Offering Plans
New York City Offering Plan Lawyers
DL Partners boasts a renowned cooperative corporation (“co-op”) and condominium (“condo”) Offering Plan practice that provides sound legal advice, in drafting and preparation of, in connection with offering plans and Offering Plan exemption and No-Action Letter and applications, tax map filings, and all related legal services. Our Offering Plan and No-Action Letter application practice assists investors and developers in both ground-up new construction developments and conversions of existing properties to cooperative and condominium regimes, whether residential units, commercial units, community facility or a mixture of several unit types
What is an Offering Plan
An Offering Plan for a co-op or condo is akin to a prospectus for an initial offering of securities. These plans are meticulously prepared documents, spanning several hundred pages, comparable in size to a university textbook. They serve as a comprehensive guide, detailing every material aspect of the property in question. Each Offering Plan undergoes a thorough review by the Real Estate Finance Bureau of the New York State Department of Law for compliance with the Condominium Act of the State of New York and the regulations promulgated therefrom by the New York State Attorney General. Until the Attorney General’s office completes its review and the Offering Plan is “accepted for filing”, no offering, advertising, sale, or promotion of the apartments or units in the property, can take place.
For condo and co–op sponsors and buyers from said sponsor, an Offering Plan is a crucial disclosure document that outlines all of the material terms under which a sponsor, the property owner, can sell you a condo unit or co-op apartment. It encompasses detailed information about the building, the properties being offered, sold, and legally mandated disclosures that protect both the sponsor and the buyer.
It is essential to understand that the New York State Attorney General’s office, specifically the Real Estate Finance Bureau, must “accept the Offering Plan for filing” before any sales can proceed. The Attorney General acts as New York State’s legal representative in this process. If a sponsor deviates from or is conducting sales activity that is not consistent with the terms of the filed Offering Plan when selling a condo unit, the Attorney General’s office maintains oversight, and any such deviations, inconsistencies or complaints may result in legal consequences to the violator.
Reading an Offering Plan
It is important for the initial purchaser from the sponsor to thoroughly review the Offering Plan because it discloses important information about the building, the properties being sold, and legally mandated disclosures that protect both the sponsor and buyer. . The Offering Plan typically involves two main parts. The first part (part I) focuses on the features of the property, explaining the selling and buying process, transaction details, down payments, closing procedures, tax responsibilities, and various estimated closing costs. This section also addresses the developer’s or sponsor’s responsibilities and any potential warranties for repairs and defects after unit sales.
The second part (part II) of the Offering Plan consists of forms and exhibits, such as the form purchase agreement and exhibits of the condominium declaration, and by-laws. These exhibits serve as governing documents for the condominium, outlining how the condominium will be operated in the future. Additionally, you will also find building and unit floor plans and an architect’s description and specifications reports detailing the building’s components.
What is a No Action Letter?
There are a variety of reasons why a developer or owner of a property may want to in an expeditious manner divide it into separate condominium units, whether as part of a joint venture, for the ability to individually finance different portions of their property, or for real estate tax considerations. Because the parties involved in these transactions are often experienced real estate development professionals and/or related parties, referred to as Declarants, they may generally submit No-Action Letter Applications in lieu of full offering plans, because they are not offering the sale of any new units to the public at large and based upon the Attorney General’s review of the submission the public does not need to be protected from the contemplated application.
Offering Plan Filings and No-Action Letter Applications
Our team of attorneys at DL Partners are well-versed in the preparation, consultation, drafting and submission of Offering Plans, No-Action Letter Applications, and the related amendments and required submission documents to be submitted before the New York State Department of Law, for review by the Real Estate Finance Bureau, in compliance with all applicable acts, laws and regulations. Our team of attorneys work closely with the owners of these projects, as well as their architects, consultants, expeditors, brokers, managing agents and other professions, in the preparation of the condominium declaration, by-laws, common charge budgets and all related and required documents, including the tax lot subdivision filing submissions to and approvals from the New York City Department of Finance.
Experienced Offering Plan Attorneys
Whether you are a developer or sponsor, buyer or seller, DL Partners is here to provide you with exceptional legal support needed throughout the Offering Plan acceptance for filing process. Our experienced team of attorneys is dedicated to assisting you in navigating the intricacies of Offering Plans process, protecting your interests, and ensuring a smooth and successful transaction.
