant-shareholders decide to increase the level of services or to make major repairs. The purchaser of a co-op apartment often obtains a loan to finance the purchase of the shares allocated to the apartment, pledging the shares of stock and proprietary lease as security for the loan. Payments on such a loan, plus the monthly maintenance charges paid to the cooperative, constitute the owner's total carrying costs for the apartment. Owning a cooperative apartment may provide tax advantages similar to those enjoyed by owners of single family homes. If the requirements of the federal tax laws are met, apartment buyers may be able to deduct the portion of their maintenance charges used to pay interest on the building's mortgage and the real estate taxes paid by the cooperative corporation. In addition, the interest (but not the principal) that an individual pays on a loan to finance the purchase of shares is deductible. The value of the deduction, however, is dependent upon each co-op owner's tax bracket. Each offering plan must explain these tax

deductions. The tax laws are complex and the Attorney General advises the purchaser to consult an attorney or accountant. The cooperative corporation that owns the apartment building is governed by a board of directors, elected by the owners of the shares of the corporation. The board's powers and responsibilities are spelled out in a detailed set of by-laws, a copy of which must be included in the offering plan. The rights and obligations of individual apartment owners are also explained in the by-laws of the corporation and in the proprietary lease. For example, most co-ops restrict the rights of tenant-shareholders to sell or lease their apartments, requiring other cooperators to approve a new building resident. Many cooperative corporations hire managing agents to operate the buildings. The managing agent collects maintenance charges from residents, supervises employees of the corporation, and receives a fee from the corporation for performing these services.

Condominiums When a building is converted to condominium ownership, the purchaser buys an apartment. At the same time, the purchaser, together with the other unit owners, buy an "undivided interest" in the common elements of the building or development. Common elements generally include the land on which the building stands, the lobby, public halls, driveways, access roads and parking areas; and the electrical, mechanical, heating and air conditioning systems that service the building. Rather than owning shares in a cooperative corporation, condominium buyers own their individual units outright and receive deeds for them. Each of the unit owners is responsible for paying a proportionate share of the building's fuel costs, building employee salaries, and other expenses of operation. These costs are known as common charges. Additionally, each condominium owner pays real estate taxes, separately assessed against each unit, and the cost of any mortgage obtained to finance the original purchase. The condominium owner may deduct these tax payments and the payments of interest (but not principal) on the mortgage, from taxable income. The condominium is governed by a board of managers elected by the unit owners. The board's authority to operate the building is explained in detail in the condominium declaration and by-laws, a copy of which is included in the offering plan. These provide rules and procedures for conducting the affairs of the condominium, and define the rights and obligations of unit owners. For example, the by-laws may restrict the right of unit owners to make certain kinds of alterations to their units or to lease or mortgage them.

Homeowners' Associations A homeowners' association owns and operates the areas and facilities common to a group of single family homes, condominiums, cooperatives or any combination of the three. Membership in a homeowners' association entitles the unit owner to the use of recreational facilities, roads, parks and similar amenities in a development. It also obligates the homeowners to pay for the maintenance of these facilities and for necessary services such as snow removal or road repairs. Many new townhouse and condominium developments form homeowners' associations to facilitate unified planning and operation. The rights and obligations of the homeowners, and the budget of the association, must be included in the offering plan. Membership fees in these associations are not tax-deductible.

Section 2 Basic New York Laws

Different laws apply in various parts of New York State to the conversion of rental apartment buildings to cooperatives and condominiums. The laws' basic provisions are summarized here, and they are explained in detail in Section 4.

The Martin Act The Martin Act (Article 23-A of the General Business Law) applies to the sale of all types of cooperatively owned real estate. The sale of co-op shares, condo units, or interests in homeowners' associations is subject to the Martin Act, as is the sale of other securities, such as stocks and bonds. The law requires that a complete description of these kinds of real estate interests be fully disclosed in an offering plan. No advertising or sales may take place unless the offering plan or prospectus, containing all the detailed information necessary for a purchaser to make a reasoned judgement about the decision to buy or not to buy, has been accepted for filing by the Attorney General.

