Tenants & Neighbors - Co-op & Condo Conversions

Co-op & Condo Conversions

Non-Eviction Conversion:

Requires commitment from purchasers for 15% of the apartments. Both rent regulated and market rate tenants are given the opportunity to purchase. Rent regulated tenants cannot be evicted because they choose not to buy. However, the owner is not required to offer a lease renewal to market-rate tenants.

Eviction Conversion:

Requires written commitment from 51% of the tenants in occupancy. All tenants are given the opportunity to purchase. Those who choose not to can be evicted. For rent stabilized tenants who choose not to purchase, they can be evicted within 3 years after the plan is declared effective. However, rent stabilized tenants who are disabled or senior citizens are exempt from eviction. Market rate tenants can be evicted at the end of their lease. Less likely conversion tactic.

Cooperative and Condominium Conversion

Basic concept
Sponsor must disclose all relevant information, without engaging in fraudulent practices, so that the potential purchaser(s) can make an informed decision about whether to purchase: “Full and fair disclosure.” Coupled with conditions that must be met before conversions to cooperative or condominium status can be accomplished, and certain protections for some tenants.

II. Laws governing conversion process

General Business Law, Article 23-A (“Fraudulent Practices in Respect to Stocks, Bonds and Other Securities”)
Full and fair disclosure

GBL, Article 23-A, Sections 352-e, and 352-eeee
New York City Rent and Rehabilitation Law (City Rent Control)
New York City Rent Stabilization Law
Emergency Tenant Protection Act of 1974

III. Definitions

Plan: Offering statement or prospectus submitted to New York State Department of Law (Attorney General) for conversion of building or group of buildings or development from residential rental status to cooperative or condominium ownership.

Sponsor: Entity offering the plan – could be the same as landlord, or new purchaser of property (including, possibly, Tenants Association or corporation created by tenants).

Cooperative (Coop): Purchaser owns shares in cooperative corporation that owns the building or development, and as a shareholder is entitled to a proprietary lease; in effect, shareholder is a tenant of the corporation in which she owns shares. Shares are allocated to each dwelling unit based on number of rooms, size or layout of apartment, location within building, view; “reasonable relationship.”

Condominium (Condo): Purchaser owns the actual apartment unit (within the four walls), and receives an individual deed to that unit; and owns a proportional share with other condo owners of the common areas of building or development.