Bill Text: NY A05752 | 2009-2010 | General Assembly | Introduced
Bill Title: An act to amend the general business law, in relation to the physical condition of a building being converted to cooperative or condominium ownership, to ensure the financial solvency of cooperative apartment corporations, to amend provisions relating to non-eviction plans and to provide for the election of shareholders
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2010-01-06 - referred to housing [A05752 Detail]
Download: New_York-2009-A05752-Introduced.html
S T A T E O F N E W Y O R K
________________________________________________________________________
5752
2009-2010 Regular Sessions
I N A S S E M B L Y
February 19, 2009
___________
Introduced by M. of A. V. LOPEZ -- read once and referred to the Commit-
tee on Housing
AN ACT to amend the general business law, in relation to the physical
condition of a building being converted to cooperative or condominium
ownership, to ensure the financial solvency of cooperative apartment
corporations, to amend provisions relating to non-eviction plans and
to provide for the election of shareholders
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
1 Section 1. Paragraph (a) of subdivision 1 of section 352-e of the
2 general business law, as amended by chapter 1085 of the laws of 1968, is
3 amended to read as follows:
4 (a) It shall be illegal and prohibited for any person, partnership,
5 corporation, company, trust or association, or any agent or employee
6 thereof, to make or take part in a public offering or sale in or from
7 the state of New York of securities constituted of participation inter-
8 ests or investments in real estate, mortgages or leases, including
9 stocks, bonds, debentures, evidences of interest or indebtedness, limit-
10 ed partnership interests or other security or securities as defined in
11 section three hundred fifty-two of this article, when such securities
12 consist primarily of participation interests or investments in one or
13 more real estate ventures, including cooperative interests in realty,
14 unless and until there shall have been filed with the department of law,
15 prior to such offering, a written statement or statements, to be known
16 as an "offering statement" or "prospectus" concerning the contemplated
17 offering which shall contain the information and representations
18 required by [paragraph] PARAGRAPHS (b) AND (D) of this subdivision
19 unless the security offering is exempted hereunder or under SUBDIVISION
20 TWO OF section three hundred fifty-nine-f[, subdivision two,] of this
21 article by rule or action of the attorney general. The term "real
22 estate" as used in [the] THIS paragraph shall not include mineral, oil
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD08854-01-9
A. 5752 2
1 or timber leases or properties, or buildings, structures, land or other
2 realty housing or containing business offices or industry, owned or
3 leased by the issuer, where the issuer is not primarily engaged in the
4 business of buying and selling such building or other realty or leases
5 or interests therein. The circulation or dissemination of a non-firm
6 offer (including circulation or dissemination of a preliminary prospec-
7 tus pursuant to section ten (b) of the securities act of nineteen
8 hundred thirty-three, and the rules thereto appertaining) shall not
9 constitute making or taking part in a public offering within the meaning
10 of this section.
11 S 2. Subdivision 1 of section 352-e of the general business law is
12 amended by adding a new paragraph (d) to read as follows:
13 (D) THE PHYSICAL CONDITION OF A BUILDING BEING CONVERTED TO COOPER-
14 ATIVE OR CONDOMINIUM OWNERSHIP. THE OFFERING STATEMENT, REFERRED TO IN
15 SUBDIVISION (A) OF THIS SECTION, SHALL PROVIDE THAT THE SPONSOR OF A
16 PLAN TO CONVERT A BUILDING OR BUILDINGS TO COOPERATIVE OR CONDOMINIUM
17 OWNERSHIP SHALL CAUSE TO BE CURED (I) ALL SERIOUS VIOLATIONS OF RECORD
18 OF LOCAL OR STATE LAW OR REGULATIONS REGARDING CONDITIONS IN THE BUILD-
19 ING OR GROUNDS OF THE REAL PROPERTY WHICH IS THE SUBJECT OF THE OFFER-
20 ING, EXISTING ON THE DATE OF EFFECTIVENESS OF THE PLAN, EXCEPT THOSE
21 WHICH, IF NOT CORRECTED, WOULD NOT LEAD TO DANGEROUS OR HAZARDOUS CONDI-
22 TIONS, AS CERTIFIED BY A REGISTERED ARCHITECT OR PROFESSIONAL ENGINEER
23 RETAINED BY THE SPONSOR, AND (II) ALL DANGEROUS AND HAZARDOUS CONDITIONS
24 IN SUCH REAL PROPERTY EXISTING ON THE DATE OF EFFECTIVENESS OF THE PLAN
25 WHICH A REGISTERED ARCHITECT OR PROFESSIONAL ENGINEER RETAINED BY THE
26 SPONSOR CERTIFIES ARE NOT IN COMPLIANCE WITH APPLICABLE STATE OR LOCAL
27 LAWS OR REGULATIONS.
28 THE OFFERING PLAN MUST FURTHER PROVIDE THAT IF ANY SUCH VIOLATIONS OR
29 RECORD REFERRED TO IN SUBPARAGRAPH (I) OF THIS PARAGRAPH OR DANGEROUS OR
30 HAZARDOUS CONDITIONS REFERRED TO IN SUBPARAGRAPH (II) OF THIS PARAGRAPH
31 ARE NOT CORRECTED BY THE CLOSING DATE, THE SPONSOR SHALL PLACE IN ESCROW
32 A SUM OF MONEY WHICH IS CERTIFIED BY A REGISTERED ARCHITECT OR PROFES-
33 SIONAL ENGINEER RETAINED BY THE SPONSOR AS SUFFICIENT TO COVER THE
34 REMAINING COST OF CORRECTION. THE SPONSOR MAY EXPEND THE ESCROW MONEY TO
35 CURE SUCH VIOLATIONS OR DANGEROUS OR HAZARDOUS CONDITIONS. IN THE EVENT
36 THAT THE CORRECTIVE WORK IS NOT COMPLETED WITHIN ONE YEAR OF THE CLOSING
37 DATE, THE SUM IN ESCROW SHALL BE TURNED OVER TO THE COOPERATIVE CORPO-
38 RATION OR CONDOMINIUM BOARD OF MANAGERS AND USED TO COMPLETE THE WORK.
39 ANY ESCROW MONEY REMAINING AFTER ALL REQUIRED WORK IS COMPLETED SHALL BE
40 RETURNED TO THE SPONSOR. WHERE THE SPONSOR PLACES INTO A RESERVE FUND AN
41 AMOUNT IN EXCESS OF THAT REQUIRED BY STATE AND LOCAL LAW WHICH IS
42 SPECIFICALLY ALLOCATED AND ADEQUATE TO CURE SUCH PARTICULAR VIOLATION OF
43 RECORD OR DANGEROUS OR HAZARDOUS CONDITION, NO MONEY NEEDS TO BE PLACED
44 IN ESCROW FOR SUCH VIOLATION OR DANGEROUS OR HAZARDOUS CONDITION. IF THE
45 SUM IN ESCROW OR SPECIFICALLY ALLOCATED IN A RESERVE FUND IS NOT SUFFI-
46 CIENT TO CURE SUCH VIOLATIONS OF RECORD OR DANGEROUS OR HAZARDOUS CONDI-
47 TIONS THE SPONSOR SHALL REMAIN LIABLE TO CURE SUCH VIOLATIONS OR DANGER-
48 OUS OR HAZARDOUS CONDITIONS.
49 S 3. Section 352-k of the general business law is amended by adding a
50 new subdivision 1-a to read as follows:
51 1-A. EVERY BROKER-DEALER WHO IS ALSO AN OFFEROR OF PARTICIPATION
52 INTERESTS IN REAL ESTATE, AND WHO IS REQUIRED TO FILE AN OFFERING STATE-
53 MENT OR PROSPECTUS WITH THE DEPARTMENT OF LAW, PURSUANT TO SECTION THREE
54 HUNDRED FIFTY-TWO-E OF THIS ARTICLE, SHALL HAVE AND MAINTAIN A NET CAPI-
55 TAL, AS SUCH TERM IS DEFINED IN SUBDIVISION ONE OF THIS SECTION, EQUAL
56 TO NOT LESS THAN FIVE PERCENT OF THE TOTAL AMOUNT OF THE OFFERING FOR
A. 5752 3
1 EACH VENTURE FOR WHICH AN OFFERING STATEMENT IS FILED. AT LEAST
2 ONE-FIFTH OF SUCH NET CAPITAL SHALL BE IN THE FORM OF CASH EQUIVALENTS.
3 THE ATTORNEY GENERAL IS HEREBY AUTHORIZED AND EMPOWERED TO PROMULGATE
4 RULES AND REGULATIONS TO EFFECTUATE THE PROVISIONS OF THIS SUBDIVISION.
5 S 4. The general business law is amended by adding a new section 352-m
6 to read as follows:
7 S 352-M. CONVERSION TO COOPERATIVE CORPORATION; ESCROW REQUIRED.
8 EVERY OFFEROR OF PARTICIPATION INTERESTS IN REAL ESTATE, WHERE THE OFFER
9 CONSISTS OF COOPERATIVE INTERESTS IN RESIDENTIAL RENTAL PROPERTY BEING
10 CONVERTED TO A COOPERATIVE CORPORATION FORM OF OWNERSHIP SHALL BE
11 REQUIRED TO MAINTAIN FUNDS IN ESCROW TO SECURE PAYMENT OF ONGOING FINAN-
12 CIAL OBLIGATIONS AFTER THE CLOSING AT WHICH THE COOPERATIVE FORM OF
13 OWNERSHIP COMMENCES. WHERE THE OFFEROR HAS SOLD SHARES ALLOCATED TO MORE
14 THAN TWENTY-FIVE PERCENT OF THE UNITS OFFERED PRIOR TO OR CONCURRENTLY
15 WITH SUCH CLOSING, THE OFFEROR SHALL PLACE IN ESCROW AN AMOUNT EQUAL TO
16 NOT LESS THAN TWENTY-FOUR TIMES THE DIFFERENCE BETWEEN THE MONTHLY MAIN-
17 TENANCE DUE AND THE MONTHLY RENT DUE ON THE UNITS OF WHICH THE SPONSOR
18 IS THE PROPRIETARY LESSEE, WHERE THE TOTAL OF SUCH MAINTENANCE DUE
19 EXCEEDS THE TOTAL OF SUCH RENTS DUE. WHERE THE OFFEROR HAS SOLD FEWER
20 THAN TWENTY-FIVE PERCENT OF THE SHARES ALLOCATED TO UNITS OFFERED AT THE
21 TIME OF CLOSING, THE OFFEROR SHALL PLACE IN ESCROW AN AMOUNT EQUAL TO NO
22 LESS THAN THIRTY-SIX TIMES THE DIFFERENCE BETWEEN THE MONTHLY MAINTE-
23 NANCE AND THE MONTHLY RENT DUE ON THE UNITS OF WHICH THE SPONSOR IS THE
24 PROPRIETARY LESSEE, WHERE THE TOTAL OF SUCH MAINTENANCE DUE EXCEEDS THE
25 RENTS COLLECTIBLE. WHEN THE OFFEROR OBTAINS SALES OF SHARES ALLOCATED
26 TO UNITS TOTALING MORE THAN TWENTY-FIVE PERCENT OF THE UNITS, THE AMOUNT
27 IN ESCROW MAY BE REDUCED TO THE LOWER LEVEL SET FORTH ABOVE. THE AMOUNT
28 TO BE MAINTAINED IN ESCROW SHALL BE RECALCULATED ANNUALLY TO REFLECT THE
29 CURRENT SHORTFALL BETWEEN MAINTENANCE DUE AND RENT DUE ON THE UNITS OF
30 WHICH THE SPONSOR IS THE PROPRIETARY LESSEE. THE ATTORNEY GENERAL IS
31 HEREBY AUTHORIZED AND EMPOWERED TO PROMULGATE RULES AND REGULATIONS TO
32 EFFECTUATE THE PROVISIONS OF THIS SECTION.
33 S 5. Paragraph (a) of subdivision 7 of section 352-e of the general
34 business law, as amended by section 1 of part BBB-1 of chapter 57 of the
35 laws of 2008, is amended to read as follows:
36 (a) The department of law shall collect the following fees for the
37 filing of each offering statement or prospectus as described in subdivi-
38 sion one of this section: seven hundred fifty dollars for every offering
39 not in excess of two hundred fifty thousand dollars; for every offering
40 in excess of two hundred fifty thousand dollars, four-tenths of one
41 percent of the total amount of the offering but not in excess of thirty
42 thousand dollars of which one-half of said amount shall be a nonrefunda-
43 ble deposit paid at the time of submitting the offering statement to the
44 department of law for review and the balance payable upon the issuance
45 of a letter of acceptance for filing said offering statement. The
46 department of law shall, in addition, collect a fee of two hundred twen-
47 ty-five dollars for each amendment to an offering statement AND FOR EACH
48 STATEMENT FILED PURSUANT TO SUBDIVISION EIGHT-A OF THIS SECTION. For
49 each application granted by the department of law which permits the
50 applicant to solicit public interest or public funds preliminary to the
51 filing of an offering statement or for the issuance of a "no-filing
52 required" letter, the department of law shall collect a fee of two
53 hundred twenty-five dollars. In the event the sponsor thereafter files
54 an offering statement, the fee paid for the preliminary application
55 shall be credited against the balance of the fee due and payable on
56 filing. For each application granted pursuant to section three hundred
A. 5752 4
1 fifty-two-g of this article, the department of law shall collect a fee
2 of two-tenths of one percent of the amount of the offering of securi-
3 ties; however, the minimum fee shall be seven hundred fifty dollars and
4 the maximum fee shall be thirty thousand dollars. All revenue from that
5 portion of any fee imposed pursuant to this paragraph, which exceeds
6 twenty thousand dollars shall be paid by the department of law to the
7 state comptroller to be deposited in and credited to the real estate
8 finance bureau fund, established pursuant to section eighty of the state
9 finance law.
10 S 6. Section 352-e of the general business law is amended by adding a
11 new subdivision 8-a to read as follows:
12 8-A. EVERY OFFEROR OF PARTICIPATION INTERESTS IN REAL ESTATE, CONSIST-
13 ING OF SHARES AND CONCOMITANT UNITS IN A COOPERATIVE CORPORATION, WHICH
14 SHALL HAVE BEEN REQUIRED TO FILE AN OFFERING STATEMENT OR PROSPECTUS
15 UNDER SUBDIVISION ONE OF THIS SECTION SHALL FILE WITH THE DEPARTMENT OF
16 LAW AND SERVE ON ALL SHAREHOLDERS, A STATEMENT DESCRIBING THE OFFEROR'S
17 FINANCIAL OBLIGATIONS TO THE COOPERATIVE CORPORATION AND DISCLOSING THE
18 STATUS OF SUCH OBLIGATIONS. SUCH STATEMENT SHALL BE FILED AND SERVED
19 ANNUALLY, NO LATER THAN THREE MONTHS AFTER THE END OF THE COOPERATIVE
20 CORPORATION'S FISCAL YEAR. THE ATTORNEY GENERAL IS HEREBY AUTHORIZED AND
21 EMPOWERED TO PROMULGATE RULES AND REGULATIONS TO EFFECTUATE THE
22 PROVISIONS OF THIS SUBDIVISION.
23 S 7. Paragraph (b) of subdivision 1 of section 352-eee of the general
24 business law, as added by chapter 402 of the laws of 1983, is amended to
25 read as follows:
26 (b) "Non-eviction plan". A plan which may not be declared effective
27 until at least [fifteen] THIRTY-FIVE percent of those bona fide tenants
28 in occupancy of all dwelling units in the building or group of buildings
29 or development on the date the plan [is declared effective] WAS ACCEPTED
30 FOR FILING BY THE ATTORNEY GENERAL shall have executed and delivered
31 written agreements to purchase under the plan[. As to tenants who were
32 in occupancy on the date a letter was issued by the attorney general
33 accepting the plan for filing, the purchase agreement shall be executed
34 and delivered] pursuant to an offering made in good faith without fraud
35 and WITH NO discriminatory repurchase agreements or other discriminatory
36 inducements.
37 S 8. Subparagraph (i) of paragraph (c) of subdivision 2 of section
38 352-eee of the general business law, as added by chapter 402 of the laws
39 of 1983, is amended to read as follows:
40 (i) The plan may not be declared effective until at least [fifteen]
41 THIRTY-FIVE percent of those bona fide tenants in occupancy of all
42 dwelling units in the building or group of buildings or development on
43 the date the plan [is declared effective] WAS ACCEPTED FOR FILING BY THE
44 ATTORNEY GENERAL shall have executed and delivered written agreements to
45 purchase under the plan[. As to tenants who were in occupancy on the
46 date a letter was issued by the attorney general accepting the plan for
47 filing, the purchase agreement shall be executed and delivered] pursuant
48 to an offering made in good faith without fraud and WITH NO discrimina-
49 tory repurchase agreements or other discriminatory inducements.