The Cooperative and Condominium Conversion Act The Cooperative and Condominium Conversion Act, also part of the General Business Law, specifically regulates the conversion of existing rental buildings to cooperative forms of ownership. One section (352-eeee) governs the conversion of residential apartment buildings in New York City. A second (352-eee) applies to those cities, towns and villages in the counties of Nassau, Rockland and Westchester that have passed resolutions adopting the coverage of the law. A third (352-e(2a)) protects senior citizens and disabled tenants in the municipalities throughout the state that have adopted the law. These laws provide specific protection for tenants living in buildings undergoing conversion, and require that offering plans include explanations of the rights and obligations of both purchasers and non-purchasers. These protections are explained further in Section 3.

The Rent Stabilization Law and Code and The Rent Control Law The Rent Stabilization Law and Code and the Rent Control Law offer additional protection for New York City tenants living in rent-stabilized and rent-controlled apartments undergoing conversion.

The Emergency Tenant Protection Act and The Emergency Housing Rent Control Law The Emergency Tenant Protection Act (ETPA) and the Emergency Housing Rent Control Law (EHRC) provide certain rights to tenants living in buildings outside New York City that are covered by these laws.

The Condominium Act The Condominium Act details requirements for condominiums throughout the state (Article 9B of the Real Property Law).

Section 3 The Conversion Process Step By Step Questions & Answers

Proposed Offering Plans or Red Herrings
What is a red herring? Before owners or sponsors may convert a rental apartment building, they must present an offering plan to each tenant and to the Attorney General. This plan is only a preliminary prospectus of the proposed conversion. It is referred to as a red herring because the legend on its cover must be printed in bold red lettering. Can an apartment be sold on the basis of the red herring? No. As the red legend indicates, the information contained in the red herring is subject to review and may be supplemented or changed as determined by the Attorney General. The sponsor may also change the terms of the red herring. Until the review is completed, and the final version of the plan is accepted for filing, no sales or advertisements are permitted. What exactly is the role of the Attorney General in the conversion process? In New York, interests in a cooperative, condominium or homeowners' association may not be sold, or even offered for sale, until an offering plan -- disclosing all the material facts and complying with all of the laws -- has been submitted to, and accepted for filing by the Attorney General. Before accepting a plan for filing, the Attorney General's office reviews the offering plan and supporting documents submitted by the sponsor to determine whether the sponsor has complied with tenant protection laws and whether the plan appears to disclose all of the information required by the laws and regulations issued by the Attorney General. By accepting a plan for filing, the Attorney General is indicating only that the sponsor appears to have complied with the law. Responsibility for full compliance lies with the sponsor. Acceptance does not constitute a value judgment on the plan. It does not mean the Attorney General has approved the financial terms, the price, the description of the building's condition or any other aspect of the plan.

Is it wise for tenants to begin their independent evaluation of the property as soon as the red herring is submitted? Yes. The review period gives tenants an opportunity to gather information to help them make well-informed decisions about buying their apartment. Tenants often organize themselves and hire professionals, such as attorneys and engineers, to help them evaluate the plan and assess the condition of the building. Tenants in New York City and the three suburban counties of Nassau, Rockland and Westchester must be informed by the sponsor of their right to have the building inspected by registered architects or professional engineers at any time after a red herring is submitted to the Attorney General. The inspection must be made during normal business hours, upon written request to the sponsor. Since the Attorney General's office cannot investigate all of the information contained in each plan, tenants or their attorney should notify the Attorney General of important facts they believe may have been omitted from the plan. If there are significant differences between the information submitted by the sponsor and that submitted by the tenants, the Attorney General may require a further investigation. After the red herring is submitted, how long does it take the Attorney General to accept a plan for filing? When the Attorney General's office determines that all of the material facts concerning the building appear to have been adequately disclosed, and makes all the findings required by law, the offering plan is accepted for filing. In the case of buildings occupied entirely or partly for residential purposes, the Attorney General may not accept the plan in less than four months after its submission. In no more than six months, the sponsor must by law be informed that the plan is either accepted for filing or is deficient and must be modified.

