Provides that a plan may not be declared effective for conversion to cooperative or condominium ownership until written purchase agreements have been executed and delivered for at least twenty-five percent of all dwelling units in the building or group of buildings and written consent has been obtained from the bona fide tenants who were in occupancy of fifty-one percent of the dwelling units in the building or group of buildings or development on the date a letter was issued by the attorney general accepting the plan for filing.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A5841
SPONSOR: Weprin TITLE OF BILL:
An act to amend the general business law, in relation to the conversion
of certain real property to cooperative or condominium ownership in the
city of New York
PURPOSE OR GENERAL IDEA OF BILL:
This legislation would permit occupied buildings to convert to cooper-
ative or condominium ownership upon purchase agreements being executed
and delivered by twenty-five percent of the bona fide tenants in occu-
pancy and written consent obtained from fifty-one percent of bona fide
tenants in occupancy.
SUMMARY OF PROVISIONS:
Section 1: Amends section 352-eeee of the general business law by
providing that for a Non-eviction plan for an occupied building , a plan
may not be declared effective for conversion to cooperative or condomin-
ium ownership until written purchase agreements have been executed and
delivered for at least twenty-five percent of all dwelling units in the
building or group of buildings or development by bona fide tenants in
occupancy on the date a letter was issued by the attorney general
accepting the plan for filing and written consent obtained by the bona
fide tenants in occupancy of fifty-percent of the dwelling units in the
building or group of buildings or development on the date a letter was
issued by the attorney general accepting the plan for filing.
Section 2: Amends section 352-eeee of the general business law by
providing that for a Non-eviction plan for an occupied building, the
offering plan may not be declared effective until written purchase
agreements have been executed and delivered for at least twenty-five
percent of all dwelling units in the building or group of buildings or
development by bona fide tenants in occupancy on the date a letter was
issued by the attorney general accepting the plan for filing and written
consent obtained by the bona fide tenants in occupancy of fifty-one
percent to the dwelling units in the building or group of buildings or
development on the date a letter was issued by the attorney general
accepting the plan for filing.
Section 3: Provides an effective date.
JUSTIFICATION:
In June 2019, Section 352-eeee of the General Business Law was amended
to provide that in New York City, an occupied multi-family rental build-
ing could not be converted into a cooperative or condominium unless
fifty-one percent (51%) of the apartments were entered into contract by
tenants who were occupying the building at the time that the offering
plan was accepted.
Unfortunately, the amendment to the law has severely impacted the real
estate market in New York City with regard these buildings. There have
been no cooperative or condominium conversions in New York City since
the amendment of this law went into effect on June 16, 2019 because it
is virtually impossible to obtain purchase agreements from fifty-one
percent of the tenants in occupancy.
Previously, these conversions added a very important option to real
property ownership in New York City. These conversions would enable the
owner of a building to sell apartments to the tenants or the public, and
the tenants or the public would purchase these apartments. This created
an affordable home ownership option for purchasers since the prices for
these apartments would usually be significantly less than the prices for
single family homes. At the same time, tenants who purchased apartments
were able to stay in their homes that many were living in for many years
prior. This resulted in a win-win situation for all persons involved.
This legislation will reduce the amount of apartments required to have
entered into contract for a conversion from 51% to 25% of the tenants in
occupancy at the time that the plan is accepted provided that 51% of the
tenants in occupancy execute a consent to the conversion of the building
to a cooperative or condominium.
This will result and benefit to everyone involved: Tenants in occupancy
will be able to purchase their apartment at an affordable price; the
owners of the building, in contemplation of the sales, will improve the
conditions of the buildings to get more sales; and the conversion of
rental buildings to a cooperative or condominium building will increase
the property taxes and income, and the sales of the units will generate
transfer taxes which will benefit both New York City and New York State.
Amending the law has no detriment to tenants or owners. Since the law
would require written consent from tenants in occupancy of fifty-one
percent of the units, a majority of the tenants in the building would
have to approve this change before any sales could take place. In addi-
tion, at least twenty-five percent of the units in the condominium would
thereafter be owned by former tenants. These tenants would then have
more say over how the building is operating, as unit owners and the
building would be maintained at a higher level by the new owners.
PRIOR LEGISLATIVE HISTORY:
New Bill
FISCAL IMPLICATIONS:
The conversion of a rental building to a cooperative or condominium
building will increase the property taxes and income and the sales of
the units will generate transfer taxes which will both New York City and
New York State.
EFFECTIVE DATE:
This act shall take effect immediately.