50 S 9. Paragraph (c) of subdivision 2 of section 352-eee of the general
51 business law is amended by adding a new subparagraph (viii) to read as
52 follows:
53 (VIII) THE TENANTS IN OCCUPANCY ON THE DATE THE ATTORNEY GENERAL
54 ACCEPTS THE PLAN FOR FILING SHALL HAVE THE EXCLUSIVE RIGHT TO PURCHASE
55 THEIR DWELLING UNITS OR SHARES ALLOCATED THERETO FOR NINETY DAYS AFTER
56 THE PLAN IS ACCEPTED FOR FILING BY THE ATTORNEY GENERAL AND PRESENTED TO
A. 5752 5
1 THE TENANTS, DURING WHICH TIME A TENANT'S DWELLING UNIT SHALL NOT BE
2 SHOWN TO A THIRD PARTY UNLESS SUCH TENANT HAS, IN WRITING, WAIVED HIS OR
3 HER RIGHT TO PURCHASE; SUBSEQUENT TO THE EXPIRATION OF SUCH NINETY DAY
4 PERIOD, A TENANT IN OCCUPANCY OF A DWELLING UNIT WHO HAS NOT PURCHASED
5 SHALL BE GIVEN THE EXCLUSIVE RIGHT FOR AN ADDITIONAL PERIOD OF SIX
6 MONTHS FROM SUCH EXPIRATION DATE TO PURCHASE SUCH DWELLING UNIT OR THE
7 SHARES ALLOCATED THERETO ON THE SAME TERMS AND CONDITIONS AS ARE
8 CONTAINED IN AN EXECUTED CONTRACT TO PURCHASE, SUBJECT TO THE PROVISIONS
9 OF THIS PARAGRAPH, SUCH DWELLING UNIT OR SHARES ENTERED INTO BY A BONA
10 FIDE PURCHASER, SUCH EXCLUSIVE RIGHT TO BE EXERCISABLE WITHIN FIFTEEN
11 DAYS FROM THE DATE OF MAILING BY REGISTERED MAIL OF NOTICE OF THE
12 EXECUTION OF A CONTRACT OF SALE TOGETHER WITH A COPY OF SUCH EXECUTED
13 CONTRACT TO SUCH TENANT.
14 S 10. Paragraph (b) of subdivision 1 of section 352-eeee of the gener-
15 al business law, as added by chapter 555 of the laws of 1982, is amended
16 to read as follows:
17 (b) "Non-eviction plan". A plan which may not be declared effective
18 until written purchase agreements have been executed and delivered for
19 at least [fifteen] THIRTY-FIVE percent of THE BONA FIDE TENANTS IN OCCU-
20 PANCY OF all dwelling units in the building or group of buildings or
21 development [by bona fide tenants in occupancy or bona fide purchasers
22 who represent that they intend that they or one or more members of their
23 immediate family intend to occupy the unit when it becomes vacant. As to
24 tenants who were in occupancy on the date a letter was issued by the
25 attorney general accepting the plan for filing, the purchase agreement
26 shall be executed and delivered] ON THE DATE THE OFFERING STATEMENT OR
27 PROSPECTUS WAS ACCEPTED FOR FILING BY THE ATTORNEY GENERAL SHALL HAVE
28 EXECUTED AND DELIVERED WRITTEN AGREEMENTS TO PURCHASE UNDER THE PLAN
29 pursuant to an offering made in good faith without fraud and WITH NO
30 discriminatory repurchase agreements or other discriminatory induce-
31 ments.
32 S 11. Subparagraph (i) of paragraph (c) of subdivision 2 of section
33 352-eeee of the general business law, as added by chapter 555 of the
34 laws of 1982, is amended to read as follows:
35 (i) The plan may not be declared effective until written purchase
36 agreements have been executed and delivered for at least [fifteen] THIR-
37 TY-FIVE percent of THE BONA FIDE TENANTS IN OCCUPANCY OF all dwelling
38 units in the building or group of buildings or development [subscribed
39 for by bona fide tenants in occupancy or bona fide purchasers who repre-
40 sent that they intend that they or one or more members of their immedi-
41 ate family occupy the dwelling unit when it becomes vacant. As to
42 tenants who were in occupancy on the date a letter was issued by the
43 attorney general accepting the plan for filing, the purchase agreement
44 shall be executed and delivered] ON THE DATE THE OFFERING STATEMENT OR
45 PROSPECTUS WAS ACCEPTED FOR FILING BY THE ATTORNEY GENERAL SHALL HAVE
46 EXECUTED AND DELIVERED WRITTEN AGREEMENTS TO PURCHASE UNDER THE PLAN
47 pursuant to an offering made IN GOOD FAITH without FRAUD AND WITH NO
48 discriminatory repurchase agreements or other discriminatory induce-
49 ments.