Eviction and Non-Eviction Plans

How is the type of conversion plan determined? The sponsor may choose to convert the building under either an eviction plan or noneviction plan. A sponsor who presents the tenants with an eviction plan may subsequently change it, by amendment, to a non-eviction plan. Such a change might occur, for example, if the number of tenants who agree to purchase their apartments is below the minimum required to put an eviction plan into effect. However, a plan which is initially presented as a non-eviction plan may not be changed to an eviction plan.

What is an eviction plan and what rights does it provide? Under an eviction plan, a non-purchasing tenant may be evicted from an apartment by the purchaser or the sponsor after a certain period of time. However, the conditions governing an eviction plan differ according to the location of the building and laws and regulations in effect in that community. For more specific information about your rights under an eviction plan, see Section 4 for the applicable guidelines. What is a non-eviction plan? May I be evicted if I choose not to purchase my apartment? Under a non-eviction plan, non-purchasing tenants may not be evicted for failure to buy their apartments; they may continue to occupy them as rental tenants. For more specific information about your rights under a non-eviction plan, see Section 4 for the applicable guidelines.

Senior Citizens and Disabled Persons

What are the rights of senior citizens? Senior citizens in New York City; in the Nassau, Rockland and Westchester County municipalities that have adopted the conversion laws; and in municipalities elsewhere in the state that have adopted the senior citizen and disabled tenant protection law, are protected against eviction if they choose not to purchase their apartments. However, to be eligible for this protection, a senior citizen, or his or her spouse, must be renting an apartment in New York City, or in an upstate municipality that has adopted the law, and must be at least 62 years old on the date the plan is accepted for filing by the Attorney General. In the three suburban counties, the tenant must be at least 62 on the date the plan is declared effective. How is this protection for senior citizens secured? In New York City and upstate municipalities, the senior citizen must complete a special exemption form and submit it to the sponsor or the sponsor's representative (not to the Attorney General) within 60 days of having received the final offering plan. A blank exemption form must be contained in the copies of the plan distributed to tenants by the sponsor. Protection against eviction is automatic for those senior citizens in municipalities in Nassau, Rockland, and Westchester counties who are 62 years old on the date the plan is declared effective. They need not submit an exemption form; however, they are strongly advised to submit one to ensure that the sponsor knows they are protected against eviction. To find out whether your city, town or village has adopted the statute, see the list on pages 21 and 22, or call your local government office or the Attorney General's Real Estate Finance Bureau Public Information Office, (212) 416-8121.

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If senior citizens elect exemption, may they later purchase their apartments? Yes. Eligible senior citizens may change their minds and become purchasers. They can purchase at the price offered to other tenants in the building at the time they inform the sponsor of their decision to buy. What are the rights of eligible senior citizens who decide to stay in their apartments as non-purchasing tenants? As a person exempt from eviction, a senior citizen may stay in the apartment after the building is converted, as long as rent is paid and other obligations are met. The apartment may be sold, in which case the buyer becomes the senior citizen's new landlord. All of the responsibilities of the previous landlord to repair and paint the apartment become the responsibility of the new owner. If the apartment was covered by rent control, rent stabilization or ETPA before the conversion, that law continues to apply after the conversion. Are there special protections for disabled persons? Yes. To be eligible for protection against eviction, a disable person must satisfy all four of the following conditions as of the date the offering plan is accepted for filing by the Attorney General: 1. The tenant or spouse must have an impairment which results from anatomical, physiological or psychological conditions, other than addiction to alcohol, gambling or any controlled substance, which is demonstrable by medically acceptable clinical and laboratory diagnostic techniques; and 2. The impairment must be expected to be permanent; and

3. The impairment must prevent the tenant from engaging in any substantial gainful employment; and 4. The tenant or spouse must elect not to purchase the apartment by completing a special form distributed by the sponsor in the final offering plan. The completed form must be given to the sponsor or the sponsor's representative within 60 days of the date the accepted plan was presented to the tenants. Tenants who first become disabled after the plan is accepted for filing may still qualify as eligible disabled persons, subject to certain legal conditions. They must complete the appropriate forms within 60 days following the onset of the disability. Consult your attorney or the Public Information Office of the Real Estate Finance Bureau if you have questions about these conditions.

