Requires written notification to a cooperative tenant shareholder or a condominium owner of their right to terminate a self-dealing contract under federal law.
BILL NUMBER: S4403
TITLE OF BILL : An act to amend the general business law, in relation to notification of cooperative or condominium self-dealing contract termination
PURPOSE : Provides for notification of a cooperative tenant shareholder's or condominium owner's right to terminate a self-dealing contract under federal law.
SUMMARY OF PROVISIONS : Adds a new subdivision 2-d to section 352-e of the General Business Law to define "self-dealing contract" and require sponsors of co-op or condominium conversions to notify tenant shareholders or unit owners entitled to terminate such contracts pursuant to the Condominium and Cooperative Abuse Act, 15 U.C.C. 3607, in writing within 30 days of the date that the right commences and at least 60 days before the right expires.
JUSTIFICATION : The Condominium and Cooperative Abuse Relief Act of 1980, 15 U.C.C. 3607, permits shareholders and unit owners to terminate self-dealing or so-called "sweetheart" contracts within two years after the sponsor loses "special developer control" Because the statute does not contain a notice provision, in many instances the time to attack the contracts has expired without the board knowing they had any rights. In addition, many disputes have arisen over just when the sponsor lost special developer control. The notification provision required in this bill would both help prevent such disputes, and insure that coop and condominium boards are fully aware of their right to terminate contracts which are not in the best interest of the cooperative or condominium.
LEGISLATIVE HISTORY : 2008: A8037 (Kavanagh) - Passed Assembly 2007: A8037 (Kavanagh) - Passed Assembly 2006: A6970 (Grannis) - Passed Assembly 2005: A6970 (Grannis) - Housing 2004: 4038 (Grannis) - Passed Assembly 2003: A4038 (Grannis) - Passed Assembly 2002: A4390 (Grannis) - Housing 2001: A4390 (Grannis) - Housing 2000: A1688 (Grannis) - Passed Assembly 1999: A1688 (Grannis) - Passed Assembly 1998: A867A (Grannis) - Passed Assembly 1997: A867A (Grannis) - Passed Assembly 1996: A4626 (Grannis) - Passed Assembly 1995: A4626 (Grannis) - Passed Assembly 1994: A621 (Grannis)- Passed Assembly 1993: A621 (Grannis) - Housing 1992: A1091 (Grannis) - Housing 1990: A4132 (Grannis) - Passed Assembly 1987: A11504 (Grannis) - Rules
FISCAL IMPLICATIONS : None.
EFFECTIVE DATE : This act shall take effect on the thirtieth day after it shall have become a law and shall apply to plans for which letters of accept are issued on or after such effective date
STATE OF NEW YORK ________________________________________________________________________ 4403 2009-2010 Regular Sessions IN SENATE April 22, 2009 ___________Introduced by Sen. SQUADRON -- read twice and ordered printed, and when printed to be committed to the Committee on Housing, Construction and Community Development AN ACT to amend the general business law, in relation to notification of cooperative or condominium self-dealing contract termination THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 352-e of the general business law is amended by adding a new subdivision 2-d to read as follows: 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 CONDOMIN- IUM 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 AEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD00485-01-9 S. 4403 2
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. S 2. This act shall take effect on the thirtieth day after it shall have become a law and shall apply to plans for which letters of accept- ance are issued on or after such effective date.