13 NYCRR | New York Codes, Rules and Regulations, Title 13 — Department of Law

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Chapter I General

Part 1 Distribution Of Printed Matter

N.Y. Comp. Codes R. & Regs. Tit. 13§ 1.1 Sale of documents-general

The sale and distribution of blanks, reports, pamphlets and other documents printed by the Department of Law, shall be under the supervision of the Attorney-General.

N.Y. Comp. Codes R. & Regs. Tit. 13§ 1.2 Free copies

Single copies of any departmental item of printing will be furnished without charge to the Governor; members of the Legislature; heads of other State departments; members of the press; for the necessary and proper use in the conduct of the official business of the department, schools, libraries and other institutions not carried on for profit. Officers and employees of the Federal government; officers and employees of any political subdivision of the State of New York; officers and employees of other States and political subdivisions thereof, whenever such State or other jurisdiction shall extend reciprocal courtesy to this State and its subdivisions; and to other persons in the discretion of the Attorney-General, not to exceed an annual aggregate of 25 copies for any single item.

N.Y. Comp. Codes R. & Regs. Tit. 13§ 1.3 Rates for sale to public

Printed matter for public distribution will be furnished upon application to all other persons upon receipt of a cash payment, in accordance with the established rates as per the following schedule:

Annual volume--formal and informal opinions (clothbound) $10

Chapter II SECURITIES TRANSACTIONS AND PERSONNEL

Subchapter A SECURITIES-GENERAL

Part 10 BROKERS, DEALERS AND SALESPERSONS

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.1 Registration of securities broker-dealers, issuers, and salespersons; effective date

All forms referenced in this Part are viewable at https://ag.ny.gov/forms.

(a) In compliance with subdivisions 3 and 13 of section 359-e of the General Business Law (GBL § 359-e),

(1) All brokers and dealers whose principal business is in the offering, sale or promotion of cooperative or homeowners association interests in real estate, including condominium units, shall file Form M-10 (Real Estate)

(2) All dealers that are issuers of securities not subject to subdivision (1) of this section and not classified as Federal Regulation D Covered Securities Dealers, Federal Tier 2 Dealers, or Federal Covered Investment Company Dealers herein, shall file Form M-11.

(3) All Federal Regulation D Covered Securities Dealers shall file Form D. The Attorney General hereby deems that the pertinent information to be filed for purposes of satisfying GBL § 359-e for Federal Regulation D Covered Securities Dealers shall be all information required on Form D.

(4) All Federal Tier 2 Dealers shall file the Uniform Notice Filing of Regulation A - Tier 2 Offering Form. The Attorney General hereby deems that the pertinent information to be filed for purposes of satisfying GBL § 359-e for Federal Tier 2 Dealers shall be all inf ormation required by the Uniform Notice Filing of Regulation A - Tier 2 Offering Form.

(5) All Federal Covered Investment Company Dealers shall file Form NF. The Attorney General hereby deems that the pertinent information to be filed for purposes of satisfying GBL § 359-e for Federal Covered Investment Company Dealers shall be all information necessary to complete the Form NF for each individual fund or portfolio offered by such dealer.

(6) All other brokers and dealers shall file Form M-1, except as provided elsewhere in this part.

(7) All securities salespersons, including those engaged in the sale of intrastate offerings, real estate syndication, cooperative, condominium or homeowners' association interests in real estate unless deemed already in compliance with registration statement filing requirements under GBL § 359-e (3), shall file Form M-2, except as provided below.

(b) Notwithstanding the provisions of subdivision (a) of this section, a broker-dealer not a member of the Financial Industry Regulatory Authority ("FINRA") and not required to file Form M-10 and not an issuer offering or selling its own securities may, in lieu of filing Form M-1, file an executed current Form BD with page 2 of Form U4 completed for each person listed on Schedule A or B. In lieu of filing Form M-2, a securities salesperson may file an executed current Form U4. Form BD, Uniform Application for Broker-Dealer Registration is published by the U.S. Securities and Exchange Commission, 1 00 F Street, NE Washington, DC 20549, and Form U4, Uniform Application for Securities Industry Registration or Transfer General Instructions is published by FINRA, 1735 K St NW, Washington, DC 20006 ("Form U4 Instructions"), both viewable at https://ag.ny.gov/forms.

(c) The registration of brokers, dealers and salespersons shall be for a period of four years. Initial statements for those having no previous filing may be made at any time and shall be effective from the date of filing for a period of four (4) years, except as provided elsewhere in this part.

(d) Effective date. The revisions to this Part shall become effective upon legal adoption and publication in the New York State Register.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.2 Central registration for FINRA member broker-dealers and salespersons of FINRA members

(a) All broker-dealers who are members of, or have applied for membership in, FINRA shall file initial broker-dealer registrations directly with the Central Registration Depository ("CRD") system (information regarding CRD is viewable at https://www.finra.org).

(b) A salesperson employed by a firm that is a member of FINRA and engaged in the sale of securities in the State of New York, shall file Forms U4 and U5 through the CRD system.

(c) The CRD system shall be maintained by FINRA, pursuant to an agreement with, and under the guidelines established by, the North American Securities Administrators Association, Inc. The alternative method of filing set forth in GBL § 359-e.13, and this Part shall be in effect so long as the Department of Law of the State of New York is a participant in the CRD system.

(d) Filings through the CRD system shall be made on an annual basis for a period ending on the 31st day of December following the date of filing.

(e) Filings through the CRD system shall be filed and paid for in accordance with CRD and form instructions. These fees shall be known as in lieu filing fees. Only current Forms U4 and U5 will be accepted for filing by the CRD to register, amend information or terminate a salesperson's registration. Only current Forms BD and BDW, or any other form agreed to and in use by the CRD, will be accepted for filing by the CRD to register, amend information or terminate a broker-dealer registration. (f) The annual fee for filing a Form BD under the alternative system is $ 30 0. The annual fee represents one-fourth the statutory f ee, GBL § 359-e.5,. The initial f ee f or filing a Form U4 is $ 70, which initial f ee represents a $ 40 portion of the statutory fee of $ 150, GBL § 359-e.5, and $ 30 which covers the required fee for broker-dealer supplemental statements pursuant to this Part. Thereafter, the annual salesperson renewal fee will be $ 37 which represents a portion of the current statutory fee of $ 150. Although filings shall be made by the firm on behalf of the securities salespersons, nothing in this procedure shall relieve the individual salesperson of any responsibility or liability under Article 23-A of the General Business Law.

(g) Any person, including but not limited to any partner, officer, director, or other principal of the broker-dealer who is not listed on the new Form BD and who shall act as a salesperson, shall register as a salesperson with the CRD on Form U4. Any person who was registered with the State of New York as a partner, officer, director, principal or salesperson between September 26, 1981 and September 26, 1983 shall not be required to take the examination as required by General Business Law, section 359-e.3 (b).

(h) Filings made through the CRD system shall be reviewed for completeness and accuracy by the CRD system. The Department of Law may designate to the CRD system the method of approval of applications for New York registration either by automatic approval by the CRD, f or those applications that meet all existing qualifications and edit criteria, or by individual approval of such applications on a case-by-case basis by the Department of Law. Firms submitting the filings shall be notified of deficiencies and required to correct same. Failure to correct any deficiencies on any Form U4 (salesperson's registration) within 180 days from receipt by the CRD system will result in the withdrawal of the application and will require a completely new filing. No refunds will be made for filings that are withdrawn either on a voluntary basis or as a result of the failure to correct deficiencies. All fees associated with filings made to the CRD system will be promptly remitted to the Department of Law.

(i) All brokers, dealers and salespersons subject to sub-section (a) of this section 10.2 shall submit amendments pursuant to Form U4 Instructions, and attendant fees pursuant to GBL § 359-e (5) for changes of in formation related to name, address, management, salespersons, and injunctions and other proceedings as described in section 10.3 of this part. All supplemental statements required herein shall be made within 30 days of the event warranting the change, except with regard to information regarding injunctions and other proceedings which must be made as soon as practicable.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.3 Supplemental broker-dealer statements for non-FINRA members

(a) In compliance with subdivision 4 of section 359-e of the General Business Law, except as provided hereinafter, every broker or dealer in securities who is not a member of FINRA and who shall have filed a Form M-1 broker-dealer statement, or a Form BD with the Department of Law of the State of New York, shall file a Form M-3, supplemental broker-dealer statement, whenever any of the following changes have taken place to indicate the change of information originally filed:

(1) Name. The changes in name of the registrant (in the event the registrant incorporates, an entirely new registration statement must be filed).

(2) Address. Change of business address and address of new branch offices in New York.

(3) Management. Changes in the officers, directors, partners or other principals of the registrant, giving the new names and addresses involved in such changes.

(4) Salespersons. Changes in securities salespersons, giving name and date of termination of any securities salesperson leaving the registrant's employ and the reasons therefor, and the name and commencement date of any salesperson brought into the employ of the registrant.

(5) Injunctions and other proceedings. Each registrant shall file a supplemental broker-dealer statement upon each occasion when the registrant or any officer, director, partner, principal or salesperson thereof becomes the subject of any criminal action, or is convicted of any misdemeanor or felony, or is the subject of any pending civil action commenced by a government agency relating to the offer or sale of securities or commodities, or is the subject of any injunction or cease and desist order relating to the offer or sale of securities or commodities.

(b) In lieu of filing a supplemental broker-dealer statement (Form M-3), except as hereinafter provided, a broker or dealer may file, as an amendment, an appropriately executed current Form BD, if section 10.1(b) of this Part would have allowed that broker or dealer to file Form BD as an original filing.

(c) The filing requirements of paragraph (a)(4) of this section, for firms who file through the CRD system, shall be fulfilled by the filing of Form U 4 or U5 pursuant to section 10.6 of this Part.

(d) Each Federal Regulation D Covered Securities Dealer, having already filed a Form D in the Department of Law within the past 4 years, shall file a copy of any subsequent Form D filed with the U.S. Securities and Exchange Commission if such form contains any information that differs from the information previously filed with the Department of Law within the past 4 years. Such supplemental Form D filing shall constitute a supplemental statement under GBL § 359-e.

(e) Each Federal Tier 2 Dealer, having already filed a Uniform Notice Filing of Regulation A - Tier 2 Offering Form regarding a particular issuance in the Department of Law within the registration period, shall file a supplemental Uniform Notice Filing of Regulation A - Tier 2 Offering Form, each time that such dealer submits an amendment regarding said issuance, to the U.S Securities and Exchange Commission (SEC). Such supplemental filing shall constitute a supplemental statement under GBL § 359-e.

(f) Each Federal Covered Investment Company Dealer shall file Form NF upon any change to the information previously submitted to the Department of Law. Such Form NF shall constitute a supplemental statement under GBL § 359-e.

(g) All supplemental statements required herein shall be made within 30 days of the event warranting the supplement, except with regard to information about injunctions and other proceedings which must be made as soon as practicable.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.4 Supplemental salesperson's statement for salespersons employed by a non-FINRA member firm

(a) Every salesperson of securities employed by a non-FINRA member firm, and who has already filed a salesperson's statement or a Form U4 with the Department of Law of the State of New York shall file a Form M-4, supplemental salesperson's statement, whenever any of the following changes have taken place to indicate the change of information originally filed:

(1) Name. The change of name of the registrant.

(2) Address. Change of residence address of the registrant.

(3) Termination of employment. Termination of employment as a salesperson, giving the date of termination and reason therefor.

(4) Change of employment. Information as to a change of employment, giving the name and address of the new firm and the date of commencement of employment as a salesperson.

(5) Injunctions and other proceedings. Each registrant shall file a supplemental salesperson's statement upon each occasion when the registrant becomes the subject of any criminal action, or is convicted of any misdemeanor or felony, or is the subject of any pending civil action commenced by a governmental agency relating to the offer or sale of securities or commodities, or is the subject of any injunction or cease and desist order relating to the offer or sale of securities or commodities.

(b) In lieu of the filing of a supplemental salesperson's statement, an executed current Form U4 may be filed to update or correct the information on an existing Form M-2, salesperson's registration, or to disclose employment by a different broker or dealer of a previously registered salesperson.

(c) In lieu of the filing of a supplemental salesperson's statement, a letter signed by the salesperson or by a principal officer, partner, sole proprietor or managing agent, as appropriate, containing information making an existing filing accurate and complete, may be filed for a securities salesperson if a Form U4 has been previously filed with the Department of Law for that salesperson.

(d) A current Form U5 may be used to report the termination of a salesperson.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.5 Fee for supplemental statements

The filing of any supplemental information pursuant to section 10.3 or 10.4 of this Part must be accompanied by the current statutory fee of $ 30 for each filing. Checks for filings made directly with the Department of Law of the State of New York shall be made payable to it. Once the Department of Law implements a mandatory electronic filing or payment system, such fees shall be paid electronically, unless a filer can demonstrate a material hardship presented by such electronic payment method. In the case of hardship, the Department of Law may accept payment by check or other means at the Department of Law's discretion. No f ee is required for any supplemental statement submitted by a salesperson which reports only the cancellation of a salesperson's registration.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.6 Alternative method of filing supplemental salesperson's and broker-dealer statements and fees attendant thereto

(a) The requirements of sections 10.3 and 10.4 of this Part shall be fulfilled through the CRD system with regard to a firm that is a member of FINRA and its salespersons.

(b) The filing of supplemental or amendatory information with the CRD system. shall be made on current Forms U4, U5, B D or BDW only. No fee is required to report a change of information on a Form BD or to terminate a registration on Form BDW. The filing of a single Form U4 to report the change of employment of a salesperson shall be deemed to satisfy the requirements of section 10.3(a)(4) of this Part.

(c) All filings that, pursuant to sections 10.3(a)(4) and 10.4(a)(4), report a change of employment to a new broker-dealer will require a fee of $ 60.

(d) In the event of a mass transfer of employment from one FINRA member firm to another caused by acquisition, merger or change of entity, the CRD system shall execute said transfer in accordance with the guidelines established for such by the CRD system. All such mass transfers will require the payment of a $ 30 fee by the broker-dealer and a $ 30 fee f or each salesperson transferred, payable through the CRD system.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.7 Annual renewal for FINRA member broker-dealers

(a) An initial single renewal invoice f or the renewal of broker-dealer and salesperson's registrations will be sent by the CRD system to each firm before the end of each year.

(b) Each broker-dealer shall pay the invoice amount, pursuant to the fee schedule set forth in this Part, directly to FINRA before the payment date indicated on the renewal invoice.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.8 Filing fees

(a) The Department of Law shall collect the following fees:

(1) $ 1,200 for each M-1 broker-dealer statement or Form BD filed by a non-FINRA member firm and for each Form NF filed;

(2) $ 1,200 for each M-11 issuer statement, Form D, or Uniform Notice Filing of Regulation A - Tier 2 Offering form where the amount of the offering is in excess of $ 500,000;

(i) All brokers and dealers whose principal business is in the offering, sale or promotion of real estate securities in or from the state of New York also shall pay the filing fees required by GBL § 352-e(7)(a).

(3) $ 300 for each M-11 issuer statement, Form D, or Uniform Notice Filing of Regulation A - Tier 2 Offering form where the amount of the offering is $ 500,000 or less;

(4) $ 150 for each salesperson's statement, including Form M-2;

(5) $ 30 for each supplemental statement, including an amended Form D and other supplemental forms; and

(6) $ 300 for each M-10 (Real Estate) broker-dealer statement filed for or by a broker-dealer offering for sale, selling or promoting cooperative or homeowners association interests in real estate, including condominium units, plus $ 15 for each partner, officer, director or principal of any such firm, association or corporation.

(b) Checks for filing fees shall be made payable to the New York State Department of Law and shall be forwarded with appropriate filings to the New York State Department of Law, Investor Protection Bureau, 28 Liberty Street, New York, NY 10005. Only attorneys' checks, bank checks, certified checks, firm checks or money orders will be accepted. The Department of Law may accept other methods of payment at its discretion.

(c) Payments and filings shall be processed electronically upon implementation of a mandatory electronic filing or payment system by the Department of Law, unless a filer can demonstrate a material hardship presented by such electronic payment or filing method. In the case of hardship, the attorney general may accept payment by check or other means or a filing in paper form, at the Department of Law's discretion.

(d) Fee schedules for FINRA members are detailed in parts 10.2, 10.5, 10.6 and 10.7 and shall be communicated through the CRD system.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.9 Filing time limit

The information required by sections 10.3, 10.4 and 10.6 of this Part shall be filed no later than 30 days after the change in circumstances has occurred.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.10 Definitions

(a) Definitions;

(1) A "broker-dealer" is a person or entity that acts as either a broker or a dealer, or both.

(2) "Federal Covered Investment Company Securities" are any security or securities that meet the definition of covered securities, or that will meet such definition upon completion of the transaction, under Section 18 (b)(2) of the Securities Act of 1933 (15 USC 77r(b)(2)).

(3) A "Federal Covered Investment Company Dealer" is any person, firm, association, or corporation satisfying the definition of dealer under GBL 359-e (1)(a) that offers for sale or sells Federal Covered Investment Company Securities.

(4) "Federal Regulation D Covered Securities" are any security or securities that meet the definition of covered securities, or that will meet such definition upon completion of the transaction, under Sections 18(b)(4)(F) of the Securities Act of 1933 (15 USC 77r(b)(4)(F)).

(5) A "Federal Regulation D Covered Securities Dealer" is any person, firm, association, or corporation satisfying the definition of dealer under GBL § 359-e (1)(a) that offers or sells Federal Regulation D Covered Securities.

(6) "Federal Tier 2 Securities" are any security or securities that meet the definition of covered securities, or that will meet such definition upon completion of the transaction, under Section 18(b)(3) or (b)(4)(D)(ii) of the Securities Act of 1933 (15 USC 77r(b)(3) or (b)(4)(D)(ii)).

(7) A "Federal Tier 2 Dealer" is any person, firm, association, or corporation satisfying the definition of dealer under GBL § 359-e (1)(a) that offers or sells Federal Tier 2 Securities.

(8) A "Salesperson" has the same definition as "salesman" under GBL § 359-e (1)(c).

History

Adopted New York State Register December 2, 2020/Volume XLII, Issue 48, eff. 12/2/2020

N.Y. Comp. Codes R. & Regs. Tit. 13§ 10.11 Alternative method of filing for certain dealers

(a) Federal Covered Investment Company Dealers must satisfy the initial statement, state notice, and further notice requirements of GBL § 359-e by filing a completed Uniform Investment Company Notice Filing known as Form NF (viewable at https://ag.ny.gov/forms), along with the fees designated herein, with the Department of Law prior to the sale of any securities, issued or to be issued by such dealer, within or from New York State. Such filings shall be valid for a period of four years.

(1) Form NF filings and payments of fees shall be sent to and made payable to the Department of Law. The Department of law may accept electronic or paper filings until such time as the Department of Law designates a system for exclusive electronic filings. The Department of Law may accept filings exclusively through the North American Association of Securities Administrators ("NASAA") Electronic Filing Depository ("EFD") as soon as such capability is available, approved and implemented by the Department of Law.

(2) Federal Covered Investment Company Dealer filings shall be renewed every four years, by submitting Form NF and the same fee applicable to an initial statement filing to the Department of Law. Upon availability of the EFD system to accept Form NF, and the Department of Law's implementation of EFD after any transition period as determined by the Department of Law, filings and payments shall be made through the EFD system.

(3) Federal Covered Investment Company Dealers must satisfy the supplemental statement requirements of GBL § 359-e by filing an amended Form NF with the Department of Law and the supplemental statement fee described in this part. Upon availability of the EFD system to accept Form NF supplemental statements, and the Department of Law's implementation of EFD after any transition period as determined by the Department of Law, such filings and payments shall be made through the EFD system.