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What are the rights of eligible disabled persons to buy their apartments at a later date? What are their rights as non-purchasing tenants? They are similar to the rights described for eligible senior citizens. Is there any procedure for the sponsor to dispute the eligibility of a senior citizen or disabled person? Yes. Within 30 days of having received an exemption form, a sponsor must inform the Attorney General that he or she disputes the eligibility of a person claiming senior citizen or disabled status. After reviewing all of the relevant documentation, the Attorney General will issue a determination as to the eligibility of the individual in question.

The Final Offering Plan or Black Book

What is a black book? A black book is a final offering plan for a co-op or condo that has been accepted for filing by the Attorney General's office. In place of the red legend that appeared on the cover of the red herring, this plan will have a statement in black lettering indicating that the plan constitutes the sponsor's offer to sell co-op or condo units on the terms and conditions set forth in the plan. How will I know that the plan has been accepted for filing? You will receive a copy of the black book from the sponsor. The date of the Attorney General's acceptance of the plan for filing will be shown on the cover. Does acceptance of the plan by the Attorney General automatically mean that the building will be converted? No. A specified number of apartments must be purchased before the plan can be declared effective and the building actually converted. The laws in effect in the particular area of the state where the building is located must be explained in the offering plan. See Section 4 for details. The sponsor may also choose to abandon the offering plan and continue to operate the building as a rental property. Do the tenants living in the building have any special rights to buy their apartments? Yes. the conversion laws in New York City and Nassau, Rockland and Westchester Counties, and the Attorney General's regulations give tenants the exclusive right to buy their apartments for a certain period of time after the black book is presented to them. For 90 days from the date the black book is presented to them, tenants who were in occupancy on the date the offering plan was accepted for filing, including rent-controlled and rent-stabilized tenants, have the exclusive right to purchase their apartments or the

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corresponding shares. During this 90-day period, the tenant's apartment may not be shown to a prospective buyer unless the tenant has, in writing, waived the right to purchase. For six months following the expiration of the 90-day exclusive purchase period, tenants facing eviction plans in New York City, as well as Nassau, Rockland and Westchester Counties may still purchase their apartments, but they must be willing to do so on the same terms as non-tenants. Sponsors who sell an apartment to an outside purchaser during this six-month period must notify the tenant that a contract has been signed for its sale; the tenant then has 15 days to match the terms of the contract and purchase the apartment. Tenants of apartments covered by the state rent control law also have the right to match an outside offer for purchase of their apartments. If the minimum number of subscription agreements is signed before the end of the 90-day exclusive buying period, do the remaining tenants still have until the end of the period to buy? Yes. Can the exclusive buying period, during which tenants may purchase their own apartments, be extended? Yes. The addition of a "substantial" amendment to the plan (such as an increase in the reserve fund or a decrease in the mortgage, or a change from an eviction plan to a noneviction plan) requires that the original exclusive buying period be extended for another 30 days. The 30-day amendment will never cut short the original exclusive buying period; it will serve only to extend it. If the amendment is presented after the 90-day period has expired, tenants are given an additional 30-day exclusive period. If a sponsor in New York City, or in electing localities of Nassau, Rockland and Westchester Counties substitutes a non-eviction plan for an eviction plan, any tenant who purchased under the original eviction plan has 30 days from the date the amended plan is received in which to rescind the purchase agreement. Tenants elsewhere in the state have at least 15 days to rescind. How can I find out how many tenants have agreed to purchase their apartments? In New York City and areas covered by the conversion laws, the sponsor must post the percentage of tenants who have signed subscription agreements in a prominent place in the building. This must be done every 30 days until the plan is either declared effective or abandoned. This list must also be filed with the Attorney General. However, no posting is required in buildings located in areas not covered by the conversion laws. See Section 4.