Furthermore, using our extensive background in the preparation and filing of Offering Plans, our attorneys at DL Partners can provide the crucial guidance you need during your sale or purchase of an individual cooperative apartment or condominium unit. Contact us today to benefit from our decades of experience and secure the guidance you need. We are committed to serving your legal needs and providing peace of mind as you navigate the world of Offering Plans and cooperative apartment and condominium unit ownership in the City and State of New York.
Frequently Asked Questios
What is an Offering Plan?
An offering plan, whether for a cooperative or a condominium, is similar in purpose but differs in terms of the type of ownership being offered to potential buyers. Both are legal documents used in real estate developments to provide comprehensive information to prospective buyers or investors before they commit to purchasing a unit or share in a condominium or cooperative building.
- Condominium Offering Plan: A condominium offering plan is a document prepared by a real estate developer when they intend to sell individual units in a condominium building to buyers. In a condominium, each unit is owned individually by the buyer, and the common areas and amenities are jointly owned and managed by all the unit owners through a condominium association. Each buyer owns their unit outright and receives a deed for their specific unit.
The condominium offering plan typically includes details about the project, unit specifications, common areas and amenities, financials, governance structure, purchase terms, disclosures, and proposed completion timeline, as mentioned in the previous response.
- Cooperative Offering Plan: A cooperative offering plan, on the other hand, is used when a developer intends to sell shares in a cooperative corporation to prospective buyers. In a cooperative (co-op), the entire building is owned by a corporation, and each buyer becomes a shareholder in that corporation. Instead of owning their specific unit, co-op buyers own shares in the corporation, and each share corresponds to the right to occupy a particular unit pursuant to a proprietary lease.
The cooperative offering plan contains similar elements to the condominium offering plan, but with some differences. It includes details about the project, unit specifications, common areas and amenities, financials, governance structure, purchase terms, disclosures, and proposed completion timeline. Additionally, it outlines the rules and regulations of the cooperative corporation, which may include restrictions on subleasing, financing, and alterations to units.
Before purchasing a unit in either a condominium or cooperative, potential buyers should carefully review the respective offering plan to fully understand the rights, responsibilities, and financial implications of ownership in the development.
What are by-laws?
Building by-laws, and house rules or building regulations, are a set of rules and regulations established by the management or governing body of a building, typically in the context of condominiums or cooperatives. These by-laws serve to govern the behavior and conduct of the residents or occupants within the building and are designed to promote harmonious living, protect the interests of all residents, and maintain the property’s value and functionality.
The specific content of building by-laws can vary depending on the building’s type, location, and the preferences of the management or association, but they commonly cover the following areas:
- Usage of Common Areas: By-laws may define the appropriate use of common areas such as lobbies, elevators, hallways, gyms, pools, and other shared spaces. They might establish rules for their access, reservation, and permitted activities.
- Noise and Nuisance: Regulations related to noise levels, quiet hours, and restrictions on activities that may cause disturbances to other residents are often included.
- Pet Policies: By-laws might outline rules regarding pet ownership, including the number of pets allowed, size restrictions, and leash requirements.
- Maintenance and Appearance: Regulations may specify the responsibilities of individual unit owners or shareholders concerning the maintenance and upkeep of their units, as well as rules for exterior decorations, signage, and window coverings.
- Parking and Vehicles: By-laws can cover parking arrangements, the allocation of parking spaces, and rules for the use of visitor parking. They may also address the storage of bicycles and other vehicles.
- Waste Disposal: Guidelines on garbage disposal, recycling, and any specific waste management policies within the building may be outlined.
- Security and Safety: Regulations concerning security measures, access control systems, and protocols for emergencies or disasters might be included.
- Subleasing and Rentals: By-laws may address whether subleasing or renting out units is permitted and any associated requirements.
- Alterations and Renovations: Rules for making alterations, renovations, or improvements to units, including obtaining permission and following specific procedures, may be specified.
- Obligations of Unit Owners/Shareholders and the Board of Managers: The by-laws typically outline the maintenance, repair and replacement obligations of unit owners/shareholders and the Board of Managers (meaning all owners/shareholders).
- Dispute Resolution: The by-laws might outline procedures for handling disputes between residents or between residents and the management.
Building by-laws are essential for maintaining order, ensuring a pleasant living environment, and protecting the rights of all residents. Prospective buyers or tenants should review the building’s by-laws carefully before committing to live on the property to ensure they are comfortable with the rules and regulations in place.