(b) Federal Regulation D Covered Securities Dealers must satisfy the initial statement, state notice, and further notice requirements of GBL § 359-e by filing a completed Form D (Form D Notice of Exempt Offering of Securities, published by the U.S. Securities and Exchange Commission, 100 F Street, NE Washington, DC 20549, viewable at https://ag.ny.gov/forms) along with the fees designated in this Part with the Department of Law within 15 days of the first sale of any securities, issued or to be issued by such dealer, within or from New York State. Such filings shall be valid for a period of four years.

(1) Form D filings and payments of fees shall be made through the EFD system. Information regarding the EFD system is available at https://www.efdnasaa.org/.

(2) Federal Regulation D Covered Securities Dealer filings must be renewed every four years, by submitting Form D and the same f ee applicable to an initial statement filing through the EFD system.

(3) Federal Regulation D Covered Securities Dealers must satisfy the supplemental requirements of GBL § 359-e and 13 NYCRR 10.3 and 10.4 by filing an amended Form D through the EFD system with the Department of Law and paying the supplemental statement fee described in this part.

(c) Federal Tier 2 Dealers must satisfy the initial statement, state notice, and further notice requirements of GBL § 359-e by filing a completed Uniform Notice Filing of Regulation A - Tier 2 Offering Form, along with the fees designated in this part with the Department of Law not less than twenty-one (21) calendar days prior to qualification by the SEC of any securities issued or to be issued by such dealer. Such filings shall be valid for a period of four years.

(1) Uniform Notice Filing of Regulation A - Tier 2 Offering Form filings and payments of fees shall be directed to the Department of Law. The Department of law may accept electronic or paper filings and payments until such time as the Department of Law designates a system for electronic filings and payments.

(2) Federal Tier 2 Dealer filings shall be renewed every four years, by submitting the Uniform Notice Filing of Regulation A - Tier 2 Offering Form and the same fee applicable to an initial statement filing to the Department of Law. Upon availability of the EFD system to accept the Uniform Notice Filing of Regulation A - Tier 2 Offering Form, and the Department of Law's implementation of EFD for such filings, filings and payments shall be made through the EFD system.

(3) Federal Tier 2 Dealers must satisfy the supplemental requirements of GBL § 359-e and 13 NYCRR 10.3 and 10.4 by filing an amended Uniform Notice Filing of Regulation A - Tier 2 Offering Form with the Department of Law and the supplemental statement f ee described in this part.

(d) In addition to other filings required in this section, all Federal Regulation D Covered Securities Dealers, Federal Covered Investment Company Dealers and Federal Tier 2 Dealers not incorporated or organized in New York State must also file a Uniform Consent to Service Form U-2 with the Department of State and pay a $35 fee thereto at the time each dealer makes its required initial filing, and request a copy of the Form U-2 be submitted to the Department of Law unless and until such dealers file through EFD. Any dealer completing a filing through EFD is deemed to have irrevocably appointed the Secretary of State as its agent upon whom may be served any summons, complaint, subpoena, subpoena duces tecum, notice, order, judgment or other process directed at it.

(e) If electronic filing is unavailable, filings may be made in paper, to the Department of Law, 28 Liberty St., 21st Floor, New York, NY, 10005, except for the Form U-2 which must be filed according to subsection (d).

History

Adopted New York State Register December 2, 2020/Volume XLII, Issue 48, eff. 12/2/2020

Part 11 INVESTMENT ADVISORY SERVICES

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.1 General provisions and definitions

(a) Effective date. The revisions to this Part shall go into effect on February 1, 2021.

(b) Short title. Chapter 961 of the Laws of 1960, as amended, when referred to in all rules and regulations promulgated by the Attorney General relating thereto, shall be referred to as the "New York Investment Advisory Act."

(c) Administration. The Investor Protection Bureau of the Department of Law shall be responsible for the administration of the New York Investment Advisory Act. Whenever in this Part there is reference to a submission of filing with the Department of Law, this shall mean the Investor Protection Bureau, 28 Liberty Street, New York, NY 10005 or the designee.

(d) Designation. The Attorney General may by regulation, rule or order designate the web-based Investment Advisor Registration Depository ("IARD") or Central Registration Depository ("CRD") operated by the Financial Industry Regulatory Authority ("FINRA") to receive and store filings and collect related fees from investment advisers and investment adviser representatives, on behalf of the Attorney General. (Information regarding CRD is available at https://www.finra.org. Information regarding IARD is available at www.sec.gov and www.iard.com).

History

Amended, New York State Register, Volume XXXVI, Issue 27, effective 7/9/2014

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.2 Use of CRD/IARD

(a) Unless otherwise provided, all investment adviser and investment adviser representative applications, amendments, reports, notices, related filings and fees required to be filed with the Attorney General pursuant to the rules promulgated under this section, shall be filed electronically with and transmitted to CRD/IARD. The following additional conditions relate to such electronic filings:

(1) Electronic signature. When a signature or signatures are required by the particular instructions of any filing to be made through the CRD/IARD, a duly authorized officer of the applicant or the applicant him or herself, as required, shall affix his or her electronic signature to the filing by typing his or her name in the appropriate fields and submitting the filing to CRD/IARD. Submission of a filing in this manner shall constitute irrefutable evidence of legal signature by any individuals whose names are typed on the filing.

(2) When filed. Solely for purposes of a filing made through CRD/IARD, a document is considered filed with the Attorney General when all fees are received and the filing is approved by the State.

(3) Electronic filing. Any documents or fees required to be filed with the Department of Law that are not permitted to be filed with or cannot be accepted by CRD/IARD shall be filed directly with the Department of Law.

(b) Approval Process. Filings made through the CRD/IARD system shall be reviewed for completeness by the CRD/IARD system. All applications for registration meeting all existing requirements and qualifications shall be reviewed on a case-by-case basis for approval. Advisors submitting the filings shall be notified of deficiencies and required to correct same. Failure to correct any deficiencies pursuant to sections 11.4(a)-(h), 11. 6, 11.7, 11.8, 11.9 or 11.14 of this Part, or other submissions within one hundred eighty (180) days from receipt by the Department of Law or its designee will result in the abandonment of the registration and will require a completely new filing. No refunds will be made for filings that are either withdrawn on a voluntary basis or abandoned as a result of the failure to correct deficiencies.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.3 Hardship exemptions

(a) This section provides two hardship exemptions from the requirements to make electronic filings as required by the rules.

(1) Temporary hardship exemption.

(i) Investment advisers registered or required to be registered under section 11.4(c) of this Part who experience unanticipated technical difficulties that prevent submission of an electronic filing to IARD may request a temporary hardship exemption from the requirements to file electronically.

(ii) To request a temporary hardship exemption, the investment adviser must:

(a) file form ADV-H (Application for Temporary or Continuing Hardship Exemption) (17-CFR 279.3) in paper format with the Department of Law, no later than one business day after the filing (that is the subject of the form ADV-H) was due; and

(b) submit the filing that is subject of the form ADV-H in electronic format to IARD no later than seven business days after the filing was due.

(iii) Effective date-upon filing. The temporary hardship exemption will be deemed effective upon receipt by the Department of Law of the complete form ADV-H. Multiple temporary hardship exemption requests within the same calendar year may be disallowed by the Department of Law.

(2) Continuing hardship exemption.

(i) Criteria for exemption. A continuing hardship exemption will be granted only if the investment adviser is able to demonstrate that the electronic filing requirements of this rule are prohibitively burdensome.

(ii) To apply for a continuing hardship exemption, the investment adviser must:

(a) File form ADV-H (17 CFR 279.3) in paper format with the Department of Law at least 20 business days before a filing is due.

(iii) Effective date-upon approval. The exemption is effective upon approval by the Department of Law. The time period of the exemption may be no longer than one year after the date on which the form ADV-H is filed. If the Department of Law, approves the application, the investment adviser must, no later than five business days after the exemption approval date, submit filings to IARD in paper format (along with the appropriate processing fees) for the period of time for which the exemption is granted.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.4 Registration information

(a) Initial application. The application for initial registration as an investment adviser pursuant to these rules shall be made by completing Form ADV (Uniform Application for Investment Adviser Registration) (17 C.F.R. 279.1) in accordance with the form instructions and by filing the form with CRD/IARD. The application f or initial registration as an investment adviser representative pursuant to these rules shall be made by completing Form U4 in accordance with the form instructions and by filing the form with CRD/IARD. (Both Form ADV: General Instructions and the General Instructions for Part 2 of Form ADV are published by the U.S. Securities and Exchange Commission, 1 00 F Street, NE Washington, DC 20549. Form U4 Uniform Application f or Securities Industry Registration or Transfer General Instructions is published by FINRA, 1735 K St NW, Washington, DC 20006. These instructions are viewable at https://ag.ny.gov/forms).

(b) Time for filing. Unless an application for a new investment adviser representative is filed in accordance with subdivision (i), an investment adviser or investment adviser representative application must be filed with CRD/IARD and approved by the State prior to engaging in investment advisory activities in the State of New York.

(c) Where registration required. All investment advisers and solicitors with more than five (5) clients in the State of New York must make application to register as an investment adviser, unless such solicitor is a federally covered investment adviser, or is otherwise exempt from registration with the State under § 11.13. All principals, investment adviser representatives and supervisors must apply for registration in connection with their representation of any investment adviser or solicitor. All investment adviser representatives f or a federally covered investment adviser must apply f or registration in connection with their representation.

(d) Annual renewal. The application for annual renewal as an investment adviser, solicitor an d investment adviser representative shall be filed with CRD/IARD. The application for annual renewal registration shall include the required fee and any other information the Department of Law may reasonably require.

(e) Length of registration. The registration is for a calendar year or for that remaining part of the calendar year in which it is submitted.

(f) Updates and amendments.

(1) Investment advisers and solicitors must file with CRD/IARD, in accordance with the instructions in the Form ADV, any amendments to the investment adviser ' s Form ADV.

(2) All investment adviser representatives, and all principals and supervisors f or a n y investment adviser, must file Form U4 or U5, as appropriate, on CRD/IARD and must amend such form s in accordance with the respective form's instructions. (Form U5 Uniform Termination Notice for Securities Industry Registration General Instructions published by FINRA, 1735 K St NW, Washington, DC 20006 are viewable at https://ag.ny.gov/forms.)

(3) An amendment will be considered to be filed promptly if the amendment is filed within thirty (30) days of the event that requires the filing of the amendment.

(4) Investment advisers and solicitors must file with CRD/IARD, an updated Form ADV within ninety (90) days after the end of the investment adviser or solicitor's fiscal year.

(g) Completion of filing. An application for initial or renewal registration is not considered filed for purposes of these rules until the required fee and all required submissions have been received and accepted by the Department of Law or the designee.

(h) Single person firms set up as sole proprietorships need only pay the fee for the investment adviser, not the investment adviser representative, but must file both Form ADV and Form U4, and follow all other requirements for investment advisers and investment adviser representatives as detailed herein. Th e f ore go in g does not apply if the firm is incorporated or organized as a limited liability company.

(i) Implementation Period. Except as provided below, any person who, prior to February 1, 2021, was serving continuously and permissibly in any capacity covered under this Part, and who, through continued service, is subject to the registration requirements under this Part on or after February 1, 2021, may continue such service without an approved registration until December 2, 2021 without violating the registration provisions of GBL § 359-eee or this Part, so long as a Form U4 requesting investment adviser representative registration in New York for that person is submitted on or before August 31, 2021. Should an applicant be notified of a non-examination related deficiency in the application, the applicant will have fourteen (14) days to correct such deficiency and communicate the correction to the Department of Law. Any applicant whose application is denied, or who fails to correct the deficiency and communicate the correction within fourteen (1 4) days, and who continues to engage in activity requiring registration after notification of such denial or expiration of those fourteen days, shall be in violation of this Part and GBL § 359-eee. Applicants with examination-related deficiencies must correct such deficiencies in accordance with the requirements of section 11.6 or 11.7 of this Part. Nothing in this section shall excuse, relieve or limit liability of any person who violated examination or registration requirements in existence prior to February 1, 2021, nor shall it provide any extension, grace period or waiver to such person.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.5 Notice filing requirements for federally covered investment advisers

(a) Notice filing. The notice filing for a federally covered investment adviser shall be filed with CRD/IARD on an electronically signed Form ADV (Uniform Application for Investment Adviser Registration (17 C.F.R. 279.1)). All federally covered investment advisers with more than five (5) clients in the State of New York must notice file. A notice filing of a federally covered investment adviser shall be deemed filed when the fee required and the Form ADV are filed with and accepted by CRD/IARD on behalf of the State.

(b) Renewal. The annual renewal of the notice filing for a federally covered investment adviser shall be filed with CRD/IARD. The renewal of the notice filing for a federally covered investment adviser shall be deemed filed when the fee required is filed and accepted on behalf of the state.

(c) Updates and amendments. A federally covered investment adviser must file with CRD/IARD, in accordance with the instructions in the Form ADV, any amendments to the federally covered investment adviser's Form ADV. A federally covered investment adviser shall submit their amendments pursuant to U.S. Securities and Exchange Commission requirements.

(d) Investment adviser representatives representing a federally covered investment adviser must satisfy examination requirements or receive a waiver, and must register in accordance with this Part.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.6 Investment adviser examination requirements

(a) Examination Requirement. Every principal of an investment adviser or solicitor, and every investment adviser representative, including persons representing solicitors, and every supervisor who is required to register in this jurisdiction and who does not qualify for a waiver pursuant to section 11.7 of this Part, must take and receive a passing grade within two (2) years prior to the date of filing registration information pursuant to section 11.4(c) on:

(1) the Uniform Investment Adviser Law Examination (Series 65 examination); or

(2) the Securities Industry Essentials Examination, the General Securities Representative Examination (Series 7 examination) and the Uniform Combined State Law Examination (Series 66 examination).

(b) Extended Compliance Period. In accordance with 11.4(i), every natural person who, prior to February 1, 2021, was serving continuously and permissibly in any capacity covered under this Part, and who, through continued service, is subject to the registration and examination requirements of this Part on or after February 1, 2021, and who does not qualify for a waiver pursuant to section 11.7, must take and receive a passing grade by December 2, 2021 on the examinations required under paragraph (a) of this section.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.7 Waivers

(a) Prior Registration. A natural person who otherwise is required to meet the examination requirements of 11.6 of this Part shall be exempt from such requirements upon application to, and approval by, the Department of Law, provided that such person has been continuously registered to provide investment advice in any jurisdiction for a period of at least two (2) years prior to the date of filing registration information pursuant to section 11.4(c); has not had any lapse in registration exceeding two (2) years; and is not, and has not been, subject to any regulatory or civil action, proceeding or arbitration, either pending or in the preceding ten (10) years from the date of such application, that would require disclosure on Form U4.

(b) Special Waiver. Every natural person otherwise required to meet the examination requirements of 11.6(a) of this Part and who, in the regular course of business, acted as an investment adviser representative from a place of business in the State continuously and permissibly f or at least two (2) years prior to February 1, 2021 and who is not eligible f or any other waiver under this section, may be exempted from the provisions of section 11.6 of this Part upon application to, and approval by, the Department of Law. No person shall qualify for a waiver under this subdivision (b) if:

(1) That person submits an application f or registration after August 31, 2021; or

(2) That person's investment advisory activities during the two (2) years preceding December 2, 2020 were limited to serving or acting as a solicitor; or

(3) That person, for two (2) or more continuous years in the four (4) years preceding the filing of registration information, had ceased performing acts as defined in section 11.12(f) of this Part in the regular course of business from a place of business in the State; or

(4) That person currently is or has been subject to any regulatory or civil action, proceeding or arbitration, either pending or in the preceding ten (10) years from the date of such application, that would require disclosure on Form U4, or that person has been notified or has reason to believe that they currently are or remain the subject of a regulatory or law enforcement investigation related to investment related activities.

(c) Certification. The examination requirement of section 11.6 shall not apply to any natural person who currently holds one of the following professional designations in good standing:

(1) Certified Financial Planner (CFP) awarded by the Certified Financial Planner Board of Standards, Inc.;

(2) Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr, Pennsylvania;

(3) Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;

(4) Chartered Financial Analyst (CFA) awarded by the Association for Investment Management Research;

(5) Chartered Investment Counselor (CIC) awarded by the Investment Adviser Association; or

(6) Such other professional designation as the administrator may by rule or order recognize.

(d) Application for Waiver. Applicant waiver eligibility under subdivisions (a) and (c) of section 11.7 shall be automatically directed to the Department of Law for evaluation and approval through the Form U4 submission in CRD/IARD. All requests for specials waivers under subdivision (b) of section 11.7 must be submitted directly to the Department of Law on Form NY-IASW at the time of submission of the Form U4, unless otherwise directed by the Department of Law. Nothing in this section shall automatically revoke any examination waiver granted by the Department of Law prior to February 1, 2021 pursuant to Form NY-IAQ.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.8 Filing fees

(a) The fees for initial and annual renewal registrations under this Part are $ 200 and must be paid through CRD/IARD.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.9 Record keeping requirements

(a) All of the following books and records must be maintained and preserved in an easily accessible place for a period of not less than five (5) years from last transaction or publication, the first two (2) years in an appropriate office of the investment adviser. Before ceasing operations, the investment adviser must arrange for maintenance and preservation and be responsible for all books and records for the full period described above:

(1) Journals, ledgers and underlying documentation for entries; annual financial statements (including trial balances and internal working papers), business tax returns (income & employer taxes);

(2) Check books, bank statements, canceled checks, reconciliations;

(3) All bills and statements, paid or unpaid;

(4) Employment records. Records should include, but are not limited to, a list of all individuals who give investment advice on behalf of the applicant in this jurisdiction;

(5) Record of complaints organized by complainant. These records should include, but are not limited to any regulatory or disciplinary action against any individuals who give investment advice on behalf of the applicant in this jurisdiction;

(6) A list or record of all accounts in which the investment adviser is vested with any discretionary power with respect to the funds, securities or transactions of any client;

(7) A copy of each notice, circular, advertisement, newspaper article, investment letter, bulletin or other communication that the investment adviser circulates or distributes, directly or indirectly to five (5) or more persons. If purchase or sale of a specific security is recommended and the reason is not stated, there must be a memorandum indicating the reason. The investment adviser is not required to keep a record of the names and addresses the notice, circular, letter or other communication is sent to, except if it is distributed to persons named on any list, then a memorandum describing the list and its source should be retained with the notice, circular, letter or other communication;

(8) All written agreements entered into by the investment adviser with the client or otherwise relating to the business of the investment adviser;

(9) Record of every transaction in a security in which the investment adviser has or by reason of such transaction acquires, any direct or indirect beneficial ownership (not including accounts over which the investment adviser has no control or influence or transactions in securities which are direct obligations of the United States). The record shall state the title and amount of security involved; date and nature of transaction; price at which it was effected; name of broker, dealer or bank. The transaction must be recorded not later than ten (10) days after the end of the calendar quarter in which the transaction was effected. The record may contain the statement that this is not an admission of direct or indirect beneficial ownership in the security;

(10) A copy of each written statement and each amendment or revision, given or sent to any client or prospective client and a record of the dates that each written statement, was given or offered;

(11) All accounts, books, internal working papers and any other records or documents necessary to form the basis for or to demonstrate the calculation of the performance or rate of return of any or all managed accounts or securities recommendations in any notice, circular or letter. Investment records including documentation and verification of all claims of investment performance record or any projections made to client(s);

(12) Certificates or other documentation for continuing education;

(13) Client file should contain:

(i) Written contract--must be original;

(ii) All correspondence to or from client;

(iii) All powers of attorney and any other evidence of the granting of discretionary authority;

(iv) Memorandum of each order given by investment adviser for purchase or sale of any security; any instruction from the client concerning the purchase, sale, delivery or receipt of a particular security, and of any modification or cancellation of orders or instructions. (Must show terms and conditions of the order, instruction, modification or cancellation, identify the person connected with the investment adviser who recommended the transaction to the client and the person who placed the order, the account, the date, entity that executed it, duly noted if entered pursuant to discretionary power);

(v) Brokerage, bank statements;

(vi) All written acknowledgements of receipt obtained from clients and copies of disclosure documents;

(vii) Risk analysis for each client;

(viii) Records of fees charged, collected;

(ix) Recommendations to clients including but not limited to portfolio review analyses;

(x) Investments made on behalf of clients;

(xi) If known--name of client broker, bank, accountant, insurance agent, prior investments, real estate, mortgages, amounts of coverage, assumed tax brackets, significant family relationships including ages;

(xii) Assets managed;

(xiii) Unusual material items affecting cash flow;

(xiv) Person responsible for the account;

(xv) Record of ending relationship, date; and

(xvi) Documentation of each client's financial assets and income that support any designation made or acknowledged b y the Investment Adviser of such client as an "accredited investor" (17 C.F.R. 230.501) or "qualified client" (17 CFR § 275.205-3) as those terms are defined under federal law. The investment adviser shall make and maintain documents evidencing reasonable steps to verify any designation as "accredited investor" or "qualified client" and maintain all documents reviewed in the course of such verification.