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What is the status of vacant apartments in a building undergoing conversion? Apartments unsold at the time a plan is declared effective remain the property of the sponsor, who may sell them for whatever the market will bear. Because the law specifies that the conversion plan may only be declared effective after a specified percentage of the tenants of occupied apartments have agreed to purchase, the owner of a building who contemplates submitting a plan for its conversion to co-op or condo ownership might have some incentive to discourage renting vacant apartments. In New York City, Nassau, Rockland and Westchester Counties, this practice, called "warehousing", is restricted; a conversion plan may be rejected by the Attorney General if he finds that excessive warehousing has occurred. Specifically, if the Attorney General determines that during the five months immediately preceding submission of the red herring, the number of vacant apartments has exceeded 10% of the total number of rental units in the building, and if that rate is more than double the "normal" average vacancy rate for the previous two calendar years the plan will not be accepted for filing. Apartments that first become vacant after the red herring is submitted are not considered "warehoused" units. What are the protections against harassment? The conversion laws in New York City and Nassau, Rockland and Westchester Counties specifically prohibit any person from interrupting, discontinuing or interfering with any essential service which substantially disturbs the comfort or peace and quiet of any tenant who uses or occupies an apartment. The tenant, or the Attorney General, may take legal action to stop harassment.

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Section 4 Tenants' Rights

New York City
Eviction Plan For an eviction plan to be declared effective, 51% of the bona fide tenants in occupancy (excluding from the calculation eligible senior citizen and disabled tenants) of all the dwelling units on the date the Attorney General accepts the offering plan for filing (the "acceptance date") must sign written purchase agreements. The percentage of tenants of rent-controlled apartments who purchase is not computed separately to determine if an eviction plan may be declared effective. The terms of the offering must be stated in good faith without fraud and with no discriminatory repurchase agreement or other discriminatory inducement. If the sponsor does not obtain the required percentage of purchase agreements within 15 months from the acceptance date, the conversion plan is considered abandoned, and no new conversion plan may be submitted to the Attorney General for at least one year.

Bona Fide Tenants The sponsor or a principal of the sponsor who purchases an apartment will not be counted toward the 51% needed to declare the plan effective. A sponsor's or selling agent's relative by blood, marriage or adoption; an employee, shareholder, limited partner or business associate of the sponsor or the selling agent; or the selling agent will not be counted toward the 51% unless the sponsor can prove that they are bona fide tenants of the building.

Protected Occupancy for Non-Purchasers Non-purchasing tenants may not be evicted for a minimum of three years from the date an eviction plan is declared effective. Eligible senior citizen and disabled tenants may not be evicted at any time unless they breach their leases. Rent-stabilized tenants whose leases expire less than three years after the date the plan is declared effective are entitled to renewals, subject to rent increases authorized by the Rent Stabilization Law, extending the

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lease to the end of the full three-year period. Rent-stabilized tenants whose leases already extend beyond three-year period may not be evicted until their leases expire.

Rights of Non-Purchasing Tenants The building's management must provide all services and facilities required by law to purchasing and non-purchasing tenants on a non-discriminatory basis. The sponsor is responsible for seeing that these services are provided until the co-op or condominium unit owners assume control of the board of directors or board of managers. Apartments subject to government regulation continue to be covered by those laws until the tenant moves out or until government regulation of the apartment ends. However, even in the case of apartments that are not subject to government regulation, owners may not charge unconscionable rents, that is, charge beyond ordinary rentals for comparable apartments. Complaints about unconscionable rents should be made in writing to the Real Estate Financing Bureau of the Attorney General's office. Non-purchasing tenants may be subject to eviction 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 obligations under the rental agreement. However, the apartment's owner may not evict a non-purchasing tenant merely because the owner or the owner's family wishes to occupy the apartment.

Non-Eviction Plans For a non-eviction plan to be declared effective, at least 15% of the dwelling units must be sold to bona fide tenants or non-tenant purchasers who intend, or whose family members intend, to live in the unit. The percentage may include sales of vacant and occupied apartments. However, an outside purchaser of an occupied apartment may not evict the tenant living in the apartment. The tenant may continue in occupancy as a rent-stabilized or rent-controlled tenant, paying rent to the outside purchaser or the sponsor, who must provide all the services required under applicable laws.

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Tenants' Rights
Nassau, Rockland and Westchester Counties
Tenants living in apartments subject to the state rent program should read this section together with the discussion in the following section.