What is a proprietary lease?
A proprietary lease is a legal document used in co-ops to outline the terms and conditions under which a shareholder (resident) in the co-op can occupy a specific unit within the building. In a co-op, the entire building is owned by a corporation, and individual residents do not own their units outright like in a condominium. Instead, they purchase shares in the cooperative corporation, which shares are allocated to a specific unit in the co-op and entitle them to a proprietary lease for that unit.
The proprietary lease typically includes the following key elements:
- Lease Term: The length of the lease term, which is usually for an extended period (e.g., 99 years) or can be renewable.
- Unit Description: A detailed description of the unit being leased, including its location within the building and any specific features or amenities associated with the unit.
- Occupancy Rights: The proprietary lease specifies the shareholder’s right to occupy the unit and use the common areas of the building.
- Maintenance Fees: The lease outlines the shareholder’s obligation to pay maintenance fees, also known as carrying charges or assessments, which cover operating expenses for the co-op, such as utilities, property taxes, insurance, and building maintenance.
- House Rules: The proprietary lease may reference the building’s house rules or by-laws, which govern the conduct and behavior of residents within the co-op.
- Shareholder Rights and Responsibilities: The lease delineates the rights and responsibilities of the shareholder within the cooperative, including voting rights in corporate matters and participation in meetings.
- Alterations and Improvements: The lease might address the process and permission requirements for making alterations or improvements to the unit.
- Transfer or Sale of Shares: The lease may outline the procedures and restrictions for transferring or selling shares in the cooperative to another party.
It’s important to note that in a co-op, the shareholders collectively own and govern the corporation, making decisions through democratic processes such as voting. This structure gives residents greater influence over the building’s operations and policies compared to condominium ownership.
Prospective co-op buyers should carefully review the proprietary lease before purchasing shares in the cooperative. Since the lease is a legally binding document, buyers should seek legal counsel to fully understand their rights and obligations as shareholders and residents within the cooperative community.
What is the difference between a condo and a co-op?
Condos and co-ops are two distinct forms of real estate ownership, each with its own characteristics and legal structures. Here are the main differences between them:
Ownership Structure:
- Condominiums: In a condo, individual unit owners have absolute ownership of their specific units and a proportionate interest in the common areas. Each owner receives a deed for their unit, which is a separate, transferable property, allowing them to buy, sell, or mortgage the unit as they see fit.
- Cooperatives: In a co-op, the entire building is owned by a corporation, and individual residents are shareholders in that corporation. Shareholders do not own their units directly; instead, they hold shares of stock in the cooperative, and each share corresponds to the right to occupy a particular unit. Shareholders have a proprietary lease that grants them the right to live in their unit and use the common areas.
Financing and Mortgages:
- Condominiums: Condo owners can obtain individual mortgages to finance the purchase of their units, similar to how one would finance the purchase of a traditional single-family home.
- Cooperatives: Co-op shareholders do not receive individual mortgages for their units. Instead, they often need to secure a cooperative loan, which is a loan extended to the individual based on their shares in the cooperative.
Governance and Decision-Making:
- Condominiums: Condo owners are responsible for managing and maintaining their units, as well as paying condo fees to cover shared expenses for common area maintenance. Decisions regarding the management and governance of the condominium are typically made by the condo association, consisting of unit owners.
- Cooperatives: Cooperative decisions are made collectively by the shareholders through a board of directors, often elected from among the shareholders. The board manages the building’s operations, sets policies, and makes decisions on behalf of the cooperative corporation.
Subleasing and Rentals:
- Condominiums: Condo owners generally have more freedom to sublease or rent out their units since they own the unit outright.
- Cooperatives: Co-op shareholders may have stricter restrictions on subleasing or renting out their units, as co-op boards often have more control over such matters to maintain the building’s stability and ensure a cohesive community.
Monthly Costs:
- Condominiums: Condo owners typically pay monthly condominium fees that cover common area maintenance and shared expenses.
- Cooperatives: Co-op shareholders pay monthly maintenance fees, which generally include property taxes, building expenses, and sometimes the underlying mortgage for the entire building.
Each type of ownership has its advantages and disadvantages, and the choice between a condo and a co–op depends on individual preferences, financial considerations, and the specific rules and regulations of each property