(14) Investment advisers with custody or possession of securities or funds of any client must additionally keep the following records:

(i) Journal or other record showing all purchases, sales, receipts and deliveries of securities (including certificate numbers) for such accounts and all other debits and credits to such accounts;

(ii) Separate ledger account for each client showing all purchases, sales, receipts and deliveries of securities, the date and price of each such purchase and sale, and all debits and credits;

(iii) Copies of confirmations of all transactions affected by or for the account of any such client; and

(iv) A record for each security in which any client has a position showing the name of each client having any interest in each security, the amount or interest of each such client, and the location of each security.

(15) Investment advisers who render investment supervisory or management service must keep the following records (with respect to the portfolio):

(i) Records showing separately for each such client the securities bought and sold, the date, amount and price of each such purchase and sale; and

(ii) For each security in which the client has a current position, information from which the investment adviser can promptly furnish the name of such client and the current amount or interest of such client.

(16) Upon the Department of Law's request for any records maintained pursuant to this section, such records shall be filed with the Investor Protection Bureau of the Department of Law within ten (10) business days of such request or within a timeframe otherwise agreed to by the Department of Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.10 Filing of investment advisory literature and advertisements

(a) All investment advisers who shall sell to clients or prospective clients investment advisory literature in this State, shall mail or transmit to the Department of Law on the date of the first general distribution to the investing public one copy of such literature.

(b) Every investment adviser who shall in this State, publish, give publication to, or make general distribution of any notice, circular, advertisement, form letter or other advertising communication for the purpose of soliciting investment advisory accounts or clients, whether in writing or by radio or television broadcast, shall file with the Department of Law one copy thereof as promptly as is reasonably possible, but not later than five days after such advertisement, notice, circular, letter or other advertising communication has been made.

(c) Investment supervisory services, and that part of any regular investment advisory business constituting the same, are not required to file with the Department of Law under the foregoing paragraphs personalized letters, presentations or other literature, issued in servicing of investment supervisory accounts, distributed to clients.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.11 Withdrawal of registration

(a) The application f or withdrawal of registration as an investment adviser or solicitor shall be completed by following the instructions on Form ADV-W (Notice of Withdrawal from Registration as Investment Adviser) (17 C.F.R. 279.2) and filed upon Form ADV-W with CRD/IARD. Instructions for Form ADV-W are published by the U.S. Securities and Exchange Commission, 10 0 F Street, NE Washington, DC 20549 and are viewable at https://ag.ny.gov/forms.

(b) The request for termination of registration as an investment adviser representative shall be completed by completing Form U5 on CRD/IARD.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 11.12 Definitions

(a) A single client or a single person for purposes of section 359-eee(a)(5) shall mean

(1) a natural person, and:

(i) Any minor child of the natural person;

(ii) Any relative, spouse, or relative of the spouse of the natural person who has the same principal residence;

(iii) All accounts of which the natural person and/or the persons referred to in this paragraph (a)(1) are the only primary beneficiaries; and

(iv) All trusts of which the natural person and/or the persons referred to in this paragraph (a)(1) are the only primary beneficiaries;

(2)

(i) A corporation, general partnership, limited partnership, limited liability company, trust (other than a trust referred to in subparagraph (a) (1) (iv) of this section), or other legal organization (any of which are referred to hereinafter as a "legal organization") that receives investment advice based on its investment objectives rather than the individual investment objectives of its shareholders, partners, limited partners, members or beneficiaries (any of which are referred to hereinafter as an "owner"); and

(ii) Two (2) or more legal organizations referred to in subparagraph (a) (2) (i) of this section that have identical owners.

(3) Special rules. For purposes of this section:

(i) An owner must be counted as a client if the investment adviser provides investment advisory services to the owner separate and apart from the investment advisory services provided to the legal organization, provided, however, that the determination that an owner is a client will not affect the applicability of this section with regard to any other owner.

(ii) An owner need not be counted as a client of an investment adviser solely because the investment adviser, on behalf of the legal organization, offers, promotes, or sells interests in the legal organization to the owner, or reports periodically to the owners as a group solely with respect to the performance of, or plans for, the legal organization's assets or similar matters;

(iii) A limited partnership or limited liability company is a client of any general partner, managing member or other person acting as investment adviser to the partnership or limited liability company; and

(iv) Any person for whom an investment adviser provides investment advisory services without compensation need not be counted as a client.

(b) Federally covered investment adviser means a person who is registered under section 203 of the Investment Advisers Act of 1940, 15 U.S.C. § 80(B) et seq.

(1) a bank as defined under General Business Law § 359-e; or

(2) credit union, or similar institution that is organized or chartered under the laws of a State or of the United States, authorized to receive deposits, and supervised and examined by an official or agency of a State or the United States if its deposits or share accounts are insured by the Federal Deposit Insurance Corporation, the National Credit Union Share Insurance Fund, or a successor authorized by federal law. The term does not include:

(A) an insurance company or other organization primarily engaged in the business of insurance;

(B) a Morris Plan bank; or

(d) General distribution shall mean a distribution to more than five (5) persons in this State at any one time.

(e) Institutional buyer shall mean any of the following, whether acting for itself or for others in a fiduciary capacity:

(1) a depository institution or international banking institution;

(2) an insurance company;

(3) a separate account of an insurance company;

(4) an investment company as defined in the Investment Company Act of 1940 (15 U.S.C.A. § 80a-3);

(5) a broker-dealer registered under the Securities Exchange Act of 1934;

(6) an employee pension, profit-sharing, or benefit plan if the plan has total assets in excess of $ 10,000,000 or its investment decisions are made by a named fiduciary, as defined in the Employee Retirement Income Security Act of 1974 (ERISA) (29 U.S.C. § 1102(a)), that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under this Act, a depository institution, or an insurance company;

(7) a plan established and maintained by a State, a political subdivision of a State, or an agency or instrumentality of a State or a political subdivision of a State for the benefit of its employees, if the plan has total assets in excess of $ 10,000,000 or its investment decisions are made by a duly designated public official or by a named fiduciary, as defined in ERISA (29 U.S.C. § 1102(a)), that is a broker-dealer registered under the Securities Exchange Act of 1934, an investment adviser registered or exempt from registration under the Investment Advisers Act of 1940, an investment adviser registered under this Act, a depository institution, or an insurance company;

(8) a trust, if it has total assets in excess of $ 10,000,000, its trustee is a depository institution, and its participants are exclusively members of plans of the types identified in subparagraph (6) or (7) of this subdivision, regardless of size of assets, except a trust that includes as participants self-directed individual retirement accounts or similar self-directed plans;

(9) an organization described in section 501(c)(3) of the Internal Revenue Code (26 U.S.C. § 501(c)(3)), a corporation, Massachusetts or similar business trust, limited liability company, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $ 10,000,000;

(10) a small business investment company licensed by the Small Business Administration under section 301 (c) of the Small Business Investment Act of 1958 (15 U.S.C. section 681(c)) with total assets in excess of $ 10,000,000;

(11) a private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940 (15 U.S.C. section 80b-2(a)(22)) with total assets in excess of $ 10,000,000;

(12) a federally covered investment adviser acting for its own account;

(13) a qualified institutional buyer as defined in Rule 144A(a)(1) (17 C.F.R. 230.144A(a)(1)) other than Rule 144A(a)(1)(H) (17 C.F.R. 230.144A(a)(1)(H)), adopted under the Securities Act of 1933;

(14) a major United States institutional investor as defined in Rule 15a-6(b)(4)(i) ( 17 C.F.R. 240.15a- 6(b)(4)(i)) adopted under the Securities Exchange Act of 1934;

(f) Investment adviser shall mean any person who, for compensation, engages in the business of advising members of the public, either directly or through publications or writings within or from the State of New York, as to the value of securities or as to the advisability of investing in, purchasing, or selling or holding securities, or who, for compensation and as a part of a regular business issues or promulgates analyses or reports concerning securities to members of the public within or from the State of New York.

(g) Investment adviser representative shall mean a natural person who represents:

(1) an investment adviser or solicitor in performing any of the acts that define an investment adviser under GBL § 359-eee(1)(a) or,

(2) a federally covered investment adviser from a place of business in the State and who satisfies the requirements of Rule 203A-3 (17 CFR § 275.203A-3) adopted under the Investment Advisers Act of 1940.

(h) Investment supervisory service shall mean any person giving continuous advice as to the investment of funds on the basis of individual needs of each client.

(i) Person shall mean a natural person, corporation, company, partnership, trust or association.

(j) Principal shall mean and include every person or entity directly or indirectly controlling an investment adviser or solicitor. Principals are subject to the same registration and examination requirements of investment adviser representatives under this part.

(k) Solicitor shall mean a person who as part of a regular business, engages in the business of providing investment advice to the limited extent that such person receives compensation for introducing a prospective investor or investors to an investment adviser or a federally covered investment adviser, unless such person would be excluded from the definition of investment adviser under an enumerated exception under GBL § 359-eee(1)(a) or § 11.13 of this part. Solicitors are subject to the same registration and examination requirements as investment advisers, and principals and representatives of solicitors are subject to the same registration and examination requirements as investment adviser representatives, under this part.

(l) Supervisor shall mean a natural person who directly supervises one or more natural persons associated with an investment adviser in their capacity as investment adviser representatives.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 11.13 Exclusions and Exemptions

(a) The following are excluded from the definition of "investment adviser" under 11.12(f) of this Part and are not subject to the registration provisions of GBL § 359-eee and the regulations issued thereunder:

(1) A bank or trust company, unless it is considered an investment adviser under the Investment Advisers Act of 1940;

(2) A lawyer, accountant, engineer or teacher whose performance of these services is solely incidental to the practice of this profession;

(3) A broker or dealer whose performance of these services is solely incidental to the conduct of its business as broker or dealer and who receives no special compensation for them;

(4) A publisher of a bona fide newspaper or news magazine;

(5) A person who sells investment advisory services to less than six (6) persons in this State exclusive of financial institutions and institutional buyers; and

(6) A federally covered investment adviser.

(b) The following investment advisers are exempted from the registration provisions and the advertising and literature filing provisions of GBL § 359-eee and the regulations issued thereunder;

(1) a person who gathers raw data from one (1) or more sources and publishes it in chart form without comment as an information source to investors; and

(2) a person who renders investment advice for compensation solely in the form of seminars attended by more than five (5) persons in this State.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 11.14 Financial statements

(a) Financial statements of an investment adviser shall be prepared in accordance with generally accepted accounting principles including reserves or liabilities for unfulfilled subscriptions. Where financial statements are unaudited by an independent public accountant, a certification by management is required attesting to the accuracy of such statements. Nothing in this regulation shall abrogate the requirement, set forth in form ADV: part 2A, item 18 A.1., that investment advisers charging certain fees six months or more in advance must submit audited financial statements.

(b) Each investment adviser filing an initial registration through the IARD shall submit a balance sheet and an income statement as of the close of its last fiscal or calendar year as prepared by the adviser's accountant or by management. Where the financial statements submitted are more than 90 days old, an interim balance sheet no more than 90 days old shall also be submitted directly to the Department of Law.

(c) Annually, each registered investment adviser shall submit a balance sheet and an income statement as of the close of its last fiscal or calendar year within 90 days after completion of its fiscal or calendar year end directly to the Department of Law.

History

Amended, New York State Register, Volume XXXVI, Issue 27, effective 7/9/2014

N.Y. Comp. Codes R. & Regs. Tit. 13 § 11.15 Distribution of investment adviser statement

Each investment adviser registered in the State of New York must:

(a) deliver to a client or prospective client either a copy of the investment adviser statement form ADV, or a brochure containing all of the information set forth therein, before or at the time of entering into an investment advisory contract with that client; and

(b) deliver to each client, annually within 120 days after the end of the fiscal year of such adviser, and without charge, if there are material changes in such statement or brochure since any annual updating amendment:

(1) a current statement or brochure; or

(2) the summary of material changes to any statement or brochure as required by item 2 of form ADV, part 2A that offers to provide your current brochure without charge, accompanied by the web site address (if available) and an e-mail address (if available) and telephone number by which a client may obtain the current statement or brochure from you, and the web site address for obtaining information about you through the investment adviser public disclosure (IAPD) system.

History

Amended, New York State Register, Volume XXXVI, Issue 27, effective 7/9/2014

N.Y. Comp. Codes R. & Regs. Tit. 13 § 11.17 Forms

All forms are available on the Department of Law's website at https://ag.ny.gov/forms.

(a) Form ADV.

Uniform Application f or Investment Adviser Registration, parts 1 and 2.

(b) Form ADV-H.

Application for Temporary or Continuing Hardship Exemption.

Notice of Withdrawal From Registration as Investment Adviser.

(d) Form NY-IAQ.

New York Investment Adviser Qualification. (Retired).

(e) Form U4.

Uniform Application f or Securities Industry Registration or Transfer.

(f) Form U5.

Uniform Termination Notice for Securities Industry Registration.

(g) Form NY-IASW.

New York Special Waiver Qualification Under 13 NYCRR 11.7(b).

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 11.18 Denial, Suspension, Conditioning and Revocation of Registration Statements and Applications

(a) The attorney general may by order, deny, suspend, condition, or revoke any registration statement or application of any investment adviser, investment adviser representative, solicitor or principal made pursuant to GBL § 359-eee, in the public interest for good cause.

History

Adopted New York State Register December 2, 2020/Volume XLII, Issue 48, eff. 2/2/2021

Part 12 SECURITY TAKEOVER DISCLOSURE RULES

N.Y. Comp. Codes R. & Regs. Tit. 13 § 12.1 Short title

This Part shall be known as the "Security Takeover Disclosure Rules."

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 12.2 General provisions

(a) The Bureau of Investor Protection and Securities of the Department of Law (hereinafter the "bureau") shall be responsible for the administration of article 16 of the Business Corporation Law.

(b) As used in section 1602 of the Business Corporation Law, New York City office refers to the bureau, 28 Liberty Street, New York, NY 10005 or to any subsequent address to which the bureau may move.

(d) Filings with the bureau shall be made, if made by hand delivery, between the hours of 9 a.m. and 5 p.m. during the normal business days of the Department of Law. Deliveries to the target company shall be made at its principal executive offices. The date of receipt by the bureau and the target company shall be considered the date of filing and delivery, respectively.

(e) Whenever required to file or deliver registration statements or amended registration statements, offerors shall file four copies thereof with the bureau and deliver two copies to the target company. Additional copies shall be supplied to the bureau upon request by the bureau. Offerors shall, within three days of delivering the registration statement or amended registration statements to the target company, file with the bureau a statement that such delivery to the target company has been made, including the date and location of the delivery.

(f) Whenever used in this Part, unless otherwise indicated, any reference to a section number shall be a reference to that section of the Business Corporation Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 12.3 Definitions

As used in article 16 of the Business Corporation Law, the following terms shall have the following meanings:

(a) Person means an individual (natural person), partnership, limited partnership, syndicate, corporation, joint-stock company, unincorporated organization, trust, association, affiliate and/or associate of a person, or other entity. When two or more persons act as a partnership, limited partnership, syndicate or other group for the purpose of making a takeover bid, such group shall be deemed to be a single person for the purpose of section 1601(b). A single registration statement may be filed on behalf of such a group required to file the statement under section 1602.

(b) Affiliate of a person means any person controlling, controlled by, or under common control with such person. Control, including the terms controlling, controlled by, and under common control with, means the possession of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.

(1) any corporation or other organization in which the person is an executive officer, director or partner, or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities;

(2) any person who is, directly or indirectly, the beneficial owner of 10 percent or more of any class of equity securities of the person;

(3) any trust or estate in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity; or

(4) the spouse of the person, or any relative of the person or of such spouse who has the same home as the person.

(d) Beneficial owner of equity securities means any person who directly or indirectly through any contract, arrangement, understanding or relationship has or shares the power to direct the voting of such securities; provided, however, that:

(1) a person shall be deemed to be a beneficial owner of all securities beneficially owned by all individuals who are related by blood, marriage or adoption to such person and who have the same home as such person;

(2) a person shall be deemed to be a beneficial owner of securities which such person has the right to acquire:

(i) through the exercise of an option, warrant or right exercisable within 60 days;

(ii) through the conversion of securities convertible within 60 days; or

(iii) pursuant to the power to revoke within 60 days a trust or similar arrangement. Any securities not outstanding which are subject to such option, warrants, rights or conversion privileges shall be deemed to be outstanding for the purpose of computing the percentage of outstanding securities of the class owned by such person but shall not be deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person.

(e) Bank means:

(1) a banking institution organized under the laws of the United States;

(2) a member bank of the Federal Reserve System; and

(3) any other banking institution, whether incorporated or not, doing business under the laws of any state or of the United States, a substantial portion of the business of which consists of receiving deposits or exercising a fiduciary power similar to those permitted to national banks under section 11(k) of the Federal Reserve Act, as amended, and which is supervised and examined by the State or Federal authority having supervision over banks.

(f) A person participates or aids in making a takeover bid within the meaning of section 1601, if:

(1) that person is involved in a takeover bid as principal, for or on whose behalf a takeover bid is being made;

(2) as a result of the takeover bid, that person may acquire, directly or indirectly, the right to exercise any voting rights attached to the equity securities which are the subject of the takeover bid or any other beneficial interest in the equity securities which are the subject of the takeover bid; or

(3) that person is an associate or an affiliate of a person who participates or aids in making a takeover bid. The term participates or aids in making a takeover bid, does not include the following activities, provided that the actor does not otherwise acquire a direct or indirect voting or other beneficial interest in equity securities of the target company as a result of the takeover bid:

(i) soliciting tenders under a takeover bid, or soliciting others to solicit such tenders, or otherwise furnishing the usual and customary services of a dealer manager, soliciting dealer or soliciting agent;

(ii) receiving and processing tenders of securities from security holders of the target company, arranging or making payment therefor on behalf of or for the offeror, or otherwise furnishing the usual and customary services of a depository, exchange agent or forwarding agent;

(iii) receiving, holding in safekeeping or acting as a nominee or record owner of equity securities which are the subject of a takeover bid, or otherwise furnishing the usual and customary services of a custodian, nominee or record holder of securities for or on behalf of an offeror;

(iv) transferring or registering equity securities which are the subject of a takeover bid, or otherwise furnishing the usual and customary services of a transfer agent, or registrar of securities; and

(v) publishing or assisting in the publication of any prospectus, brochure, advertisement, circular, letter or other written or oral statement relating to a takeover bid, or otherwise furnishing the usual and customary services of a newspaper, printer, typesetter, composer, mailing agent, public relations advisor, advertising agency or similar publicity function.