Cities, towns and villages in Nassau, Rockland and Westchester Counties are permitted by law to adopt General Business Law Section 352-eee. (See Section 2, page 6.) A list of the municipalities that have adopted the law is on pages 21 and 22, and an updated list is maintained by the Attorney General's Real Estate Financing Bureau. Municipalities in these three counties also have the option of adopting the Emergency Tenant Protection Act (ETPA), the suburban rent-stabilization program. A list of these communities is on pages 22 and 23. The state rent control program is in effect in a small number of municipalities in the three suburban counties, and other communities have adopted the special senior citizen and disabled tenant protection law. This section is applicable only to those cities, towns and villages in Nassau, Rockland and Westchester Counties that have adopted General Business Law Section 352-eee. Rent-controlled tenants should also see the next section. For a discussion of the rights of tenants living in suburban municipalities that have not adopted Section 352-eee, see pages 19 through 21.

Eviction Plans For an eviction plan to be declared effective, the sponsor must have obtained signed purchase agreements from: (1) 51% of the bond fide tenants in occupancy on the acceptance date, excluding from the percentage calculation the apartments of eligible senior citizen and disabled tenants; and (2) 35% of the bona fide tenants in occupancy on the acceptance date, including the apartments of eligible senior citizen and disabled tenants. The terms of the offering must be set forth in good faith, and fraud, discriminatory repurchase agreements, and other discriminatory inducements are prohibited. If the

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sponsor fails to obtain the required percentage of purchase agreements within one year from the acceptance date, the plan is considered abandoned, and no new conversion plan may be submitted to the Attorney General for at least 15 months.

Bona Fide Tenants The sponsor or a principal of the sponsor who purchases an apartment will not be counted toward the percentages needed to declare the plan effective. A sponsor's or selling agent's relative by blood, marriage or adoption; an employee, shareholder, limited partner or business associate of the sponsor or the selling agent; or the selling agent will not be counted towards those percentages unless the sponsor can prove that they are bona fide tenants of the building.

Protected Occupancy For Non-Purchasers Non-purchasing tenants may not be evicted for a minimum of three years from the date a eviction plan is declared effective. Eligible senior citizens and disabled persons may not be evicted any time unless they breach their leases. The tenant of an apartment covered by ETPA, and for which the lease expires less than three years after the effective date of the plan, is entitled to a renewal extending the lease, subject to ETPA. Thereafter, the tenant may be evicted upon 90-days notice by a purchaser who seeks the apartment for personal or family use. Rent-controlled tenants should see page 20. The tenant of a non-ETPA apartment is not entitled to a renewal lease, but may not be evicted before the end of the three-year period. So long as the tenant remains in the apartment the rent may not be increased unconscionably.

Rights of Non-Purchasing Tenants The building management must provide all services and facilities required by law to purchasing and non-purchasing tenants on a non-discriminatory basis. The sponsor is responsible for seeing that these services are provided until the co-op or condominium unit owners assume control of the board of directors or board of managers.

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Apartments subject to government regulation continue to be covered by those laws until the tenant moves out or until government regulation of the apartment ends. However, even in the case of apartments not subject to government regulation, owners may not charge unconscionable rents, that is, rent beyond ordinary rentals for comparable apartments. Non-purchasing tenants may be subject to eviction 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 obligations under the rental agreement. However, the apartment's owner may not evict a non-purchasing tenant merely because the owner or the owner's family wishes to occupy the apartment.

Non-Eviction Plans For a non-eviction plan to be declared effective, at least 15% of the bona fide tenants in occupancy must sign written purchase agreements. The calculation of the percentage may include tenants who move into the building after the black book is presented. Non-purchasing tenants who choose not to buy may not be evicted for that reason. They may continue in occupancy as rent-controlled or ETPA tenants.

Tenants' Rights
Municipalities in Upstate New York, And Nassau, Rockland, Suffolk and Westchester Counties That Have Not Adopted General Business Law Section 352-eee.
Several complex and overlapping laws and regulations govern the rights of tenants in areas of New York State not covered by General Business Law Section 352-eee or Section 352eeee. This discussion explains the rights of tenants (1) living in apartments in Nassau, Rockland and Westchester County communities that have adopted the Emergency Tenant Protection (ETPA) but have not adopted Section 352-eee; (2) tenants living in apartments covered by the state rent control program; and (3) tenants living in municipalities that have adopted the law protecting senior citizens and disabled tenants.