50 S 12. Paragraph (c) of subdivision 2 of section 352-eeee of the gener-
51 al business law is amended by adding a new subparagraph (viii) to read
52 as follows:
53 (VIII) THE TENANTS IN OCCUPANCY ON THE DATE THE ATTORNEY GENERAL
54 ACCEPTS THE PLAN FOR FILING SHALL HAVE THE EXCLUSIVE RIGHT TO PURCHASE
55 THEIR DWELLING UNITS OR SHARES ALLOCATED THERETO FOR NINETY DAYS AFTER
56 THE PLAN IS ACCEPTED FOR FILING BY THE ATTORNEY GENERAL AND PRESENTED TO
A. 5752 6
1 THE TENANTS, DURING WHICH TIME A TENANT'S DWELLING UNIT SHALL NOT BE
2 SHOWN TO A THIRD PARTY UNLESS SUCH TENANT HAS, IN WRITING, WAIVED HIS OR
3 HER RIGHT TO PURCHASE; SUBSEQUENT TO THE EXPIRATION OF SUCH NINETY DAY
4 PERIOD, A TENANT IN OCCUPANCY OF A DWELLING UNIT WHO HAS NOT PURCHASED
5 SHALL BE GIVEN THE EXCLUSIVE RIGHT FOR AN ADDITIONAL PERIOD OF SIX
6 MONTHS FROM SUCH EXPIRATION DATE TO PURCHASE SUCH DWELLING UNIT OR THE
7 SHARES ALLOCATED THERETO ON THE SAME TERMS AND CONDITIONS AS ARE
8 CONTAINED IN AN EXECUTED CONTRACT TO PURCHASE, SUBJECT TO THE PROVISIONS
9 OF THIS PARAGRAPH, SUCH DWELLING UNIT OR SHARES ENTERED INTO BY A BONA
10 FIDE PURCHASER, SUCH EXCLUSIVE RIGHT TO BE EXERCISABLE WITHIN FIFTEEN
11 DAYS FROM THE DATE OF MAILING BY REGISTERED MAIL OF NOTICE OF THE
12 EXECUTION OF A CONTRACT OF SALE TOGETHER WITH A COPY OF SUCH EXECUTED
13 CONTRACT TO SUCH TENANT.
14 S 13. Section 352-e of the general business law is amended by adding a
15 new subdivision 2-d to read as follows:
16 2-D. (A) EXCEPT IN THE CASE OF A PHASED DEVELOPMENT OR TIMESHARE, THE
17 ATTORNEY GENERAL SHALL REFUSE TO ISSUE A LETTER STATING THAT AN OFFERING
18 PLAN HAS BEEN FILED, OR IN THE CASE OF AN OFFERING PLAN ALREADY ACCEPTED
19 FOR FILING, SHALL REFUSE TO ACCEPT AN AMENDMENT TO THE PLAN, UNLESS THE
20 PLAN OR AMENDMENT PROVIDES THAT:
21 (1) WITHIN SIXTY DAYS AFTER TITLE IS TRANSFERRED TO THE APARTMENT
22 CORPORATION OR THE FIRST CONDOMINIUM UNIT CLOSES, AN ELECTION SHALL BE
23 HELD FOR THE BOARD OF DIRECTORS OR BOARD OF MANAGERS, AT WHICH TIME AT
24 LEAST ONE MEMBER SHALL BE ELECTED BY AND FROM AMONG THE SHAREHOLDERS OR
25 UNIT OWNERS IN OCCUPANCY, AND SUCH ELECTED MEMBER SHALL BE NEITHER THE
26 OFFEROR, NOR A RELATIVE, BUSINESS ASSOCIATE, AGENT, DESIGNEE, AFFILIATE,
27 PARTNER OR EMPLOYEE OF THE OFFEROR. WHERE TITLE IS IN THE NAME OF THE
28 COOPERATIVE CORPORATION AT THE TIME THE OFFERING PLAN IS SUBMITTED TO
29 THE DEPARTMENT OF LAW, THE ELECTION SHALL BE HELD WITHIN SIXTY DAYS
30 AFTER SHARES ARE TRANSFERRED TO BONA FIDE PURCHASERS.
31 (2) WITHIN TWO YEARS AFTER TITLE IS TRANSFERRED TO THE APARTMENT
32 CORPORATION OR THE FIRST UNIT OF A CONDOMINIUM CLOSES, A MAJORITY OF THE
33 BOARD OF DIRECTORS OR MANAGERS SHALL BE ELECTED BY AND FROM AMONG THE
34 SHAREHOLDERS OR UNIT OWNERS WHO ARE IN OCCUPANCY REGARDLESS OF THE
35 NUMBER OF UNSOLD SHARES OR UNITS HELD BY THE OFFEROR.
36 (B) IF ANY ACTION TAKEN BY A BOARD OF DIRECTORS OR BOARD OF MANAGERS
37 THAT HAS NOT BEEN ELECTED IN ACCORDANCE WITH SUBPARAGRAPHS ONE AND TWO
38 OF PARAGRAPH (A) OF THIS SUBDIVISION RESULTS IN A BENEFIT, FINANCIAL OR
39 OTHERWISE, TO THE OFFEROR OR AN AFFILIATE OF THE OFFEROR, A SHAREHOLDER
40 OF THE COOPERATIVE CORPORATION OR UNIT OWNER IN A CONDOMINIUM MAY SUE
41 THE OFFEROR ON BEHALF OF THE COOPERATIVE CORPORATION OR CONDOMINIUM
42 ASSOCIATION TO RECOVER THE VALUE OF ANY BENEFIT RECEIVED BY THE OFFEROR,
43 OR ANY AFFILIATE OF THE OFFEROR. IF SUCH VALUE CANNOT BE REASONABLY
44 ASCERTAINED, THE COURT MAY AWARD DAMAGES PAYABLE BY THE OFFEROR TO THE
45 COOPERATIVE CORPORATION OR CONDOMINIUM ASSOCIATION, NOT TO EXCEED FIVE
46 THOUSAND DOLLARS FOR EVERY SUCH ACTION.
47 (C) IF AT THE TIME THIS SUBDIVISION TAKES EFFECT FEWER THAN EIGHTEEN
48 MONTHS SHALL HAVE ELAPSED SINCE ANY GIVEN PLAN HAS BEEN DECLARED EFFEC-
49 TIVE, A VOTE THAT COMPLIES WITH SUBPARAGRAPH ONE OF PARAGRAPH (A) OF
50 THIS SUBDIVISION SHALL BE HELD WITHIN SIXTY DAYS OF THE EFFECTIVE DATE
51 OF THIS SUBDIVISION. HOWEVER, IF ON SUCH EFFECTIVE DATE EIGHTEEN MONTHS
52 OR MORE SHALL HAVE ELAPSED SINCE ANY GIVEN PLAN HAS BEEN DECLARED EFFEC-
53 TIVE, A VOTE THAT COMPLIES WITH SUBPARAGRAPH TWO OF PARAGRAPH (A) OF
54 THIS SUBDIVISION SHALL BE HELD WITHIN SIXTY DAYS OF THE EFFECTIVE DATE
55 OF THIS SUBDIVISION.
A. 5752 7
1 S 14. Severability. If any clause, sentence, paragraph, section or
2 part of this act shall be adjudged by any court of competent jurisdic-
3 tion to be invalid, such judgment shall not affect, impair or invalidate
4 the remainder thereof, but shall be confined in its operation to the
5 clause, sentence, paragraph, section, or part thereof directly involved
6 in the controversy in which such judgment shall have been rendered.
7 S 15. This act shall take effect immediately and shall apply to plans
8 and offering statements submitted to the attorney general after such
9 effective date and to plans and offering statements submitted but not
10 yet accepted for filing; provided, however, that the amendments to
11 section 352-eee of the general business law made by sections seven,
12 eight and nine of this act and the amendments to section 352-eeee of the
13 general business law made by sections ten, eleven and twelve of this act
14 shall not affect the expiration of such sections and shall be deemed to
15 expire therewith.