(g) Securities of an issuer are or are to be the subject of a takeover bid within the meaning of section 1601(b) at any time after an offeror has filed a registration statement pursuant to section 1602 concerning a takeover bid for such issuer and while such takeover bid is still pending for such issuer.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 12.4 Financial statements required

The financial statements of the offeror shall include audited balance sheets and related statements of income and changes in financial position for the three most recent annual fiscal periods. The audited balance sheets and related statements of income and changes in financial position shall be based on examinations made by independent public accountants in accordance with generally accepted auditing standards and prepared in accordance with generally accepted accounting principles applied on a basis consistent with previous periods and shall include opinions by said independent public accountants as to the fairness of presentation of the offeror's financial position, results of operations, and changes in financial position reflected in the financial statements. If the most recent audited financial statements are for a period ended more than 90 days prior to the date of filing, interim statements covering the period from the date of the last audited statement to a date within 90 days of the date of filing are required to be filed hereunder. Interim statements, if not audited by independent public accountants, shall be attested to by the offeror as to completeness and fairness of presentation to the best of the offeror's knowledge and belief.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 12.6 Hearings and investigations

(a) Notice of the scheduling of a public hearing or the commencement of an investigation pursuant to section 1612 shall be made by mailing such notice to the person and address specified in section 12.5(d)(11) of this Part.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 12.7 Fees

(a) The bureau shall collect the following fees for the filing of each registration statement:

(1) $500 for every registration statement where the maximum consideration payable by the offeror for the securities which are the subject of the takeover bid is less than $250,000;

(2) $1,000 where the minimum consideration is $250,000 and where the maximum consideration is less than $1,000,000; and

(3) $2,500 where the consideration is $1,000,000 or more.

(b) The fees set forth in this section shall be paid upon the initial filing of the registration statement with the bureau and shall not be refundable.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 12.8 Safe harbor

An offeror shall be deemed to be in compliance with section 1602(b) if the offeror makes full and fair disclosure to the offerees of the material information set forth in the registration statement filed pursuant to section 1602(a) as soon as practicable after the commencement of the takeover bid. An offeror shall be deemed to have made such disclosure if, within seven days of the commencement of the takeover bid, copies of a document or documents making full and fair disclosure of the material information set forth in the registration statement filed pursuant to section 1602(a) are mailed to all record owners of the equity securities of the target company who are listed on the stock records of the company, determined as of a date not more than 30 days prior to the commencement of the takeover bid, as having addresses of record in New York State at such New York address and, within five days of the commencement of the takeover bid, a notice is published in The New York Times or the New York edition of the Wall Street Journal and a newspaper of general circulation in Albany, Buffalo, Rochester or Syracuse stating that a takeover bid is being made for the equity securities of the target company and that material information concerning the offer as required by statute is available to New York resident owners of the equity securities upon request at an address specified in the notice and copies of such document or documents are promptly sent to those New York resident owners who so request. Such newspaper notice shall be no less than five inches by seven inches in size.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 12.9 Insider trading restrictions

(a) A person other than a natural person shall not be deemed in violation of section 1609(b) if such person shows that:

(1) the individuals making the investment decision on behalf of such person to purchase or sell any security described in section 1609(b) or to cause any such security to be purchased or sold by or on behalf of others did not know the material nonpublic information; and

(2) such person had implemented one or a combination of policies and procedures, reasonable under the circumstances, taking into consideration the nature of the person's business, to insure that individuals making investment decisions would not violate section 1609(b), which policies and procedures may include but are not limited to (i) those which restrict any purchase, sale and causing any purchase and sale of any such security or (ii) those which prevent such individuals from knowing such information

(b) The following transactions shall not be deemed violations of section 1609(b):

(1) purchase(s) of any security described in section 1609(b) by a securities broker or by another agent on behalf of the offeror; or

(2) sale(s) by any person of any security described in section 1609(b) to the offeror.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 13 COMMODITY BROKER-DEALERS, SALESPERSONS AND INVESTMENT ADVISORS

N.Y. Comp. Codes R. & Regs. Tit. 13§ 13.1 Definitions

(a) For purposes of these regulations, the term commodity shall not include stamps or numismatic coins whose fair market value is at least 20 percent higher than the value of the metal they contain, where such numismatic coins or stamps are sold by any person or firm whose income from the sale of such numismatic coins or stamps derives substantially from retail sales in face-to-face transactions with purchasers in retail stores.

(b) The term substantially shall mean 75 percent or more of such income.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 13.2 Registration of commodity broker-dealers, salespersons and investment advisors

(a) In compliance with subdivision 14 of section 359-e of the General Business Law, all commodity broker-dealers shall file form CBD with the Department of Law. All commodity salespersons shall file form CM-2 with the Department of Law. All commodity investment advisors shall file form CADV with the Department of Law. Any person who manages or supervises any such commodity broker-dealer, salesperson or investment advisor shall supply the information set forth and required on forms CBD and CADV. All officers, directors, principals, partners, managers, supervisors and 10 percent or more equity holders of commodity broker-dealers and commodity investment advisors shall file form CI-1 with the Department of Law. Each of the above forms shall be subscribed and sworn to by the signer thereof and notarized.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 13.3 Supplemental commodity statement

(a) In compliance with paragraph 14(e) of section 359-e of the General Business Law, every commodity broker-dealer who shall have filed a commodity broker-dealer statement (form CBD) with the Department of Law, and every commodity investment advisor who shall have filed a commodity investment advisor statement (form CADV) with the Department of Law, shall file a Supplemental Commodity Statement (form CM-3) whenever the information contained in the original filing becomes inaccurate or incomplete in any material respect, including but not limited to the following:

(1) Name.

Any change in the name of the registrant. However, in the event the registrant incorporates, an entirely new registration statement must be filed.

(2) Address.

Any change of business address or address of each new branch office.

(3) Management.

Any change in the officers, directors, partners, 10 percent or more equity holders or other principals of the registrant or any person who manages or supervises the commodity broker-dealer, commodity investment advisor or the commodity salespersons, giving the name and address of each such person involved in the change.

(4) Salespersons.

Any change in commodity salespersons of a registered commodity broker-dealer, giving name and date of termination of any salespersons leaving the registrant's employ and the reasons therefor, and the name and commencement date of any salespersons brought into the employ of the registrant.

(5) Injunctions and other proceedings.

Any change in disciplinary history, including, but not limited to, each occasion when the registrant or any officer, director, partner, principal, managing person or supervisor, 10 percent or more equity holder or salesperson thereof becomes the subject of any criminal action, or is convicted of any misdemeanor or felony, or is the subject of any pending civil action commenced by a government agency relating to the offer or sale of securities or commodities, or is the subject of any injunction or cease and desist order relating to the offer or sale of securities or commodities.

(6) Termination of business activity.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13§ 13.4 Supplemental commodity salesperson's statement

(a) In compliance with paragraph 14(e) of section 359-e of the General Business Law, every commodity salesperson who shall have filed a commodity salesperson's statement (form CM-2) with the Department of Law shall file a supplemental commodity salesperson's statement (form CM-4) whenever the information contained in the original filing becomes inaccurate or incomplete in any material respect, including but not limited to the following:

(1) Name.

Any change in the name of the registrant.

(2) Address.

Any change of residence address of the registrant.

(3) Termination of employment.

Any termination of employment as a commodity salesperson, giving the date of termination and reason therefor.

(4) Change of employment.

Any new employment as a commodity salesperson, giving the name and address of the new firm and the date of commencement of employment as a salesperson.

(5) Injunctions and other proceedings.

Any change in disciplinary history, including but not limited to each occasion when the registrant becomes the subject of any criminal action, or is convicted of any misdemeanor or felony, or is the subject of any pending civil action commenced by a government agency relating to the offer or sale of securities or commodities, or is the subject of any injunction or cease and desist order relating to the offer or sale of securities or commodities.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 13.5 Filing fees

The annual filing fee for each commodity broker-dealer and commodity investment advisor registration statement is $100. The annual filing fee for each commodity salesperson registration statement is $25. The filing fee for each supplemental statement is $10. Checks should be made payable to the New York State Department of Law. Personal checks or cash will not be accepted. Attorney's checks, bank checks, certified checks or money orders only will be accepted.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 13.6 Time and place for filing

(a) Form CBD, form CADV and form CM-2 must be filed with the Department of Law prior to engaging in any activity covered by the registration.

(b) The information required by sections 13.3 and 13.4 of this Part shall be filed no later than 30 days after the change in circumstances has occurred. Any changes which occur within 30 days of each other may be reported by filing one appropriate form with the applicable fee.

(c) Whenever in these regulations there is a reference to submission or filing with the Department of Law, this shall mean the New York State Department of Law, Bureau of Investor Protection and Securities, 28 Liberty Street, New York, NY 10005.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 13.7 Duration of registration

(a) Registration is for a period of one year from date of filing.

(b) A registration renewal is executed on form CBD, form CM-2 or form CADV in the same manner as the original registration. Such application should contain complete answers to all questions and not merely statements that there are no changes since the last registration.

(c) A registered commodity broker-dealer or commodity investment advisor may terminate its registration by filing form CM-3.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 13.8 Fee receipt

A receipt for the filing fee will be sent as an acknowledgment of filing.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Subchapter B REAL ESTATE SYNDICATES

Part 16 REAL ESTATE SYNDICATION OFFERINGS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.1 General provisions

(a) Parts 16 and 18 of the regulations promulgated under the provisions of chapter 987 of the Laws of 1960 are hereby repealed 10 days after the filing of this Part. This Part shall then become effective immediately.

(b) Chapter 987 of the Laws of 1960, chapter 762 of the Laws of 1961, chapter 57 of the Laws of 1962 and chapter 588 of the Laws of 1963, when referred to below and in all rules and regulations issued by the Attorney General relating thereto, shall be referred to as the New York State Real Estate Syndicate Act.

(c) The Condominium, Theatre and Syndication Financing Bureau of the Department of Law shall be responsible for the administration of the New York State Real Estate Syndicate Act. Wherever in this Part there is reference to filing with the Department of Law, this shall mean the Condominium, Theatre and Syndication Financing Bureau thereof, at 28 Liberty Street, New York, NY 10005.

(d) The expressly enumerated "offering statement" requirements of paragraph (b) of subdivision 1 of section 352-e of the New York State Real Estate Syndicate Act shall only be included in offering literature required to be filed under paragraph (a) of subdivision 1 of section 352-e when, and as far as, applicable to the particular type of specific or general real estate investment offering being made.

(e) The offering statement required to be used by subdivision 3 of section 352-e shall include a prospectus, which shall contain a full and fair summary of all material aspects of the offering. The prospectus shall be so denoted except where the securities are offered pursuant to a regulation A exemption under the Federal Securities Act of 1933 in which case it may be denoted as an "offering circular." Twenty-five copies of such prospectus or offering circular shall be filed as provided herein.

(f) Unless elsewhere provided by regulation, prospectuses required to be filed with the Department of Law of the State of New York pursuant to section 352-e of the General Business Law of this State shall be accompanied on the original filing by two copies of form RS-1 to be issued by the Attorney General of this State for such purposes. All offering literature to be employed in connection with the offering shall accompany such original filing.

(g) Unless elsewhere provided by regulation, documents filed with the Department of Law to supplement or amend a prospectus already filed pursuant to the foregoing subdivision or prior regulations and new or amended literature to be employed in connection with an offering shall be accompanied by two copies of form RS-2 to be issued by the Attorney General of this State for that purpose. Such form, together with 25 copies of the supplemental or amended literature shall be filed with the Department of Law. Paragraph (a) of subdivision 2 of section 352-e of the General Business Law is applicable to the use of such additional material as new offering literature.

(h) Unless elsewhere provided by regulation, two copies of form RS-3 shall be filed by every real estate syndicate offering securities (as defined in paragraph [a] of subdivision 1 of section 352-e of the General Business Law) to the public in or from this State after January 1, 1961, where the offering or real estate transaction is abandoned or not consummated for any reason; upon which form the actual disposition of funds raised shall be given, as well as an accurate explanation for the failure to consummate the transaction.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.2 Contents of prospectus

(a) Cover.

(1) There shall be set forth on the outside front cover page of every prospectus the following statement in capital letters printed in boldface roman type at least as large as 10-point modern type and at least two points leaded:

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

There shall be no other reference to filing with the Attorney General or the Department of Law anywhere in the prospectus.

(2) There shall be set forth on the outside front cover page of every prospectus the following:

(i) the amount of money sought to be raised;

(ii) the price per unit;

(iii) the name of the issuer;

(iv) the name and address of the principal distributor; and

(v) the date of the prospectus.

(3) Unless the issue is also filed with the Securities and Exchange Commission of the United States under a full registration, it shall be indicated after the date of the prospectus that the prospectus may not be used for a period of more than four months thereafter. Such statement shall not eliminate the need to amend the prospectus during that four-month period upon the occurrence of material events affecting the issuer or issue.

(4) The aforesaid shall not constitute a limitation on the contents of the front cover where additional material is essential for full and fair disclosure.

(b) Body.

(1) Where applicable, when the offering involves specific real estate or interests therein, to be acquired with all or part of the proceeds of the offering, there shall be contained on the inside front cover in easily readable print a box entitled "Introductory Information on Property to be Purchased," which shall be in the following form:

(i) location of property;

(ii) basic type of construction and use;

(iii) nature of interest to be acquired (fee, leasehold, etc.).

Where applicable the following statement shall follow in capital letters in bold print:

THIS PROSPECTUS CONTAINS PAST OPERATING FIGURES ON THE PROPERTY, THE BACKGROUND AND EXPERIENCE OF THE PROMOTERS, AND THEIR PROFITS. YOU SHOULD READ THIS PROSPECTUS CAREFULLY TO MAKE UP YOUR OWN MIND ON THE SUITABILITY FOR YOU OF THIS INVESTMENT. NO PROJECTIONS OR PREDICTIONS ARE CONTAINED IN THIS PROSPECTUS BECAUSE OF THE IMPOSSIBILITY OF PREDICTING FUTURE INCOME.

(2) If there is no undertaking contained in the prospectus by the offerors or others to return all moneys invested in the offering in the event of the failure or discontinuance of the promotion, the following language shall be employed in the prospectus in italics, where applicable:

If insufficient funds are raised to complete this offering, or if the offering is not completed for any other reason, you may receive back only part of your investment, or possibly lose your full investment.

(3) Where applicable, the following facts (in addition to those expressly required in paragraph [b] of subdivision 1 of the New York Real Estate Act) and possible changes therein, shall be set forth with respect to proposed or contemplated particular or general real estate investments and businesses integrally connected therewith:

(i) the surrounding neighborhood, growth and changing phases;

(ii) the occupancy rate presently and for at least the past two years;

(iii) the rent roll and material particulars on recent increases and decreases, and other relevant matters related thereto;

(iv) the average rent or other income factor (include average rental per apartment room, or per square foot in commercial buildings); and its comparison to the rest of the neighborhood or nearest competition for comparable properties;

(v) for existing properties, a fair reflection of the operations thereof, with historical operating figures for at least two years or the life of the property where it has been in existence for a shorter period, including profit and loss statements prepared by an independent public accountant, audited and prepared in accordance with standard accounting procedures. The operating figures provided as aforesaid shall cover a period ending not less than six months prior to the date of the prospectus. However, unaudited operating figures shall be provided for any subsequent period not covered by such figures, up to three months prior to the date of the prospectus;

(vi) in the case of issuers which have been engaged in business operations prior to the date of the offering, a fair reflection of the operations thereof, with historical figures of the issuer for at least three years or for the existence of the issuer where it has been in existence for a shorter period, including profit and loss statements of the issuer prepared by an independent public accountant, audited and prepared in accordance with standard accounting procedures. The operating figures provided as aforesaid shall cover a period ending not more than six months prior to the date of the prospectus. However, unaudited operating figures shall be provided for any subsequent period not covered by such figures up to three months prior to the date of the prospectus;

(vii) rights and limitations pertaining to participation by investors in increased future earnings;

(viii) percentage termination of leases over next 10 years or other period where more material;

(ix) business conditions in any particular business involved in the offering and peculiarities thereof, such as rapidity of obsolescence;

(x) the tax effects of depreciation policies to be followed;

(xi) the effect of success or failure of contemplated or essential present or future refinancing;

(xii) powers to refinance mortgages and other indebtedness;

(xiii) the assignability of the management (or net lease) agreement and liability therefor;

(xiv) the cancelability of the management (or net lease) agreement and liability therefor;

(xv) a detailed statement as to all material competition;

(xvi) general employment situation in the area involved;

(xvii) the names and addresses of the sellers and their true relationship to the promotion or offering;

(xviii) a summary of all material clauses in any relevant agreement, such as limited partnership or trust agreement, which are not otherwise covered in the prospectus (this shall include all rights and options of principals, promoters, offerors and management to purchase or otherwise liquidate the interests of investors or increase their equity or control);

(xix) where "management" is expected to assign actual management to an independent contractor, details including identification and qualified background of actual management;

(xx) whether principals (general partners, trustees, etc.) are or will be bonded;

(xxi) the existence or non-existence of a current trading market for the particular securities being offered;

(xxii) any existing lawsuits or other proceedings which could materially affect the offering or the venture or operation thereof;

(xxiii) assessed valuation (relevant factors such as: last change, next date for change);

(xxiv) whether interests assigned to principal promoters, such as general partners have been given a valuation arbitrarily set;

(xxv) all other information material to the offering.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.3 Advertising

(a) All advertising in connection with an offering made by prospectus under the New York Real Estate Syndicate Act shall contain the following statement in easily readable print:

This advertisement is not an offering. No offering is made except by a prospectus filed with the Department of Law of the State of New York. The Attorney-General of the State of New York has not passed on or endorsed the merits of this offering.

(b) The statement required under the foregoing subdivision shall similarly be contained on the cover page of all circulars, flyers, cards, letters and other literature employed in connection with soliciting interest in the offering; except that a single page letter of transmittal actually accompanying a prospectus duly filed with the Department of Law need not contain such statement, if included therein it is accurately stated that the prospectus is transmitted herewith.

(c) No abbreviations shall be employed in connection with any such advertising, unless the meaning is unmistakably clear.

(d) No advertisement in any newspaper, magazine, periodical or other media shall contain any reference to a specific rate of distribution.

(e) Advertisements in newspapers, magazines or other periodicals shall be considered consistent with the prospectus if in the following form:

(1) name of offering; amount of offering; price per unit;

(2) if applicable, whether fee or leasehold or other interest being offered;

(3) name and address of distributor; and

(4) the legend required above for advertisements.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.4 Prefiling procedure (optional)

(a) Prior to formal filing of prospectus literature, etc., an offeror may submit proposed offering (including advertising) literature to the Condominium, Theatre and Syndication Financing Bureau and request a conference. Four copies of such literature and two copies of an unsigned form RS-1 should accompany such request. Offerors and their counsel who wish prefiling conferences should be prepared to submit a full appraisal of the specific property or properties involved in the offering by a competent independent appraiser and all contracts and documents pertaining to the offering at the time of the submission of the above copies (see subd. [c] below).

(b) Prior to formal filing of an application for an exemption on the basis of full registration with the Securities and Exchange Commission, an offeror may submit two copies of his preliminary ("Red Herring") prospectus, and full exhibit sheets and exhibits filed with that agency, as well as "letters of comment", as received therefrom, and request comments from the Condominium, Theatre and Syndication Financing Bureau as to the likelihood of the granting of any exemption upon formal application at a later date.