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Eviction Plans

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Before an eviction plan may be declared effective, the sponsor must have obtained signed purchase agreements for at least 15% if the units in the building from bona fide tenants, or from purchasers who intend, or whose families intend, to occupy the building. If the sponsor has failed to obtain purchase agreements for the requisite number of rent-controlled tenants within six months after the date the black book has been presented, the plan is considered abandoned with respect to the rent-controlled apartments in the building, and those tenants may continue in occupancy indefinitely. During the first 90 days after the plan is presented, tenants have an exclusive right to purchase their apartments. If the plan is declared effective, rent-controlled tenants have an additional 30-day period during which they have the exclusive right to purchase their apartments under the original terms. There is no time limit for obtaining the required number of purchase agreements for apartments not covered by rent control.

Rights of Possession Under An Eviction Plan Generally, non-purchasing tenants may not be evicted from their apartments before the expiration of their leases or rental agreements. However, an ETPA tenant's lease may contain a clause permitting its termination by the purchaser of the apartment, once the plan has been declared effective on 90-days notice.

Rights of Senior Citizens and Disabled Tenants Some senior citizens and disabled tenants are entitled to greater protections than other nonpurchasing tenants faced with eviction plans. If a city, town or village adopts the law that became effective on July 29, 1983, tenants 62 years of age or older and disabled tenants who do not purchase their apartments may not be evicted for that reason. They may remain in their apartments as long as they do not breach their leases. A list of the municipalities that have adopted the law is on page 21-23, and an updated list is maintained by the Attorney General's Real Estate Financing Bureau. Tenants who wish to claim the protection of the law should follow the procedures described in the offering plan.

Non-Eviction Plans

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At least 15% of all units in the building must be sold to bona fide tenants or purchasers who intend that they or a family member will live in the apartment. Non-purchasing tenants may not be evicted, although their apartments or shares corresponding to their apartments may be sold. Tenants whose apartments are subject to ETPA or rent control may continue in occupancy as ETPA or rent-controlled tenants, paying rent to the purchaser of the apartment. Tenants whose apartments are not rent regulated may remain in their apartments, and they may not be charged unconscionable rents.

Municipalities in Nassau, Rockland and Westchester Counties 22

That Have Adopted General Business Law Section 352-eee as of December 2007. Nassau County Village of Baxter Estates Village of Cedarhurst Inc. Village of Farmingdale Inc. Village of Floral Park Inc. Village of Freeport City of Glen Cove Village of Great Neck Village of Great Neck Estates Inc. Village of Great Neck Plaza Town of Hempstead Village of Hempstead Village of Lawrence City of Long Beach Inc. Village of Lynbrook Village of Manorhaven Village of Mount Kisco Town of North Hempstead Town of Oyster Bay Inc. Village of Port Washington Village of Rockville Centre Inc. Village of Roslyn Inc. Village of Russell Gardens Village of Thomaston Village of Valley Stream Village of Westbury Inc. Village of Woodburgh Westchester County Town of Bedford Village of Briarcliff Manor Village of Bronxville Inc. Village of Croton-on-Hudson Inc. Village of Dobbs Ferry Town of Eastchester Town of Greenburgh Town of Harrison Village of Hastings-On-Hudson Inc. Village of Irvington Village of Larchmont Town of Lewisboro Town of Mamaroneck Village of Mamaroneck Village of Mineola City of Mount Vernon City of New Rochelle Inc. Village of North Tarrytown Inc. Village of Ossining City of Peekskill Village of Pelham Village of Pelham Manor Inc. Village of Pleasantville Inc. Village of Port Chester City of Rye Village of Scarsdale Inc. Village of Tarrytown Inc. Village of Tuckahoe City of White Plains City of Yonkers Town of Yorktown

Rockland County Town of Haverstraw Inc. Village of Nyack Town of Orangetown Inc. Village of South Nyack Village of Spring Valley Village of Suffern Inc. Village of West Haverstraw

23

Municipalities In Nassau, Rockland, and Westchester Counties That Have Adopted Emergency Tenant Protection Act of 1974 as of December 2007. (Unless otherwise noted, ETPA is applicable in buildings of six or more units.)

