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April 21, 2020

Stroock Special Bulletin

By: Leslie R. Byrd

On April 16, 2020, Governor Andrew Cuomo issued Executive Order 202.18, which expanded the statutory and regulatory relief available to condo and co-op sponsors under prior COVID-19 Executive Orders and guidance from the NYS Attorney General (“AG”). The new Executive Order temporarily suspends key filing fees and deadlines applicable to sponsors. In ordinary times, failure to pay these fees and meet these deadlines would prevent sponsors from marketing and selling units in both new and existing projects. However, until at least the expiration of the new Executive Order on May 16, 2020, these are not ordinary times.

The following summarizes the relief afforded condo and co-op sponsors under Executive Order 202.18:[1]

Suspension of Filing Fees for Initial Offering Plans, Plan Amendments and No?Action Letter Applications

The filing fees payable to the AG under § 352?7(a) of the General Business Law (“GBL”) upon submission of (i) a new condo and co-op offering plan (maximum $30,000), (ii) an offering plan amendment ($225) or (iii) an application for a no?action letter ($225), are suspended for the duration of, and are payable within ninety (90) days after, expiration of the new Executive Order.

Suspension of Requirement to Amend Offering Plans Re: Delayed First Year of Operation

The new Executive Order tolls applicable rules and regulations that require a sponsor to amend the offering plan to disclose a delay of six months or more in the projected first year of condominium or cooperative operation. Such update of the projected first year of operation must be made within 30 days after expiration of the new Executive Order.  Purchasers will not have the right to rescind their contracts unless the budget for the new projected first year exceeds the prior budget by 25% or more.

Suspension of 15-Month Deadline to Declare Conversion Plans Effective

The new Executive Order suspends the provisions of GBL § 352-eeee(2)(a) and applicable rules and regulations that require a sponsor to declare a condominium or cooperative conversion offering plan effective within 15 months after the plan has been accepted for filing by the AG. This suspension will remain for the duration of the new Executive Order.

Conclusion

Executive Order 202.18, together with other recent Executive Orders[2] and AG guidelines,[3] provide a temporary framework within which sponsors can continue to market and sell their condo and co-op projects during the COVID-19 NYS disaster emergency.

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For More Information:

Leslie R. Byrd

[1] The full text of Executive Order 202.18 can be found here: https://www.governor.ny.gov/news/no-20218-continuing-temporary-suspension-and-modification-laws-relating-disaster-emergency.

[2] See, e.g., Executive Order 202.11, issued March 27, 2020, which extended by an additional 30 days, the AG’s 30-day statutory period to respond to condo and co-op offering plan submissions.

[3] The AG’s March 25, 2020 guidance for condo and co-op sponsors is summarized in this Stroock client alert: https://www.stroock.com/news-and-insights/ny-issues-condo-and-co-op-plan-guidance-amid-covid-19-pandemic/.

This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.

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