The issuer should submit all relevant documents and index thereto relating to the offering including the following, where applicable:

(1) appraisal of the property or properties involved in the offering by a competent independent real estate appraiser including appraisal of the physical condition of the property, breakdown of land and improvements for depreciation purposes, appraisal of value of the property and basis therefor. In addition, copies of all appraisals of the property ever obtained by the issuer or principal should be submitted;

(2) partnership agreements, certificates of incorporation and bylaws, trust indentures and any other pertinent documents relating to the form of business organization;

(3) contract of sale of property;

(4) leases, deeds and other evidence of interest or of title held by issuer or principal; title report;

(5) actual or proposed leases or subleases of all or a major portion of the property materially affecting the issue or issuer;

(6) all relevant agreements, including options, to which the issuer is or was intended to be a party, or a successor in interest, including agreements and options to be performed or which have been performed by the issuer or its principals, and any agreement or option in which the issuer or principals have a beneficial interest or which can in any way materially affect the issuer, principals or the issue (Unless requested, this shall not include agreements made in the ordinary course of business unless affecting a significant portion of the issuer's assets or business or unless they affect the acquisition of an interest in real property.);

(7) mortgages on property, and interests evidenced by a writing presently owned by the issuer or to be acquired by it; modifications and extensions of same;

(8) any other instruments relating to debt of the issuer incurred or intended to be incurred, whether short or long term;

(9) instruments relating to pledge of stock or other interest of principals or issuer;

(10) specimen of security to be issued;

(11) all documents relating to underwriting, distribution and sale of securities;

(12) an affidavit setting forth in detail the incurred or expected expenses of the offering including such items as the following: legal, accounting, printing, recording, taxes, title insurance, brokerage, and other commissions, appraisals, advertisements and filing fee;

(13) affidavit regarding prior syndications by principals including a statement as to whether such syndications have paid anticipated distributions and a statement as to whether such distributions were made from then current earnings.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.6 Real estate investment trusts, real estate mutual funds, general real estate investment funds

All of these regulations shall be binding on the aforesaid, insofar as applicable to such offerings.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.7 Annual reports

(a) Within four months after the close of the fiscal year of all firms which have made or were required to make filings under section 352-e of the General Business Law there shall be filed with the Condominium, Theatre and Syndication Financing Bureau of the Department of Law two copies of form AR-1. Attached to such form should be a statement prepared by an independent public accountant setting forth in detail the amounts and sources of all distributions from each of the following, with details thereof:

(1) borrowed monies (secured or unsecured);

(2) loans or additional contributions from officers or partners or other principals or agents thereof;

(3) proceeds from the sale, transfer, option, exchange or other disposition (including involuntary conversion and insurance proceeds) of property or other assets, contracts, etc. (including monies received as deposit on contracts, returnable and unreturnable). In the determination of such "proceeds", deferred payments and purchase money mortgages should be treated on the basis of accepted installment accounting principles;

(4) funds generated from operations, which funds should be defined to include net income as ascertained through the use of standard accounting practices adjusted so that depreciation allowances are not treated as an expense and payment of principal due on debt is deducted. However, in the case of motels, hotels, nursing homes, furnished apartment houses, and similar properties, personalty recurrently acquired for use in connection with real property should be deducted as an expense;

(5) other sources (giving details).

(b) In the preparation of the information called for in subdivision (a) above, it may be assumed that distributions were made: first, from current earnings from the period involved to the extent available; second, from retained earnings to the extent available; and thirdly, from funds generated from operations to the extent available. In the determination of current and retained earnings for this purpose, deferred payments and purchase money mortgages should be treated on the basis of accepted installment accounting principles. In regard to distributions from sources in excess of funds generated from operations the specific sources should be determined.

(c) Together with accountant's statements specified in subdivision (a) above, there should be submitted a copy of each quarterly "Source of Distribution Statement" (described in section 16.9 below) issued to owners of securities for and during the fiscal year. The quarterly statements should be summarized or recapitulated, and where said summary or recapitulation is not fully in agreement with the accountant's statement required by subdivision (a) above, an appropriate statement of reconciliation should be supplied.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.8 Other provisions

(a) In the case of limited partnership syndications within the terms of section 352-e of the General Business Law, a letter permitting the filing of the offering to be issued by the Attorney-General may be conditioned upon the general partner or other principals filing within 20 days of the closing of title, a certified copy of the original and amended limited partnership certificate as filed with the office of the appropriate county clerk; and that in the event there is any "warehousing" or other pledging or collateral agreement involving unsold unit or units owned by the promoters that full disclosure thereof shall be made immediately to the Attorney-General and to investors to afford full and fair disclosure. If such financing may materially change or affect the offering, an offer of restitution shall be made to all prior subscribers or purchasers within 10 days prior to the closing of title.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.9 Sources of distributions

(a) Beginning November 1, 1963, all partnerships, corporations, trusts, joint ventures, associations and other groups or entities, persons and offerors who were required heretofore since January 1, 1961 or who hereafter are required by article 23-A of the General Business Law to file an offering statement under section 352-e thereof, or who have obtained an exemption therefrom under section 352-g of article 23-A, or are granted such exemption hereafter, are hereby required to transmit to each of the then owners of securities of said issuer, who are residents of this State, at the end of each quarter thereafter of its respective fiscal year, but not later than 60 days from such date, a statement to be known as a "Source of Distribution Statement", when such owners have been paid distributions from any source by such issuer for or during such quarterly period, which shall indicate clearly to each investor in the manner and form set forth in form SD-1 issued by the Attorney-General:

(1) Whether or not any payments of cash to any investors, partners, stockholders, etc., were made from any of the following sources, and the amounts thereof with full details:

(i) borrowed monies (secured or unsecured);

(ii) loans or additional contributions from officers or partners or other principals or agents thereof;

(iii) proceeds from the sale, transfer, option, exchange or other disposition (including involuntary conversion and insurance proceeds) of property or other assets, contracts, etc. (including monies received as deposit on contracts, returnable and nonreturnable). In the determination of such "proceeds", deferred payments and purchase money mortgages should be treated on the basis of accepted installment accounting principles;

(iv) funds generated from operations, which funds should be defined to include net income as ascertained through the use of standard accounting practices adjusted so that depreciation allowances are not treated as an expense and payment of principal due on debt is deducted. However, in the case of motels, hotels, nursing homes, furnished apartment houses and similar properties, personalty recurrently acquired for use in connection with real property should be deducted as an expense;

(v) monies paid to the issuer by lessees or other obligors as a result of a transaction where rent or other obligations due are intended to be made primarily from the operations of a particular property or properties where the issuer or any principal of the issuer has a material direct or indirect interest in the lessees or obligors when it is known to the issuer or principal thereof that all or part of such monies emanated from sources other than recurrent business earnings of such obligors or lessees in connection with the operation of the particular property or properties concerned.

(2) In the event any payments of distributions were made solely from current or retained earnings (or similar classifications) for a prior fiscal or calendar year, the information required by paragraph (1) need not be given. In the determination of current or retained earnings for this purpose deferred payments and purchase money mortgages should be treated on the basis of accepted installment accounting principles.

(3) In the preparation of the information called for in paragraphs (1) and (2) above it may be assumed that such payments were made first from current earnings for the period involved to the extent available; secondly from retained earnings to the extent available; and thirdly from funds generated from operations to the extent available. In regard to distributions from sources in excess of funds generated from operations, the specific sources should be determined.

(4) Whether during the aforesaid period of time there has been any material default by the issuer in payment of any mortgage, taxes, interests or other obligation or obligations on secured or unsecured debt. If not, no express representation need be made.

(5) Whether any reserve set up for a purpose other than the payment of distributions to investors has been reduced or terminated by application of funds therein for purposes materially different from that for which said reserve was established. If not, no express representation need be made.

(6) Whether the principal officers or directors of the issuer have received any notice from any lessee or other person or firm of a material fact which may substantially affect future distributions. If not, no express representation need be made.

(7) Whether any loans or advances have been made to officers, partners, or directors of the issuer during the reporting period of time, indicating the authority upon which such monies were disbursed, and the full terms of such loans or advances. If not, no express representation need be made.

(8) Whether any general partner, officer, director or other principal has pledged or collateralized any of his stock, shares or interests in the issuer during the reporting period of time. Any such general partner, director or other principal shall provide such information to the issuer not later than 30 days from the end of each quarter of the issuer's fiscal year. If no such pledge or collateralization has taken place, no express representation need by made.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.10 Review by residents of proposed submission of an offering plan to convert residential premises to cooperative or condominium ownership

(General Business Law, § 352-e [2-a])

(a) Definitions.

(1) Review shall mean inspection, examination, reading or perusal.

(2) Proposed submission shall mean the initial proposed offering plan which shall include an affidavit of no excessive long term vacancies.

(3) Resident shall mean occupant, tenant, subtenant of each of the apartments in the affected premises or their attorneys.

(b) Review of proposed submission: With respect to any proposed offering involving conversion of a rented building or groups of buildings or development to cooperative or condominium status within the State of New York, the offeror shall give each and every resident a 15 day period after the date of the submission of the proposed offering plan to the Attorney General for examination of the said proposed submission. Said period of examination shall commence on the date of submission to the Attorney General or within three calendar days after mailing notice to residents pursuant to subdivision (c) of this section with enclosures required pursuant to subdivision (e) of this section.

Written notice of said proposed submission shall be mailed to each resident of the premises sought to be converted and a copy thereof posted in a prominent place in the lobby or lobbies of the building or buildings affected. Said notice shall set forth the date when the proposed submission was made to the Attorney General which shall be the same date the aforesaid notice of opportunity to review shall be mailed to the residents.

(d) Enclosures with notice to residents.

The notices mailed to residents shall be accompanied by the initial proposed offering plan and a copy of the affidavit of no excessive long term vacancies. On the face of the proposed plan, there shall be printed in red ink, the following legend:

"A PROPOSED OFFERING PLAN RELATING TO CONVERSION TO COOPERATIVE (OR CONDOMINIUM) STATUS OF THE APARTMENTS IN THIS BUILDING HAS BEEN SUBMITTED TO THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK, BUREAU OF SECURITIES AND PUBLIC FINANCING, BUT HAS NOT BEEN ACCEPTED FOR FILING AND HAS NOT YET BECOME EFFECTIVE. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THESE APARTMENTS MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED UNTIL SUCH TIME AS A COMPLETED OFFERING PLAN HAS BEEN ACCEPTED FOR FILING AND A FINAL COPY DELIVERED TO EACH PURCHASER."

(e) Form of notice of residents.

The notice of residents of opportunity to review shall be in substantially the following form:

Name

Address

Date ______________________________________________

Re: Address of Premises Proposed Conversion To Cooperative (or Condominium) Status

Dear Resident:

Please take notice that the undersigned sponsor has this day submitted to the Attorney General of The State of New York an initial proposed offering plan for the conversion of premises New York, to cooperative (or condominium) status. This is a preliminary plan which has not yet become effective.

Under the laws of the State of New York residents including tenants and subtenants have 15 days from the receipt of this plan within which to examine said proposed submission. Herewith enclosed for your convenience is a copy of the initial proposed offering plan which you may review and retain. Also included herewith is a copy of an affidavit of no excessive long term vacancies. One copy of these documents is also available for review during the same period at the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005.

If and when an offering plan is accepted for filing by the Attorney General pursuant to law you will be duly notified and a copy of the plan as accepted will be delivered to you. It is only thereafter that the offering will actually be made.

Comments regarding the proposed submission may be addressed to the sponsor with a copy forwarded to the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005, or you may wish to write to the Department of Law directly.

Very truly yours,

(f) Affidavit of service of notice.

An affidavit of such mailing and posting shall be mailed or delivered to the Attorney General and copies thereof shall be mailed to the residents within three days of service. Said affidavit shall include the name, address and apartment number of each such resident, tenant and subtenant, and a copy of said notice.

(g) Affidavit of no excessive long term vacancies.

(1) Definition.

(i) Long term vacancies shall mean apartments not leased and occupied by bona fide tenants or subtenants for more than five months prior to the date of a proposed submission.

(ii) Excessive shall mean double the normal average vacancy rate for the building or group of buildings or development for two years prior to the last preceding January 31 prior to the date of submission, in cases where apartments in the building or group of buildings or development were offered for the entire period involved.

(iii) Offered for entire period involved shall mean operated as rental property for the entire period involved.

(2) The affidavit of no excessive long term vacancies sworn to by the sponsor (if a corporate sponsor, by its president) shall contain a representation of the average vacancy rate for two years prior to the last preceding January 31 prior to the date of submission and a representation setting forth the vacancy rate for the five month period next preceding the date of submission of the proposed offering plan for conversion from rental to cooperative or condominium status.

(i) Annexed to the affidavit and made a part thereof as exhibit "A" shall be a schedule of apartments located in the premises sought to be converted which shall contain a list of all apartments, the names of the tenants (or occupants, if different from the tenant), the date of commencement of the term of their occupancy and the termination thereof for the two year period to the last preceding January 31.

(ii) Annexed to said affidavit and made a part thereof as exhibit "B" shall be a schedule of apartments located in the premises sought to be converted which shall contain a list of all apartments, the names of the tenants (or occupants, if different from the tenant), the date of their occupancy and termination thereof for a five-month period next preceding the date of submission of the proposed offering plan.

(iii) Annexed to the affidavit and made a part thereof as exhibit "C" shall be a schedule of apartments and the names of the tenants or occupants who are related to the sponsor or any of its principals by blood or marriage or who are employees or agents of the sponsor or selling agent or who have had prior business or professional relations with the sponsor or selling agents or any of their principals.

(iv) Annexed to the affidavit and made a part thereof as exhibit "D" shall be a schedule showing in part I the vacancy rate for the two-year period prior to next preceding January 31st and how calculated, and in part II the vacancy rate for the five-month period next preceding the date of submission of the proposed offering plan and how calculated.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.11 Guidelines for non-specified property real estate syndication offerings

(a) These guidelines apply to nonspecified property syndications (hereinafter called "programs") in the form of limited partnerships. To the extent appropriate, they will also be applied to nonspecified property programs in forms other than limited partnerships. As used herein, the term nonspecified property or blind pool program shall mean an investment program in which the offering statement or prospectus does not clearly set forth the specific property or properties to be purchased, leased, mortgaged or otherwise financed with at least 75 percent of the net proceeds of the offering; or a program in which the proceeds of any sale or refinancing of properties may be reinvested. Reserves shall be included in the nonspecified 25 percent.

(b) This section is not intended to be exclusive. All of the regulations, requirements, standards and policies of the Department of Law otherwise applicable to real estate syndication offerings shall apply to nonspecified property programs.

(c) These guidelines set forth some of the criteria that will be weighed in exercising the discretion contained in sections 352-e (1)-(2), 252-g and 359-f (2) of the General Business Law. The Department of Law retains full discretion to refuse to issue a filing letter or to deny an exemption to a nonspecified property offering which meets all of the conditions of this section, whenever in its sole judgment such refusal or denial is warranted by the particular facts and circumstances and is necessary for the protection of investors.

(d) In determining whether to issue a filing letter or grant an application to exempt from filing a nonspecified property offering, the Attorney General will apply the following guidelines:

(1) Statement of policy regarding real estate programs.

All of the provisions of the "Statement of Policy Regarding Real Estate Programs" adopted by the North American Securities Administrators Association, Inc. and currently in effect, are incorporated herein by reference. Those provisions are an integral part of these guidelines and will be applied to nonspecified property programs except to the extent that particular requirements of this subdivision are more stringent than, and therefore supersede, specific requirements thereof.

(2) Minimum capitalization.

The minimum gross proceeds of the offering must be at least $2,500,000.

(3) Maximum capitalization.

Offerings of total dollar amounts which are excessively large in relationship to the prior experience and demonstrated capabilities of the principals or are otherwise inconsistent with responsible investment criteria, will be denied exemption or refused filing.

(4) Experience of sponsor.

The sponsor(s) or at least one principal must establish that he has had the equivalent of not less than five years experience in the acquisition and management of the type of properties to be acquired; or otherwise must demonstrate to the satisfaction of the Attorney General that he has sufficient related knowledge and experience to acquire and manage the type of properties to be acquired.

(5) Net worth of general partner.

The financial condition of the general partner(s) or other principals liable for the debts of the program, must be commensurate with any financial obligations assumed in the offering and in the operation of the program. As a minimum, the general partners shall have an aggregate financial net worth exclusive of homes, automobiles and home furnishings, of the greater of either $250,000 or an amount at least equal to five percent of the gross amount of all offerings sold within the prior 12 months, plus five percent of the current offering, to an aggregate maximum net worth requirement of $1,500,000. Evaluation will be made of contingent liabilities and the use of promissory notes to determine the appropriateness of their inclusion in computing net worth.

(6) Suitability standards.

Suitability standards for investors must be imposed which are reasonable in light of the type of program, its specific tax orientation, the lack of liquidity, limited transferability and the inherent risk involved. Unless the Department of Law approves a lower suitability standard, each investor shall have a minimum annual gross income of $35,000 and a net worth of $35,000 or alternatively, a net worth of $100,000. For high risk offerings, higher suitability standards may be required. Net worth shall be determined exclusive of home, home furnishings and automobiles.

(7) Suitability reports.

The sponsor or general partner of the program shall file a pre-effective undertaking with the Attorney General that all New York residents purchasing interests in the program will be appropriate in light of the required suitability standards and a post closing affidavit (which may be based on written representations of the underwriters and purchasers) confirming that the suitability requirements have been met with respect to such purchasers.

(8) Minimum investment.

A minimum initial cash purchase of $2,500 per investor shall be required. However a minimum of $1,000 shall apply to a purchase by an individual retirement account. Subsequent transfers of such interest shall be in units of not less than $2,500, except for transfers by an individual retirement account, transfers by gift, inheritance, intra-family transfers, transfers subsequent to the preceding, and transfers to affiliates.

(9) Investment objectives.

(i) The prospectus must contain an accurate and detailed statement of the investment pruposes of the program, the types of properties to be acquired and, to the extent practicable, the investment criteria to be applied. The size and scope of projects shall be consistent with the objectives of the program and the experience of the sponsor.

(ii) The prospectus must restrict investments in unimproved and nonincome producing property to not more than 15 percent of the proceeds available for investment.

(10) Reinvestment.

(i) The program must provide that if acquired property is sold or refinanced and the proceeds are reinvested, acquisition or other fees or commissions for reinvestment may be paid directly or indirectly to the sponsors or their affiliates only if the limitation on maximum compensation for investment in properties is not exceeded.

(ii) Offerings not registered with the SEC will generally be required to return to the partners all net proceeds upon the sale or refinancing of property.

(11) Escrow required.

(i) The prospectus must contain an undertaking that prior to the initial closing of the offering, all moneys received from subscribers will be held in trust for their benefit in a special escrow account; that all moneys received from subscribers after an initial closing will also be held in trust for their benefit in a special escrow account; and that a subscriber's funds will only be released to the issuer pursuant to a closing at which the subscriber becomes a partner or other participant.

(ii) The prospectus must contain an undertaking that proceeds of the offering will be received by the issuer at any closing to be used only for the purposes set forth in the prospectus and that any proceeds not invested or committed within two years from the date of effectiveness (except for necessary operating capital) shall be distributed pro rata to the partners as a return of capital.

(12) Nonspecified status.

The cover page identification of material risks shall include an appropriate statement to the effect that prospective investors will not have the opportunity to evaluate any real properties to be acquired by the partnership because the partnership owns no real property, has not identified any specific property it intends to purchase and does not have an operating history. Include a cross-reference to further information in the prospectus.