Nassau County City of Glen Cove (100 or more) City of Long Beach (60 or more) Town of North Hempstead Town of Oyster Bay Village of Baxter Estates Village of Bellerose Village of Cedarhurst Village of Floral Park Village of Freeport Village of Great Neck Village of Great Neck Plaza Village of Hempstead Village of Lynbrook Village of Mineola Village of New Hyde Park Village of Rockville Centre Village of Russell Gardens Village of Sea Cliff Village of Thomaston Village of Valley Stream Village of Westbury Village of Williston Park

Westchester County City of Mount Vernon City of New Rochelle City of White Plains City of Yonkers Town of Eastchester Town of Greenburgh Town of Harrison Town of Mamaroneck Village of Ardsley Village of Dobbs Ferry Village of Hastings-on-Hudson Village of Irvington (20 or more) Village of Larchmont Village of Mamaroneck Village of Mt. Kisco (16 or more) Village of North Tarrytown Village of Pleasantville (20 or more) Village of Port Chester (12 or more) Village of Tarrytown Village of Tuckahoe

Rockland County Town of Haverstraw Village of Spring Valley

NOTE: PLEASE CONFIRM WITH YOUR COUNTY, CITY, TOWN OR VILLAGE FOR UPDATE.

24

Glossary
Acceptance For Filing: The formal act by which the Attorney General authorizes the public offering of interests in a plan for a cooperative, condominium or homeowners' association. Black Book: The offering plan accepted for filing by the Attorney General and used by the sponsor as the sales document for a cooperative, condominium or homeowner's association. By-laws: The framework of rules and regulations adopted by a cooperative corporation or condominium board of managers which governs the meetings and internal operations of the board of directors or managers. Closing Date: In a condominium, the date on which title to property passes from the seller to the buyer. In the case of most cooperatives, the date on which title passes from the sponsor to the cooperative corporation, and also the approximate date the shares are issued to the individual purchasers. Condominium Declaration: The document which legally establishes a condominium. The declaration, together with the by-laws, contains conditions, covenants and restrictions governing the sale, ownership, use and disposition of property within the framework of the New York State Condominium Act. Declaring the Plan Effective: The sponsor's statement that subscription agreements for at least the required number of apartments have been obtained to permit the building's conversion. An amendment disclosing or confirming the effectiveness of the plan must be accepted for filing by the Attorney General and presented to the tenants before any closing may occur. Eviction Plan: A plan for the conversion of residential property to cooperative or condominium ownership which provides that non-purchasing tenants will be subject to eviction after the expiration of specific time periods set by law. Maintenance Charges: Monthly payments made by tenant-shareholders in a cooperative corporation for the expenses of operating the building, including real estate taxes, mortgage payments, fuel and building employee salaries.

25

Glossary (continued)
Non-Eviction Plan: A plan for the conversion of a residential property to a cooperative or condominium ownership which provides that tenants may not be evicted for failure to buy their apartments. Presentation of the Plan: The date on which the final offering plan or black book is given to the tenants by the sponsor. Proprietary Lease: The agreement between a cooperative tenant-shareholder and the cooperative corporation which defines the rights and obligations of each party regarding use and occupancy of the cooperative apartment. Red Herring: The proposed (or preliminary) offering plan of cooperative or condominium ownership which is submitted by the sponsor to the Attorney General and to tenants, and which is subject to modification. Reserve or Working Capital Fund: A fund set aside by the sponsor from the purchase price of the property for use by the cooperative corporation or condominium for future capital improvements or expenses. Sponsor: The individual, partnership, corporation or other legal entity that offers to sell interests in a cooperative, condominium, timeshare or homeowners' association. Subscription Agreement or Purchase Agreement: The contract which constitutes the agreement by a purchaser to buy shares of stock in a cooperative corporation or a condominium unit. December 1999

February 2008

26

COOPERATIVE AND CONDOMINIUM CONVERSION HANDBOOK

State of New York Office of the Attorney General

Real Estate Finance Section 120 Broadway, 23rd floor New York, N.Y. 10271

(212) 416-8121
http://www.ag.ny.gov/realestate/realestate.html