NYS Attorney General Announces “Relief Period” Guidelines for Developers, Brokers and Buyers

March 26, 2020

In response to challenges presented by the COVID-19 pandemic, the Office of the New York State Attorney General, Real Estate Finance Bureau (REFB), has just released new guidelines affecting the offer and sale of new and converted condominium units and cooperative apartments in New York.

During this emergency “relief period”, the REFB will continue to serve the public and review offering plans, amendments and “no-action” letter applications, subject to delays and using modified policies and procedures, including the following:

  1. Photocopies and scanned copies of original signatures will be deemed “originals”, and the notarization requirement for documents can be replaced by a sworn affirmation by the signatory.
  2. Digital copies of offering plans and amendments can be sent to purchasers in lieu of hard copies without the filing of an application for digital distribution, subject to certain restrictions and requirements.
  3. Routine financial update amendments to extend the term of the offering, along with price change amendments, need not be filed. Accordingly, if an offering plan’s term is set to expire during the relief period, the REFB will not pursue enforcement actions based solely on an offering plan sponsor continuing sales activity while that plan is “stale”.
  4. Offering plan sponsors remain responsible for filing effectiveness amendments, post-closing amendments, and amendments to disclose material and adverse changes to the offering.

While the REFB has provided examples of “material and adverse” issues that will require disclosure during the relief period, it is a non-exhaustive list and your specific disclosure obligations should be discussed with counsel. Additionally, even with a moratorium on filing financial update amendments, offering plan sponsors should consider providing prospective purchasers with information that would otherwise be included in these amendments, such as budgets and financial statements, to help avoid future claims of rescission.

It is important to note that once the temporary relief period concludes, the REFB will require that sponsors bring all offering plans back into compliance and include any disclosures that would have otherwise been made during this time. The term of the relief period is indefinite but is expected to last at least for the duration of the Governor’s emergency declaration.

Additional details can be found in the new guidelines available here.

We are here to help you with questions about current projects and to assist with future plans. Please reach out to us.


For more information on this issue or other condominium and cooperative law matters, please contact:

Philip Tucker at +1 212 592 1482 or [email protected]
 

© 2020 Herrick, Feinstein LLP. This alert is provided by Herrick, Feinstein LLP to keep its clients and other interested parties informed of current legal developments that may affect or otherwise be of interest to them. The information is not intended as legal advice or legal opinion and should not be construed as such.