(13) Cross-reference sheet.

A cross-reference sheet must be submitted for each nonspecified property program, setting forth:

(i) the specific location in the partnership agreement and/or prospectus of compliance with, or variance from, each of the provisions of these guidelines;

(ii) the specific variance from each provision, including the provisions of the NASAA "Statement of Policy Regarding Real Estate Programs" (paragraph [1] of this subdivision) or that specific provisions are inapplicable; and

(iii) the specific section of the partnership agreement incorporating each provision which NASAA "Statement of Policy Regarding Real Estate Programs" (paragraph [1] of this subdivision) requires to be included in the partnership agreement.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 16.12 Exemptions

(a) Upon written application sworn to by a general partner, trustee, officer or other principal of the issuer, the Department of Law may, in its discretion, by ruling exempt an offering from any provision of this Part or from the provisions of section 352-e, 352-f or 359-e of the General Business Law where it is found that enforcement of such provisions is not necessary to protect the investing public or to effectuate the purposes of the General Business Law. The fees imposed by the General Business Law must be paid to obtain exemptions under this section.

(b) Applications for exemptions pursuant to this section shall comply as to form and content with exemption instructions issued by the Department of Law and available at its offices at:

New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005, Telephone No. (212) 416-8122.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 17 COOPERATIVE APARTMENT OFFERINGS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 17.2 Contents of offering plan

(a) Cover.

(1) The lower portion of the outside front cover of every offering plan shall contain the following statement in capital letters printed in boldface roman type of at least 10-point modern type and at least two points leaded:

THIS OFFERING PLAN IS THE SPONSOR's ENTIRE OFFER TO SELL THESE COOPERATIVE APARTMENTS. NEW YORK LAW REQUIRES THE SPONSOR TO DISCLOSE ALL MATERIAL INFORMATION CONCERNING THE COOPERATIVE APARTMENTS IN THIS PLAN AND TO FILE THIS PLAN WITH THE NEW YORK STATE DEPARTMENT OF LAW PRIOR TO SELLING OR OFFERING TO SELL ANY APARTMENT. FILING WITH THE DEPARTMENT OF LAW DOES NOT MEAN THAT THE DEPARTMENT OR ANY OTHER GOVERNMENT AGENCY HAS APPROVED THIS OFFERING.

(2) There shall be set forth on the outside front cover page of every plan of cooperative organization the following information:

(i) the amount of money to be raised if all apartments are sold;

(ii) the name and address of the cooperative corporation (which shall not be a general name for several co-ops, but the specific name of the corporation whose stock is being offered);

(iii) the approximate date of the proposed first offer to the public. The term of the initial offer is 12 months, commencing on the filing date indicated in the letter from the Department of Law;

(iv) a listing of the names and addresses of the actual promoters (whether they be builders, general contractors, landowners, etc.), which shall include dummy corporations only at the bottom of such listing (unless such listing is included on the face of the first inside leaf); and

(v) the names and addresses of the selling agents.

(3) On the inside front cover, or the next immediate page, there shall be printed a table of contents.

(b) Body of offering plan; informational content.

(1)

(i) If there is no undertaking contained in the offering plan by the offerors or others to return all moneys invested in the offering in the event of the failure or discontinuance of the promotion, the following language shall be employed in the offering plan in italics:

If insufficient funds are raised to complete this offering, or if the offering is not completed for any other reason, you may receive back only part of your investment, not your full investment.

(ii) If the promoters reserve the right to change the price of any apartment without substantial limitation, then such fact and the effects thereof shall be set forth within the plan and such fact must be included in easily readable, bold print on the front cover of the offering plan. And in such case, the front page statement shall be as follows:

"The prices for these apartments may be changed from time to time during this offering, so that prior or subsequent purchasers may pay or may have paid less or more than present subscribers for similar apartments. The effect of such is set forth on page [indicate page]."

(iii) And above the price schedule, in such case, there shall be the statement:

"See page [indicate page] for conditions applicable to these prices."

(2) Each offering should contain a fair summary of material relevant to the particular offering. Each offering plan should be viewed with respect to the special nature of that particular offering. The following factors, in addition to those facts and representations required by subdivision (1)(b) of section 352-e of the New York Real Estate Syndicate Act, should be considered with respect to every offering of cooperative apartments. However, the necessary addition of other factors shall depend on the nature of the particular offering. Thus, for example, type of "landfill" should be included in developments on swamp or other marginal lands, or where existing buildings in the area have been troubled by excessive settling, etc.

(i) A description of the premises and locality, including but not limited to:

(a) The surrounding neighborhood, growth and changing phases. The aforesaid shall include, for example, in new developments or in outlying areas: shopping facilities in actual existence; schools actually existing or under actual construction; transportation facilities in actual existence; the zoning of the immediate adjacent areas surrounding the existing building or the building to be constructed.

(b) With reference to any swimming pools which are not to be owned by the cooperative organization, but to which residents of the cooperative are to be given access under the terms of any proposed or existing agreement with the builder, etc.: the size of the pool in existence or to be constructed; the type of construction; the name of the contractor who built or will build such pool; the proposed fee to be charged for the use thereof; residence restriction or priority on use of pool; and the date set forth for final completion and the availability of the finished pool.

(ii) The assessed valuation and tax rate for the past two years, also indicating the approximate date for each assessment; if new construction, the fact that the assessment is open for determination by the government units involved, and will affect any projection now made of real estate taxes.

(iii) Attached to and made a part of the plan of cooperative organization, there shall be a concise separate schedule of the description of the land, buildings, apartments and equipment to be owned by the cooperative corporation, which shall include detailed information concerning those factors pertinent to the particular type of offering. Examples of factors to be considered, where relevant are: type of landfill; the general nature of structure (concrete, steel, etc.); exterior and interior walls and facing; floors and ceilings; bathrooms; painting and papering; roof; insulation and heating; windows and doors; kitchen equipment; patios, sun decks, terraces, etc.; hardware and lighting fixtures; ventilators and air conditioning; basement; water supply (including name of company servicing area); sanitary sewage system, plumbing and storm water disposal; swimming pool, boat mooring and other recreational facilities (if such facilities are to be owned by cooperative organization, full information as to the size, type of construction, name of contractor and scheduled date of completion); TV antenna; landscaping; parking and garaging; laundry facilities; public halls, stairways, entrances and exits; elevators; disposal facilities; service personnel and duties; storage space per apartment and general storage facilities; special sources of income for the cooperative organization. Irrespective of above, where all or most of the prospective purchasers have been in actual residence in the premises for several years (as in the case of rent-controlled conversions), emphasis should be on present condition of premises, including deficiencies probably unknown to occupants, rather than description of material make-up visually obvious to each resident.

(iv) Date of construction or scheduled completion of construction.

(v) Date present owner acquired property.

(vi) Type of deed to be conveyed.

(vii) The financial details: the terms of all institutional and other financing, including rate of interest, method of amortization (and whether self-liquidating), amount of each mortgage, rights pertaining to prepayment, the names and addresses of all present and prospective holders of relevant mortgages and the status of all commitments, a description of any governmental mortgage, insurance or guaranty; the necessity for future refinancing of "balloon-type" mortgages, if applicable, and the concurrent problem of additional assessments.

(viii) A separate schedule including: identification of each apartment; number of rooms and baths in each; the allocation of shares; the stock price per apartment; the estimated annual expense and maintenance per share, per apartment and per total of all apartments.

(ix) Miscellaneous expenses incurred or to be incurred in effecting the offering, including a breakdown of selling commissions, realty brokerage fees, legal expenses, accounting fees, mortgage placement and processing fees, advertising expenses, special payments to any person or firm for any services, counsel or other reason relating to the offering and not otherwise covered by this Part. Insofar as legal and accounting fees are concerned, the aforesaid relates only to amounts paid by the cooperative corporation, which fees may be grouped together with other expenses, in a reasonable manner, where the individual fees are not paid to any of the promoters or firms associated with them. A "promoter" for this purpose is not meant to include members of any law firm merely used to fill cooperative corporation offices on a temporary basis.

(x) The names of the recipients of the expenditures set forth in the preceding subparagraph and the relationship, if any, directly or indirectly, to any of the promoters.

(xi) The approximate amount of any inspection fee to be paid to any government agency for physical inspection or appraisal of the property (FHA, NYS Retirement Fund, etc.).

(xii) A breakdown of projected maintenance (including labor) charges, including: the projected totals for itemized expenses and the basis thereof (whether based on the figures of the previous owner, promoter's estimate, etc.) indicating the specific qualification of all persons making such projections and the basis upon which the projections are made; specific coverage of "maintenance charges", and whether it includes utilities, telephone, garage, rights to recreational facilities (such as swimming pools); whether the projection is based on joint contracting not obligatory by proprietary lease agreement; if the cooperative corporation is only one of several in the same development area, whether the projected charges are based on projections made for prior offerings; and if so, whether such prior projections have proved accurate; whether the applicable tax assessment has been made, and if not, how the real estate taxes and other relevant taxes have been projected; and whether the projection is the work of, or has been approved by any government agency (such as FHA).

(xiii) Promoters' (including builders') profits are specifically required by section 352-e of the General Business Law. The profits of each promoter (including all dummy entities, nominees, agencies, or other intermediaries subject to his control, directly or indirectly) shall be given or projected with conditioning language where the exact profit cannot be given. In the latter case, the maximum possible profit should be projected with a summary of the many conditions that may affect the eventual profit or loss. Where, however, part or all of the promoters' profits come solely from the sale or other transfer of land, building or interest therein, the original cost thereof and resulting profit need not be given if the particular promoter has held continuous control of such ownership or interest for three years prior to the proposed first offering of cooperative apartments.

(xiv) Provisions made for units unsold at the time the cooperative takes title (including the name of the person to whom such reserved units may be transferred, whether or not they will be held by a nominee, the obligations assumed by such holder, any rights and restrictions which have been imposed on the selling price of reserved units, and the voting position relative to such reserved units).

(xv) The description of major concessions to commercial tenants or purchasers or other transferees of apartments. For all conversions of existing rent controlled buildings in New York State, there shall be included a general summary in a short paragraph of essential provisions of municipal or State statutes and regulations which govern the rights of the tenants in occupancy not wishing to participate in the cooperative venture and the procedures necessary for the cooperative or nonoccupant purchaser to acquire possession from such tenants.

(xvi) The nature of any contractual obligations or bonds, whether in writing or otherwise, and conditions or limitations attached thereto. The word "guarantee" should be avoided, because of its misleading nature.

(xvii) A projected statement of income and expenses for the first full year of operation by the cooperative organization with identification of the source of such projection and the basis thereof. If any such figures are expected to change in the following year or years, it shall be so stated.

(xviii) Whether or not a letter of adequacy for the projected maintenance charges has been issued by the selling agent, managing agent or any other source.

(xix) If the cooperative organization itself has contracted new construction, a schedule of payments to the builder or contractor and indication whether there will be any certification prior to the disbursement of money at various stages of completion.

(xx) Any existing law suits or other proceedings against the cooperative organization, any promoter, the managing agent, the sales agent or any other person or firm connected with the offering, which could materially affect this offering.

(xxi) Whether or not there shall be distributed to stockholders any or all of the following annually: a tax deduction statement, an annual report of total corporate affairs, including a balance sheet and profit and loss statement certified by an independent certified public accountant (required by section 352-e of the General Business Law); and a notice of the holding of an annual stockholders meeting for the purpose of election of a board of directors.

(xxii) A summary of all contracts, appointments, agreements and binding obligations made by promoters (their nominees or dummies) that will be binding upon the cooperative organization after it is actually tenanted, setting forth the full details thereof, including the length of time of the obligations or arrangements and the reasons why binding agreements were made for the purpose involved (include garage concessions, laundry concessions, managing agent contracts, etc.), before the actual tenant stockholders could act upon these matters.

(xxiii) In a new construction, whether there will be a completion bond furnished by the builder and, if so, the relevant terms thereof; also the estimated date of beginning of construction, the estimated date of completion of construction, the estimated date when occupancy will be permitted and the method of determining when the building will be completed.

(xxiv) A summary of the major terms of the proprietary lease, including: relationship of stock rights to lease rights; the rights of possession and use of premises; voting rights; rights to sublet or assign and the conditions relative thereto; provisions in the event of default and nonpayment of maintenance charges, restrictions on the cancelability of lease; the duration of the lease. The inclusion in an offering plan of a true copy of the proprietary lease will ordinarily substantially reduce the need for greatly comprehensive detail in the summary portion of the offering plan.

(xxv) The terms governing deposits by prospective shareholders.

(xxvi) A summary of important features of ground leases involved in the cooperative venture, including an explanation of rights and obligations on the expiration date of any such leases.

(xxvii) A full description of the rights and obligations of the cooperative and management under any agreement made with a managing agent, including: the assignability and cancelability of the management agreement by either side; the duration of the agreement and renewability provisions, if any; fees paid to and other profits of the managing agent; whether the managing agent is or will be bonded; any relationship between managing agent or any of its officers and any promoter of the cooperative venture.

(xxviii) A special risk section that, if applicable, must be on a separate page, immediately following the table of contents. All features of a plan which involve significant risk or will disproportionately or unusually affect maintenance charges or obligations of tenant shareholders in future years of cooperative operation must be conspicuously disclosed and highlighted. A brief description of the risk should be given in this section and a more thorough description should be given in a referenced later section. Questions as to whether a risk should be highlighted in this section should be resolved in favor of inclusion. Special risks include, but are not limited to, the examples set forth below:

(a) If the subscription agreement is not contingent on obtaining financing, the purchaser's obligations to pay the balance of the purchase price without regard to the availability of financing and purchaser's maximum loss upon failure to pay the balance of the purchase price must be explained.

(b) If a mortgage has a balloon payment that is due in less than 10 years after the anticipated date of closing, the risks and costs of refinancing should be discussed.

(c) If any nonresidential lease may generate less income than the pro rata share of expenses attributable to the leased space now or in the future, or if the ratio of income generated by the lease to the share of expenses fairly attributable to the leased space may decline in the future, the potential burden to the apartment corporation should be highlighted and estimates of expenses and income for the lease term should be fully disclosed.

(d) If any nonresidential lease does not give the apartment corporation control over the future use of the leased space, the possibility that the future use could be objectionable to the apartment corporation should be explained.

The offering plan submitted to the Department of Law must contain the exhibits described below and provide that all exhibits are part of the offering plan required by General Business Law article 23-A and subject to the requirements and sanctions of the law. Whenever an exhibit document is marked "Original" (orig.), it means that all copies must be duly executed, original documents. Whenever a document is marked "copy", it means that a true and complete copy of the document should be included. Two copies of parts A (Certifications) and B (General) of the exhibits are required, indexed with numbered tabs and secured in a folder so that documents can easily be removed. In addition, conformed or photostatic copies of the part A certifications should appear in the body of the plan. Inapplicable exhibits should be expressly noted and explained in the transmittal letter.

(1) Part A of the exhibits (Certifications) shall include:

(i)

(A-1)-certification by sponsor and sponsor's principals (orig.); and

(ii)

(A-2)-certification by sponsor's engineer or architect (orig.).

(2) Part B of the exhibits (General) shall include:

(i)

(B-1)-copy of title company report, dated within 30 days of submission;

(ii)

(B-2)-copy of proposed management agreement;

(iii)

(B-3)-copies of all contracts which will become binding on the apartment corporation, for $2,500 or more per year, such as service, union, washing machine, television antennae, cable television, snow removal, landscaping, security, exterminating, elevator, heating and air conditioning contracts;

(iv)

(B-4)-copy of letter from insurance company or its authorized agent, stating proposed insurance coverage [including fire liability and officers' and directors' liability (if any)] and amounts, the applicable tariff classifications and the annual premium or premiums and a copy of an opinion from a licensed insurance broker appraiser concerning adequacy of coverage to avoid being a coinsurer and/or the adequacy of coverage to replace the building;

(v)

(B-5)-copies of G.B.L. section 352-b designations of Secretary of State as agent (for out-of-state issuers, sponsors, principals and selling agents);

(vi)

(B-6)-worksheets which set forth bases for projections and method and calculations used to prepare first-year operating budget;

(vii)

(B-7)-copy of certificate of incorporation and receipt from Secretary of State;

(viii)

(B-8)-copy of specimen stock certificate;

(ix)

(B-9)-copy of mortgage commitment (if any);

(x)

(B-10)-copy of any mortgage and bond or note that will be a lien after closing;

(xi)

(B-11)-copy of proposed purchase money mortgage and note (if any);

(xii)

(B-12)-copies of all professional and commercial leases;

(xiii)

(B-13)-certified rent roll including the name of each tenant, apartment number, rent, term and termination date of lease, and status under any rent regulatory laws for the month in which the offering plan was submitted to the Department of Law. Indicate vacant apartments and the date on which each such apartment first became vacant. Include an affidavit setting forth the identity of any tenants who are related by blood, marriage or adoption to the sponsor or selling agent, or who are principals, employees, shareholders, limited partners or business associates of the sponsor or selling agent;

(xiv)

(B-14)-copy of contract to acquire property if not currently owned by sponsor;

(xv)

(B-15)-copy of the mortgage and note or bond required by a sponsor if sponsor is offering financing, or required by a mortgage lender procured by sponsor, together with any other document which significantly affects a purchaser's obligations for financing offered or procured by sponsor. If the documents are not available at the time of submission to the Department of Law, so indicate and forward when available;

(xvi)

(B-16)-for cooperatives located outside of New York, copy of statutes and regulations governing cooperatives and evidence of compliance with that law;

(xvii)

(B-17)-copy of contract of sale or exchange between the sponsor and the apartment corporation that conforms to the contract described in the offering plan; and

(xviii)

(B-18)-other material document(s), each of which should be described in the transmittal letter, e.g., copy of regulatory agreement with a government agency.

(3) Two copies of part C (Engineering) of the exhibits in a separate folder similarly secured and indexed.

Part C of the exhibits shall include:

(i)

(C-1)-architect's or engineer's detailed description of the physical aspects of the cooperative with the architect's or engineer's stamp and original signature; and

(ii)

(C-2)-copy of certificate of occupancy, if available.

(4) Two copies of the exhibits, part D (Fees, and other information) in a separate folder similarly secured and indexed.

Part D of the exhibits shall include:

(i)

(D-1)-personal or certified checks for one half the filing fees due under G.B.L. section 352-e(7)(a) and the entire amount of the fees due under G.B.L. section 359-e(5), both payable to the New York State Department of Law and placed within an envelope together with the form of receipt issued by the Department of Law;

(ii)

(D-2)-signed M-10 forms, registration for broker-dealer, for the selling agent(s) (orig.), and signed M-2 forms, salesman statement, for all individual employees who act as salesmen for selling agents (orig.). Forms do not have to be submitted if currently valid registration forms are on file with the Department of Law from prior public offerings;

(iii)

(D-3)-signed M-10 form(s), registration for broker-dealer, for all principals of the sponsor (orig.). Forms do not have to be submitted if currently valid registration forms are on file with the Department of Law from prior public offerings;

(iv)

(D-4)-signed RI-1 form, registrant information form(s) concerning prior convictions, judgments, administrative actions, bankruptcy, employment and business affiliations for all principals of the sponsor (orig.);

(v)

(D-5)-proof of financial responsibility of sponsor (certified sponsor's statement or affidavit of sponsor's net worth) and sponsor's certification that its net worth is sufficient to meet sponsor's unsecured obligations under the plan including sponsor's obligations for unsold shares (orig.);

(vi)

(D-6)-an affidavit from sponsor and principals of sponsor, as defined in section 21.1(c) and (d) of this Chapter, stating whether sponsor and principals of sponsor have taken part in public offerings of cooperative interests in realty including condominiums in or from New York which were initially offered during the preceding five years. State the address of the realty and approximate date of the closing for cooperatives and the first closing for condominiums;

(vii)

(D-7)-exemption application pursuant to G.B.L. section 359-e; and

(viii)

(D-8)-completed statistical information card(s) available from the Department of Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 17.3 Prefiling procedure (optional)

(a) Sponsors of cooperative offerings may submit their proposed offering plans in draft form to the Real Estate Financing Bureau, Department of Law, 28 Liberty Street, New York, NY 10005, with a request for analysis and comments. Three copies of such proposed plan should be submitted together with two copies of the exhibits described in section 17.2(c) of this Part.

