INDUSTRY UPDATE:
Important Reprieve Afforded to Sponsors through Executive Order
Tolling Certain Crucial Deadlines Based on
COVID-19 State of Emergency
New York Gov. Andrew Cuomo recently issued Executive Order No. 202.18 (“Executive Order”) to temporarily suspend or modify statutes and local laws thereby tolling important statutory deadlines for the period of time commencing on April 16, 2020 and continuing through May 16, 2020 (“Tolling Period”)
The Tolling Period impacts the following obligations of sponsors under the Attorney General’s regulations:
The Time Frame to Conduct a First Closing is Tolled. According to the well-established regulations promulgated by the Attorney General governing new construction and substantial rehabilitation condominium and cooperative offerings, a sponsor must offer purchasers the right to rescind their purchase agreements if the first closing does not occur within the first 12 months of the anticipated commencement date of the first year of operation. As a result of the recent “stay at home” directives (essentially putting construction and the ability to procure a temporary certificate of occupancy at a stand-still), the Executive Order provides necessary relief by extending this 12-month deadline for the length of the Tolling Period. Therefore, sponsors are now afforded additional time to conduct their first closings before being required to offer recession to purchasers under contract.
Timing to File an Updated Budget for First Year of Building Operation is Tolled. Similar to the statutory deadline requiring a first closing to occur within the first 12 months from the anticipated commencement date of the first year of building operation, a sponsor is also required to update their projected budget for the first year of operation if the first closing is delayed by more than 6 months. This requirement is likewise suspended for the length of the Tolling Period, now requiring any necessary update to the budget to take place within 30 days from the expiration of the Tolling Period.
The 15-Month Deadline to Declare Effective in a Conversion Plan is Tolled. In a residential conversion offering plan, a sponsor is obligated to declare the offering plan effective within 15 months from the date the offering plan is accepted for filing, failing which sponsor is required to abandon the offering and provide rescission to all purchasers. Such 15-month deadline is also suspended for the length of the Tolling Period, affording sponsors additional time to meet these sales requirements.
Filing Fees. The payment of all filing fees to be made at the time of submission shall also be exempted during the Tolling Period, with the understanding that all such fees shall be remitted to the DOL within 90 days of the expiration of the Tolling Period.
It should also be noted that the Tolling Period may be further extended by an amendment to the Executive Order. A copy of the Executive Order can be found here.
Starr Associates LLP is proud to have worked alongside other industry leaders in an effort to bring the aforementioned relief to our clients and their condominium/cooperative projects affected by Covid-19. Our firm is available to discuss the potential impact of the Tolling Period on your project and help you navigate through these unprecedented times. Additionally, our office will be circulating updated deadlines specifically related to your individual project.
Wishing each of you and your families continued health and safety during these very difficult times.