Relates to filing requirements relating to the sale of certain non-public real estate securities offerings.
TITLE OF BILL: An act to amend the general business law, in relation to filing requirements relating to the sale of certain non-public real estate securities offerings
PURPOSE OR GENERAL IDEA OF BILL: This bill creates a requirement to file with the department of law an offering statement or prospectus for non-public real estate securities offerings.
SUMMARY OF SPECIFIC PROVISIONS: This bill adds new language to section 352-e of the General Business Law to require the submission of an offering statement of prospectus to the department of law when a non-public offering of real estate related securities is made.
JUSTIFICATION: Under Article 23-A of the General Business Law, generally referred to as the "Martin Act", the issuer of a real estate related security must file an offering plan with the New York State Attorney General, setting forth the detailed terms of the transaction. Prospective purchasers rely upon the statements in the offering plan in determining whether to purchase an apartment, and therefore the Martin Act requires that all material information be disclosed and that all representations in the offering plan are true. Currently, this requirement is only for publicly offered securities, and therefore prospective purchasers are left unsure of the existence and validity of terms of any non-public securities related to a property. This bill seeks to cure that uncertainty and give purchasers the best information possible when choosing whether to purchase an interest in a property. This would assist in protecting buyers from entering into agreements related to properties that may try to hide unacceptable types or levels of debt with terms unknown to the buyer.
PRIOR LEGISLATIVE HISTORY: New Legislation
FISCAL IMPLICATIONS: None to the state.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 7604 IN SENATE May 15, 2014 ___________Introduced by Sen. HOYLMAN -- 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 filing require- ments relating to the sale of certain non-public real estate securi- ties offerings THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Paragraph (a) of subdivision 1 of section 352-e of the general business law, as amended by chapter 1085 of the laws of 1968, is amended to read as follows: (a) It shall be illegal and prohibited for any person, partnership, corporation, company, trust or association, or any agent or employee thereof, to make or take part in a public OR NON-PUBLIC offering or sale in or from the state of New York of securities constituted of partic- ipation interests or investments in real estate, mortgages or leases, including stocks, bonds, debentures, evidences of interest or indebt- edness, limited partnership interests or other security or securities as defined in section three hundred fifty-two of this article, when such securities consist primarily of participation interests or investments in one or more real estate ventures, including cooperative interests in realty, unless and until there shall have been filed with the department of law, prior to such offering, a written statement or statements, to be known as an "offering statement" or "prospectus" concerning the contem- plated offering which shall contain the information and representations required by paragraph (b) of this subdivision unless the security offer- ing is exempted hereunder or under SUBDIVISION TWO OF section three hundred fifty-nine-f
[, subdivision two,]of this article by rule or action of the attorney general. The term "real estate" as used in [the]THIS paragraph shall not include mineral, oil or timber leases or prop- erties, or buildings, structures, land or other realty housing or containing business offices or industry, owned or leased by the issuer, where the issuer is not primarily engaged in the business of buying and selling such building or other realty or leases or interests therein.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD11729-01-3 S. 7604 2
The circulation or dissemination of a non-firm offer (including circu- lation or dissemination of a preliminary prospectus pursuant to section ten (b) of the securities act of nineteen hundred thirty-three, and the rules thereto appertaining) shall not constitute making or taking part in a public offering within the meaning of this section. S 2. This act shall take effect immediately.