(b) On the date the proposed offering plan in draft form is submitted to the Department of Law, the sponsor shall serve each offeree, as defined in section 17.1(f) of this Part, of any occupied building, with a copy of the proposed offering plan together with the following notice:

Date of Notice: ___________________________________________

We have submitted for prefiling review to the New York State Department of Law, Real Estate Financing Bureau, a proposed offering plan for the conversion of [insert address or name of building] to a cooperative. The law requires us to disclose all material information concerning the building and the conversion process in an offering plan. A copy of the proposed offering plan is enclosed for you to retain. Other copies of the offering plan are available for inspection and copying at the office of the sponsor (or sponsor's selling agent) located at [insert address of sponsor or selling agent] and at the Department of Law.

The Attorney General strongly urges you to read this offering plan carefully and to consult with an attorney to advise you as to the meaning and consequences of the offering plan.

No apartments may be sold or offered for sale, no subscription agreements may be executed and no down payments may be accepted unless and until the Department of Law files the offering plan and a copy of the filed plan is served on each tenant.

(c) The upper portion of the front cover of every proposed offering plan shall contain the following statement in capital letters printed in red in boldface roman type of at least 10-point modern and at least two points leaded:

THIS IS A PROPOSED OFFERING PLAN ("RED HERRING") TO CONVERT THE APARTMENTS IN THIS BUILDING TO A COOPERATIVE. IT HAS BEEN SUBMITTED TO THE NEW YORK STATE DEPARTMENT OF LAW, REAL ESTATE FINANCING BUREAU. THIS PROPOSED OFFERING PLAN IS SUBJECT TO MODIFICATION. APARTMENTS MAY NOT BE SOLD OR OFFERED FOR SALE UNTIL THE OFFERING PLAN IS FILED AND A FINAL COPY IS DELIVERED TO EACH TENANT.

(d) The Department of Law, in its discretion, may issue a letter to the sponsor or sponsor's attorney stating that an offering plan that was submitted pursuant to the prefiling procedure for a building occupied in whole or in part for residential purposes is filed when:

(1) more than 120 days have elapsed from the date the draft offering plan was submitted to the Department of Law; and

(2) after analysis and comment as provided under subdivision (a) of this section, the sponsor submits 15 copies of the bound offering plan and a personal or certified check for one half the filing fees due under G.B.L. section 352-e(7)(a) payable to the New York State Department of Law.

At any time during the prefiling procedure, or if the Department of Law declines to issue such a letter to the sponsor or sponsor's attorney under the prefiling procedure, the sponsor may elect to submit for final filing. The sponsor then must comply with section 17.1(d) and (e) of this Part and shall be subject to the minimum and maximum time requirements and other requirements of section 17.1(g) of this Part.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 17.4 Advertising

(a) All advertising in connection with offerings made by cooperative apartments shall contain the following statement in easy readable print, except as provided herein:

"This advertisement is not an offering. No offering is made except by a prospectus filed with the Department of Law of the State of New York. Such filing does not constitute approval of the issue or the sale thereof by the Department of Law or the Attorney General of the State of New York."

(b) The statement required under the foregoing subdivision shall similarly be contained on the cover page of all circulars, flyers, cards, letters and other literature employed in connection with soliciting interests in the offering, except that a single page letter of transmittal actually accompanying an offering plan duly filed with the Department of Law need not contain such a statement. A subscription form need not contain such a statement, if included therein there is an acknowledgement of a prior receipt of such an offering plan.

(c) Irrespective of subdivision (a) of this section, in all classified-type advertisements not more than five inches long and not more than one column of print wide the following statement may be used, in lieu of the statement required in subdivision (a) of this section:

"THIS OFFERING IS MADE BY PROSPECTUS ONLY."

(d) All advertisements may be submitted for comment to the Condominium Theatre and Syndication Financing Bureau of the Department of Law, 28 Liberty Street, New York, NY 10005, at least 48 hours before publication.

(e) No room plan, chart or diagram may be used in connection with the offer or sale of any cooperative unit unless such document has been filed as part of the plan of cooperative organization.

(f) No advertisement shall include any representation or statement not covered in and consistent with the offering plan on file with the Department of Law of the State of New York. Monthly maintenance charges shall be preceded by the word "estimated" where only an anticipation; and there shall be no subtraction or representation of specific dollar or percentage savings because of anticipated tax deductions.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 17.8 Determinations of elections by eligible senior citizens, eligible handicapped persons and eligible disabled persons

(a) Election.

A nonpurchasing tenant may elect not to purchase as an eligible senior citizen or eligible disabled person as defined in General Business Law section 352-e eee or as an eligible handicapped person as defined in General Business Law section 352-e ee within 60 days from the presentation date by completing the applicable form, SH-1, SH-2 or SH-3 prescribed by the Department of Law and included in the offering plan immediately preceding the introduction page, signing the election form and having the signature notarized and personally delivering it to the named sponsor or agent at a location specified by the sponsor in the plan or by mailing it by certified or registered mail, return receipt requested to the named sponsor or agent at an address specified by the sponsor in the plan.

(1) An election form is timely if it is personally delivered or postmarked before midnight of the 60th day after the presentation date subject to statutory rules of construction.

(2) The sponsor or agent shall acknowledge receipt of the election form and promptly return an acknowledged copy to the nonpurchasing tenant.

(b) Determination of disputed elections.

A sponsor who disputes the election by a nonpurchasing tenant to be an eligible senior citizen, an eligible handicapped person or an eligible disabled person, must apply to the Department of Law for a determination by the Department of Law of such person's eligibility within 30 days following receipt of the election form.

(1) The application is timely if it is personally delivered to the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005, during business hours or postmarked before midnight of the 30th day following receipt by the sponsor or agent of the election form.

(2) An untimely application will not be entertained, in which case the tenant whose eligibility is disputed will be deemed eligible under the statute.

(3) The application shall include the following:

(i) one copy of the election form;

(ii) one original and one copy of an affidavit, sworn to by a person having knowledge of the facts, setting forth the following:

(a) that the application is timely in accordance with this Part;

(b) the specific ground(s) for disputing the election; and

(c) the basis for the affiant's statement that the tenant is not an eligible senior citizen, eligible handicapped person or eligible disabled person; and

(iii) two copies of all supporting information or documentation in the possession of the sponsor or the affiant bearing on eligibility.

(4) The application must be complete at submission. The Department of Law need not consider any additional or supplemental information subsequently submitted by sponsor.

(5) The Department of Law shall notify the person that the sponsor disputes the person's election to be an eligible senior citizen, eligible handicapped person or eligible disabled person and shall request the person to submit an answer to the application on a form prescribed by the Department of Law and support the answer with information or documentation bearing on the specific grounds raised by sponsor to dispute the election. The answer and supporting documentation must be submitted to the Department of Law within 10 days of the date of the notice from the Department of Law. Failure to submit an answer shall not preclude the Department of Law from issuing a determination.

(6) The Department of Law may, in its discretion, require the appearance of any witness for the purpose of obtaining oral testimony on the specific grounds for disputing the election. A witness shall be notified that he may be represented by counsel.

(7) On the basis of the information contained in the election form, the sponsor's application, the answer, if any, and oral testimony, if any, the Department of Law shall issue a determination of eligibility. The determination shall become final three days after the Department of Law mails notice of the determination to the parties.

(c) Sale of units or shares allocated to units occupied by eligible senior citizens, eligible handicapped persons and eligible disabled persons.

(1) A unit or shares allocated to a unit occupied by an eligible senior citizen, eligible handicapped person or eligible disabled person or a person seeking exemption as an eligible senior citizen, eligible handicapped person or eligible disabled person, may not be offered to a third party during the exclusive purchase period granted to tenants in occupancy in the offering plan and any amendments thereto unless the sponsor, in writing, waives any right to challenge the eligibility of the occupant of the unit.

(2) Where the sponsor has disputed the eligibility of a person seeking an exemption, the unit or shares allocated thereto may not be offered to a third party for 30 days after the Department of Law has made its determination of eligibility. If a proceeding to review such determination is commenced under article 78 of the Civil Practice Law and Rules in a court of competent jurisdiction, the unit or shares allocated thereto may not be offered to a third party for 30 days after notice of entry of the final order in such proceeding. If such final determination or order finds that the person seeking the exemption is not an eligible senior citizen, eligible handicapped person or eligible disabled person, such person may purchase the unit or shares allocated thereto for a period not to exceed 30 days following such final determination or order on the most favorable terms offered to tenants in occupancy at any time prior to such final determination or order; provided, however, that if such final determination or order includes a finding that the exemption was sought fraudulently or made in bad faith, such person may purchase the unit or shares allocated thereto as provided in paragraph (3) of this subdivision.

(3) Notwithstanding an election not to purchase, an eligible senior citizen, eligible handicapped person or eligible disabled person may purchase the unit or shares allocated thereto on the terms then offered to tenants in occupancy.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 18 OCCUPIED COOPERATIVES

N.Y. Comp. Codes R. & Regs. Tit. 13 § 18.4 Transmittal letter and certifications

(a) Transmittal letter.

A transmittal letter addressed to the Department of Law that is signed and affirmed by the attorney who prepared the offering plan and containing the following unqualified statements, be submitted with the plan and exhibits:

(1) at the time the plan is first submitted for filing; and

(2) immediately prior to its acceptance for filing:

I/We am/are the attorney(s) who prepared the cooperative offering plan for the captioned property. I/We affirm as follows: Enclosed for filing pursuant to 13 NYCRR Part 18, Occupied Cooperatives, are copies of the offering plan together with the exhibits.

I/We am/are fully familiar with the provisions of article 23-A of the General Business Law and the regulations promulgated by the Department of Law in Part 18.

I/We prepared the attached offering plan and exhibits based on information from the sponsor. I/We have read all the printed copy submitted to the Department of Law, but expressly disclaim any responsibility to have made an independent inspection of the building(s) or property or investigation of the information furnished to me/us by sponsor. I/We have no actual knowledge of a violation of article 23-A of the General Business Law or Part 18 of the regulations promulgated by the Department of Law, nor do I/we have actual knowledge of any material fact omitted or any untrue statement of a material fact included in the offering plan.

(b) Certification by sponsor.

Include in Part II of the plan and in the exhibits a certification, subscribed and sworn to by the sponsor and sponsor's principals in their capacity as principals, in the following form:

We are the sponsor and the principals of sponsor of the cooperative offering plan for the captioned property.

We understand that we have primary responsibility for compliance with the provisions of Article 23-A of the General Business Law, the regulations promulgated by the Department of Law in 13 NYCRR Part 18 and such other laws and regulations as may be applicable.

We have read the entire offering plan. We have investigated the facts set forth in the offering plan and the underlying facts. We have exercised due diligence to form a basis for this certification. We jointly and severally certify that the offering plan does, and that documents submitted hereafter by us which amend or supplement the offering plan will:

(i) set forth the detailed terms of the transaction and be complete, current and accurate;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representations or statement made.

This certification is made under penalty of perjury for the benefit of all persons to whom this offer is made. We understand that violations are subject to the civil and criminal penalties of the General Business Law and Penal Law.

Include in Part II of the plan and in the exhibits the following certification subscribed and sworn to by an engineer or architect (who must either be registered as an architect or be licensed to practice as a professional engineer in the jurisdiction where the cooperative is located). The certification must be dated within 90 days prior to the date of submission of the offering plan to the Department of Law. A second certification containing the language in parenthesis below, shall be submitted with any addendum to a report.

"The sponsor of the offering plan to convert the captioned property to cooperative ownership retained me/our firm to prepare a report disclosing the condition of the property, (the "Report"). I/We visually inspected the property on __, and prepared the report dated __,

I/We understand that I/we am/are responsible for complying with article 23-A of the General Business Law and the regulations promulgated by the Department of Law in 13 NYCRR Part 18 insofar as they are applicable to this report (addendum).

I/We have read the entire report (addendum) and investigated the facts set forth in the report (addendum) and the facts underlying it, and conducted the visual inspection referred to above with due diligence in order to form a basis for this certification. I/We certify that the report (addendum) and all documents prepared by me/us disclose all the material facts (relevant to the topics of the addendum) which were then discernible from a visual inspection of the property. This certification is made for the benefit of all persons to whom this offer is made. I/We certify that the report (addendum), based on my/our visual inspection:

(i) sets forth in narrative form the physical condition of the entire property (the aspects of the property discussed in the addendum), and is current and accurate as of the date of inspection;

(ii) in my/our professional opinion, affords potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the physical condition of the property (the aspects of the property discussed in the addendum);

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representations or statement made; and

(viii) it is to be understood that all aspects of the physical condition of the property cannot be determined by a visual inspection and that all statements contained in this certification are premised on and limited to such visual inspection.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this report (addendum) is not contingent on the conversion of the property to a cooperative or on the profitability or price of the offering. This statement is not intended as a guarantee or warranty of the physical condition of the property."

(d) Certification by expert on adequacy of budget.

Include in Part II of the plan and in the exhibits a certification subscribed and sworn to by an expert concerning the adequacy of Schedule B in the following form. The certification must be dated within 90 days prior to the date of the submission of the offering plan to the Department of Law. The expert's certification must be based on experience in the management of cooperatives or condominiums or rental properties and must disclose the approximate number of properties managed and length of time managed, together with other relevant real estate experience, qualifications and licenses.

The sponsor of the cooperative offering plan for the captioned property retained me/our firm to review or prepare Schedule B containing projections of income and expenses for the first year of cooperative operation. My/Our experience in this field includes:

I/We have reviewed the Schedule and investigated the facts set forth in the Schedule and the facts underlying it with due diligence in order to form a basis for this certification. I/We also have relied on my/our experience in managing residential buildings.

I/We certify that the projections in Schedule B appear reasonable and adequate under existing circumstances, and the projected income appears to be sufficient to meet the anticipated operating expenses for the projected first year of cooperative operation.

I/We certify that the Schedule:

(i) sets forth in detail the projected income and expenses for the first year of cooperative operation;

(ii) affords potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the first year of cooperative operation;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing cirucmstances;

(vii) does not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representations or statement made.

I/We further certify that I am/we are not owned or controlled by the sponsor. I/We understand that a copy of this certification is intended to be incorporated into the offering plan. This statement is not intended as a guarantee or warranty of the income and expenses for the first year of cooperative operation.

This certification is made under penalty of perjury for the benefit of all persons to whom this offer is made. I/We understand that violations are subject to the civil and criminal penalties of the General Business Law and Penal Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 18.6 Advertisements

(a) Except as provided in subdivision (b) of this section, all advertising in print or other media, as well as circulars, flyers, cards, letters and other literature employed to solicit interest ("advertisement") for offering plans filed pursuant to this Part, shall contain the following statement in easily readable print separated from the body of the advertisement or spoken in a distinctly audible voice.

The complete offering terms are in an offering plan available from sponsor.

(b) Notwithstanding subdivision (a) of this section, in all classified-type advertisements not more than five inches long and not more than one column of print wide, the following statement may be used in lieu of the statement required in subdivision (a) of this section at the end of the advertisement and separated from the body of the advertisement:

SEE OFFERING PLAN FOR FULL TERMS.

(c) Any chart or diagram used in a advertisement must be consistent with the offering plan. Any room or floor plan must be to scale.

(d) No abbreviations shall be employed in advertisement unless the meaning is unmistakably clear.

(e) All advertisements in connection with an offering plan filed pursuant to this Part shall be consistent with the representations and information required to be set forth by the General Business Law and this Part. All assertions of fact in advertisements must be provably true.

(f) Anticipated maintenance charges shall be preceded by the word projected or estimated or abbreviations of those terms. In estimating maintenance charges, there shall be no subtraction or representation of specific dollar saving because of anticipated tax deductions.

(g) Advertisements of amenities or services available at a fee charged in addition to the maintenance charge, or in addition to the purchase price, must refer to the additional fee. Advertisements of amenities or services that will not be available at closing must state the approximate date of availability.

(h) Artist's rendering of a property in an advertisement must be marked as an artist's rendering and must accurately and realistically depict the dimensions, height and landscaping of the property and surrounding roads, buildings and open space.

(i) Advertisements of financing offered or procured by sponsor must include the term of the financing when the term is for less than five years.

(j) Advertisements directed to nontenant purchasers of occupied apartments shall state:

(1) Purchasers will assume all the obligations of a landlord. These expenses are not included in maintenance charges.

(2) The costs of owning the apartment may exceed the rent.

(3) In the case of a noneviction plan: This is a noneviction plan. Tenants may have the right to remain in occupancy indefinitely.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 18.8 Eligible senior citizens and eligible disabled persons

(a) Election.

A tenant may elect not to purchase as an eligible senior citizen or eligible disabled person as defined in G.B.L., section 352-e(2-a) or 352-eeee, or as an eligible disabled person as defined in G.B.L., section 352-eee, within 60 days from the presentation date by completing the applicable form, SH-1 or SH-2, prescribed by the Department of Law and included in the offering plan immediately preceding the introduction page, signing the election form and having the signature notarized, and personally delivering it to the named sponsor or selling agent at a location specified by the sponsor in the plan or by mailing it by certified or registered mail, return receipt requested, to the named sponsor or selling agent at an address specified by the sponsor in the plan. G.B.L., section 352-eee does not require that a tenant file an election form in order to qualify as an eligible senior citizen. However, it is advised and requested that a tenant, who believes he or she is or will become an eligible senior citizen within 12 months from the date the plan is filed, complete the election form SH-5 promulgated by the Department of Law and included in the plan. This senior citizen election form should be completed, signed, notarized and returned to the sponsor within 60 days of presentation of the offering plan. In the event that the plan becomes subject to G.B.L., section 352-e(2-a) after the plan was accepted for filing, the plan must be amended immediately after the statute becomes applicable to such offering, and such election may be made within 60 days of presentation of such amendment.

(1) An SH-1 or SH-2 election form is timely if it is personally delivered or postmarked before midnight of the 60th day after the presentation date, subject to statutory rules of construction. An SH-5 election form may be delivered at any time.

(2) The sponsor or selling agent shall acknowledge receipt of the election form and promptly return an acknowledged copy to the nonpurchasing tenant.

(b) Determination of disputed elections.

A sponsor who disputes the election by a non-purchasing tenant to be an eligible senior citizen or an eligible disabled person must apply to the Department of Law for a determination of the person's eligibility within 30 days following receipt of the election form.

(2) An untimely application will not be entertained, in which case the tenant whose eligibility is disputed will be deemed eligible under the statute.

(3) The application shall include the following:

(i) one copy of the election form;

(ii) one original and one copy of an affidavit, sworn to by a person having knowledge of the facts, setting forth the following:

(a) that the application is timely in accordance with this Part;

(b) the specific ground(s) for disputing the election; and

(iii) two copies of all supporting information or documentation in the possession of the sponsor or the affiant bearing on eligibility.

(4) The application must be complete at submission.

The Department of Law need not consider any additional or supplemental information subsequently submitted by sponsor.

(5) The Department of Law shall notify the person that the sponsor disputes the person's election to be an eligible senior citizen or eligible disabled person; and shall request the person to submit an answer to the application on a form prescribed by the Department of Law and support the answer with information or documentation bearing on the specific grounds raised by sponsor to dispute the election. The answer and supporting documentation must be submitted to the Department of Law within 10 days of the date of the notice from the Department of Law. Failure to submit an answer shall not preclude the Department of Law from issuing a determination.

(6) The Department of Law may, in its discretion, require the attendance and giving of testimony by witnesses and the production of papers, documents, books and other evidence concerning the issues raised. A witness shall be notified that he or she may be represented by counsel.

(7) On the basis of the evidence received, the Department of Law shall issue a written determination of eligibility.

(1) A unit or shares allocated to a unit occupied by an eligible senior citizen or eligible disabled person, or a person seeking exemption as an eligible senior citizen or eligible disabled person, may not be offered to a third party during any exclusive purchase period granted to bona fide tenants in occupancy unless the sponsor, in writing, waives any right to dispute the eligibility of the occupant of the unit.

(2) Where the sponsor has disputed the eligibility of a person seeking an exemption, the unit or shares allocated thereto may not be offered to a third party for 30 days after the Department of Law has made its determination of eligibility. If a proceeding to review such determination is commenced under article 78 of the Civil Practice Law and Rules in a court of competent jurisdiction, the unit or shares allocated thereto may not be offered to a third party for 30 days after notice of entry of the final order in such proceeding. If such final determination or order finds that the person seeking the exemption is not an eligible senior citizen or eligible disabled person, such person may purchase the unit or shares allocated thereto, within 30 days thereafter, on the most favorable terms offered to tenants in occupancy at any time prior thereto; provided, however, that if such final determination or order includes a finding that the exemption was sought fraudulently or in bad faith, such person may purchase the unit or shares allocated thereto as provided in paragraph (3) of this subdivision.

(3) Notwithstanding an election not to purchase, an eligible senior citizen, or eligible disabled person may purchase the unit or shares allocated thereto on the terms then offered to tenants in occupancy.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 19 CONDOMINIUM OFFERINGS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 19.3 Prefiling procedure (optional)

(a) Sponsors of condominium offerings may submit their proposed offering plans in draft form to the Real Estate Financing Bureau, Department of Law, 28 Liberty Street, New York, NY 10005, with a request for analysis and comments. Three copies of such proposed plan should be submitted together with two copies of the exhibits described in section 19.2(c) of this Part.

(b) On the date the proposed offering plan in draft form is submitted to the Department of Law, the sponsor shall serve each offeree, as defined in section 19.1(g) of this Part, of any occupied building with a copy of the proposed offering plan together with the following notice:

Date of Notice: __.

We have submitted for prefiling review to the New York State Department of Law, Real Estate Financing Bureau, a proposed offering plan for the conversion of [insert address or name of building] to a condominium. The law requires us to disclose all material information concerning the building and the conversion process in an offering plan. A copy of the proposed offering plan is enclosed for you to retain. Other copies of the offering plan are available for inspection and copying at the office of the sponsor (or sponsor's selling agent) located at [insert address of sponsor or selling agent] and at the Department of Law.

The Attorney General strongly urges you to read this offering plan carefully and to consult with an attorney to advise you as to the meaning and consequences of the offering plan.

You may send written comments to the Department of Law, Real Estate Financing Bureau, 28 Liberty Street, New York, NY 10005. You may also send your written comments to the sponsor (or sponsor's selling agent). No apartments may be sold or offered for sale, no purchase agreements may be executed and no down payments may be accepted unless and until the Department of Law files the offering plan and a copy of the filed plan is served on each tenant.

THIS IS A PROPOSED OFFERING PLAN ("RED HERRING") TO CONVERT THE APARTMENTS IN THIS BUILDING TO A CONDOMINIUM. IT HAS BEEN SUBMITTED TO THE NEW YORK STATE DEPARTMENT OF LAW, REAL ESTATE FINANCING BUREAU. THIS PROPOSED OFFERING PLAN IS SUBJECT TO MODIFICATION. APARTMENTS MAY NOT BE SOLD OR OFFERED FOR SALE UNTIL THE OFFERING PLAN IS FILED AND A FINAL COPY IS DELIVERED TO EACH TENANT.

(d) The Department of Law, in its discretion, may issue a letter to the sponsor or sponsor's attorney stating that an offering plan, that was submitted pursuant to the prefiling procedure for a building occupied in whole or in part for residential purposes, is filed when:

(1) more than 120 days have elapsed from the date the draft offering plan was submitted to the Department of Law; and

(2) after analysis and comment as provided under subdivision (a) of this section, the sponsor submits 15 copies of the bound offering plan and a personal or certified check for one half the filing fees due under General Business Law section 352-e(7)(a) payable to the New York State Department of Law.

At any time during the prefiling procedure, or if the Department of Law declines to issue such a letter to the sponsor or sponsor's attorney under the prefiling procedure, the sponsor may elect to submit for final filing. The sponsor then must comply with section 19.1(e) and (f) of this Part and shall be subject to the minimum and maximum time requirements and other requirements of section 19.1(h) of this Part.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 19.4 Advertising

(a) All advertising in connection with the offering of condominium interests shall contain the following statement running along the entire width of the advertisement, in easily readable print: This advertisement is not an offering, which can be made only by a formal prospectus.

(c) No abbreviations shall be employed in connection with any such advertising, unless the meaning is unmistakably clear.

(d) Irrespective of the provisions of this section, the following statement may be used in all classified advertisements not more than five inches long and not more than one column of print wide:

NO OFFERING IS MADE EXCEPT BY PROSPECTUS.

(e) No floor plan, chart or diagram may be used in the offering of condominium interests unless such plan has been filed with the Department of Law as part of a plan of condominium offering.

(f) No advertisement shall include any representation or statement not set forth in the offering plan filed with the Department of Law of the State of New York, or inconsistent therewith. Every statement regarding common and other charges and expenditures by purchasers shall be preceded by the word estimated and there shall be no representation of specific dollar or percentage savings because of anticipated income tax deductions resulting from expenditures.

(g) Mere advertising material employed subsequent to the initial filing need not be filed, but shall be consistent with offering literature filed, for amendments thereto.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 19.5 Amendments

(a) General.

Documents to supplement or amend an offering plan-collectively, amendment(s) -shall be deemed part of the offering plan and shall meet the following requirements:

(1) If the offering plan does not comply with section 19.1(c) of this Part due to change of events, the passage of time or any other reason, the offering plan must be amended promptly.

(2) An amendment must include a representation that all material changes of facts or circumstances affecting the property or the offering are included, unless the changes were described in prior amendment(s) submitted to but not yet filed with the Department of Law.

(3) Except as otherwise provided, an amendment to an offering plan shall be filed on the date indicated in the letter issued by the Department of Law stating that the amendment has been filed, and not sooner.

(4) Amendments that have been filed with the Department of Law must be attached to the inside front cover of the offering plan before the amended plan is distributed to the public. The cover of the offering plan must be stamped: "This plan has been amended. See inside cover." Any revisions, additions or deletions of specific language in the offering plan should reprint a sufficient portion of the paragraph from the offering plan, as revised, so that the revised portion of the offering plan may be understood easily. An offering plan that has been amended extensively may be rewritten to incorporate the amendments into the body of the plan.

(5) Amendments must be served on offerees in accordance with section 19.1(g) of this Part.

(b) Procedure for submission of amendments.

Amendments must be mailed to or submitted during business hours to the Real Estate Financing Bureau, Department of Law, 28 Liberty Street, New York, NY 10005. Include the following when submitting an amendment to the Department of Law:

(1) A transmittal letter, signed by the attorney who prepared the amendment, that:

(i) states the date the offering plan was filed;

(ii) identifies the subject amendment(s) in numerical order;

(iii) states whether prior amendments had been submitted to but not yet filed with the Department of Law; and

(iv) identifies, if possible, the attorney in the Department of Law who reviewed the most recent submission.

(2) Three copies of the amendment to the offering plan.

(3) Check (certified or uncertified) for filing fees under G.B.L. section 352-e(7), payable to New York State Department of Law, stapled or clipped to the transmittal letter together with three copies of the form of receipt issued by the Department of Law.

(4) Two copies of the offering plan, including all filed amendments.

(5) One form CD-2.

If the amendment is submitted before the closing, or if the amendment discloses the events that took place at the closing, the form must be signed by the sponsor. If the amendment is submitted after the closing, the form must be signed by one or more holders of unsold shares and must include the sponsor or principals of sponsor if the sponsor or principals are holders of unsold shares.

Pursuant to section 19.2(a)(2)(iv) of this Part, the term of the initial offer is 12 months commencing on the date indicated in the letter issued by the Department of Law stating that the plan is filed. Prior to the closing of the first unit, an amendment other than a price change amendment extends the term of the offering for an additional six-month term, unless the term is shorter by the provisions of the amendment. After the closing of the first unit, any subsequent amendment other than a price change amendment extends the term of the offering for an additional 12-month term from the date of filing of the amendment. A price change amendment submitted pursuant to subdivision (d) of this section does not extend the term of the offering. In the absence of any amendments, an extension of the term must be made by amendment before the end of the then current term and must comply with the provisions of this section and the requirements set forth below.

(1) The amendment must disclose all material changes, such as decreases or increases in common charges.

(2) If the closing has occurred, the amendment must state:

(i) the number of unsold units remaining; and

(ii) the extent to which the sponsor controls the board of managers.

(d) Price change amendments.

An amendment proposing to change any offering price is subject to the requirements set forth below.

(1) Notwithstanding paragraph (a)(3) of this section, if the amendment is limited solely to price changes and no prior amendment has been submitted to but not yet filed with the Department of Law, the amendment shall be deemed filed when submitted to the Department of Law.

(2) If the amendment contains price changes and supplements or amends any other part of the offering plan, the amendment shall be filed on the date indicated in the letter issued by the Department of Law stating that the amendment has been filed, and not sooner.

(3) The transmittal letter for a price change amendment must be accompanied by a completed copy of form C-11 as promulgated by the Department of Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 19.8 Determinations of elections by eligible senior citizens and eligible handicapped persons

(a) Election.

Subject to the other provisions of this section, a person may seek exemption as an eligible senior citizen or an eligible handicapped person as defined in General Business Law, section 352-e ee or 352-eeee by completing the relevant form SH-1, SH-2 or SH-3 promulgated by the Department of Law and included in the offering plan, and returning the form to the sponsor or his designated agent within 60 days of the date the Department of Law files the plan. The form must be served on the sponsor or his designated agent by personal service or certified or registered mail, return receipt requested. The sponsor or agent shall acknowledge receipt of the form and return an acknowledged copy to the person making the election.

(b) Determination of disputed elections.

(1) A sponsor who disputes the election by a person seeking exemption as an eligible senior citizen or eligible handicapped person must apply to the Department of Law within 30 days of the receipt of the election form for a determination by the Department of Law of such person's eligibility.

(2) The application shall be in the form of an affidavit sworn to by a person having knowledge of the facts and shall set forth the following:

(i) a statement that the application is made within 30 days of receipt of the election form;

(ii) the specific grounds for challenging the exemption;

(iii) the basis for the affiant's belief that the person making the election is not an eligible senior citizen or eligible handicapped person; and

(iv) all supporting information and documentation in the possession of the affiant bearing on the above.

(3) If the sponsor does not file a timely application, the Department of Law shall determine that the person making the election is an eligible senior citizen or eligible handicapped person.

(4) Upon receipt of an application and supporting documentation timely filed, the Department of Law shall inform the person making the election that an application disputing his or her eligibility has been received and shall request the person to submit an answer to the application on forms prescribed by the Department of Law supported by all relevant documentation in his or her possession within seven business days. Failure to answer the application shall not preclude the Department of Law from determining the eligibility of such person. The Department of Law may, in its discretion, request the appearance of any witness for the purpose of obtaining oral testimony on the issue or issues presented in the dispute. Such person shall be notified that he or she may be represented by counsel.

(5) On the basis of the information contained in the election form, the sponsor's application, the answer, if any, and oral testimony, if any, the Department of Law shall issue its determination of eligibility.

This section shall be applicable to all offering plans accepted by the Department of Law for filing after the effective date, and to all applications to the Department of Law for determinations pursuant to General Business Law, section 352-e ee(4) or 352-eeee(4) not yet determined as of the effective date.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 20 NEWLY CONSTRUCTED, VACANT OR NON-RESIDENTIAL CONDOMINIUMS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 20.1 General

(a) Applicability.

The offering statement or "offering plan" required by section 352-e of the General Business Law ("GBL") for a condominium that meets the requirements set forth below is subject to this Part, newly constructed, vacant or non-residential condominiums. Except as provided in paragraphs (4) and (5) of this subdivision, offerings subject to this Part are not subject to any other Part.

(1) The building is completely vacant of individuals residing in the building or entitled to residential occupancy on the date the proposed offering plan is submitted to the Department of Law or the building is to be newly constructed. In the case of a newly constructed out-of-state condominium, the building may be partially occupied by out-of-state purchasers.

(2) The condominium is not organized as a time-sharing arrangement.

(3) A condominium offering for vacant or occupied commercial or professional use only is subject to this Part, newly constructed, vacant or non-residential condominiums. In the case of a mixed use building the residential units must be completely vacant of individuals residing in the building or entitled to residential occupancy on the date the proposed offering plan is submitted to the Department of Law.

(4) The conversion of a newly constructed, vacant or non-residential building to two or more condominium units along with the conversion of one or more of the condominium units to a cooperative apartment corporation ("condo-coop") is also subject to Part 21 of this Title, newly constructed, vacant or non-residential cooperatives.

(5) If membership in a homeowners association or similar entity is included or is to be sold in conjunction with the offering of condominium units, the offering plan must also comply with the requirements of Part 22 of this Title, homeowners associations.

(b) Standard of compliance.

An offering plan must, at a minimum:

(1) contain in detail the terms of the transaction and be complete, current and accurate;

(2) afford potential investors, purchasers, and participants an adequate basis upon which to found their judgment;

(3) not omit any material fact;

(4) not contain any untrue statement of a material fact;

(5) not contain any fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale;

(6) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and

(7) not contain any representation or statement which is false, where the sponsor or the person who made such representation or statement:

(i) knew the truth;

(ii) with reasonable effort could have known the truth;

(iii) made no reasonable effort to ascertain the truth; or

(iv) did not have knowledge concerning the representation or statement made.

As used in this Part:

(1) Sponsor means any person, partnership, joint venture, corporation, company, trust, association or other entity which makes or takes part in a public offering or sale in or from the State of New York of securities consisting primarily of shares or participation interests or investments in real estate including condominium units and other cooperative interests in realty. Sponsor's obligations as sponsor continue until all units are sold. Sponsor shall not be deemed to include a selling agent who has complied with section 359-e of the General Business Law or an attorney or other expert retained by the sponsor solely to render professional advice or opinions in connection with the offering. Sponsor shall also be deemed to include owners of at least 10 units or 20 percent of the total number of units in the condominium, whichever is less, which are not purchased for occupancy by the owner or one or more members of his or her immediate family; such sponsor will be deemed, however, to be a sponsor with the obligations of a sponsor only in relationship to the units which such sponsor owns.

(2) Principal(s) means all individual sponsors, all general partners of sponsors that are partnerships, all officers, directors and shareholders of a corporate sponsor that are actively involved in the planning or consummation of the offering, and all other individuals who both (i) own an interest in or control sponsor and (ii) actively participate in the planning or consummation of the offering, regardless of the form of organization of sponsor.

(3) Purchase agreement means any executed written agreement to purchase a condominium unit. Purchaser means any person, partnership, joint venture, corporation, company, trust, association or other entity which executes and delivers to the sponsor or selling agent a purchase agreement. To purchase means to execute a purchase agreement.

(4) Presentation date means the date of completion of service, as defined in subdivision (d) of this section, of a copy of the plan or amendment filed with the Department of Law.

(5) Building means building or group of buildings.

(6) Consummation of the plan means filing the declaration of condominium and the first transfer of title to a condominium unit to at least one purchaser under the plan following a declaration of effectiveness by the sponsor and acceptance of the amendment by the Department of Law confirming or declaring the plan effective.

(7) Filing means the issuance of a letter from the Attorney General stating that an offering plan or amendment has been accepted for filing.

(8) Digital copy means a copy is identical in content to a paper copy except that it is recorded electronically in read-only .pdf format or other electronic format that the Department of Law determines to be acceptable. Digital copies of the plan shall include all the supporting documents included in Part II of the plan. Digital copies of the exhibits to the plan shall include all documents referenced in section 20.2(c)(5) of this Part, as applicable. Digital copies of the amendment shall include all exhibits, back-up documents, and other supplemental documents annexed to the amendment, as applicable. The Department of Law shall periodically issue a Guidance Document as defined by State Administrative Procedure Act section 102(14), setting forth particular guidelines and procedures for the submission of digital copies. Such Guidance Document will be available on the Department of Law's website, as required by State Administrative Procedure Act section 202(e).

(9) Interim lessee means a purchaser under the plan who takes occupancy to his or her contracted-for unit prior to closing title. The rights and obligations of the interim lessee must be set forth in writing executed by both sponsor and purchaser.

(d) Service.

(1) Unless otherwise provided by statute or regulation, any document required to be served by this Part shall be served on:

(i) commercial or professional tenants;

(ii) purchasers who have executed and delivered purchase agreements to the sponsor or selling agent and whose purchase agreements are in effect;

(iii) unit owners; and

(iv) any other person entitled to service pursuant to local law or regulation (collectively "offerees"), in the following manner:

(a) personal delivery; or

(b) mailing by regular mail or registered or certified mail with or without return receipt requested, addressed to the offeree at the last known residence of such offeree or, if the offeree has provided written information of an alternative address for notices, addressed to the offeree at the alternative address. If sponsor has no information of the last known residence address, but has written information of the place of business or employment of such offeree, the mailing shall be addressed to such last business or employment address.

(2) Service by personal delivery shall be deemed complete upon delivery. Service by mailing shall be presumed complete on the fifth day after the date of mailing. An affidavit of service identifying the offerees served, stating the manner of service and the date of service is a document required to be retained under section 20.3(ad) of this Part. The completion of service shall be the latest date on which service upon all offerees is deemed or presumed complete.

(3) Service on unit owners may be satisfied by service on the board of managers if the sponsor is no longer in control of the board of managers and the amendment is solely limited to price changes.

(e) Notice to commercial or professional tenants and affidavit of service.

Within three business days from the date the proposed offering plan is first submitted to the Department of Law, sponsor shall serve each commercial or professional tenant with a copy of the proposed offering plan together with the following notice:

Date of Notice: ___________________________________________

"We have submitted to the New York State Department of Law, Real Estate Finance Bureau, a proposed offering plan for the conversion of (insert address and name of building, if any) to a commercial or professional condominium. The final offering plan has not yet been filed with the Department of Law. The law requires us to disclose all material information concerning the building and the conversion process in this proposed offering plan. A copy of the proposed offering plan is available for inspection and copying at the office of sponsor (or selling agent) located at (insert address of sponsor or selling agent) and the Department of Law. The law requires the Department of Law, within not more than 30 days from the date of submission of the proposed offering plan, either to file the offering plan or to indicate how the offering plan is deficient. No condominium units may be sold or offered for sale and no purchase agreements may be executed unless and until the Department of Law files the final offering plan. A copy of the filed plan will then be served on each commercial or professional tenant. You may send written comments on the proposed offering plan to the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005. You may also send your written comments to (insert name and address of sponsor or selling agent)." An affidavit of service of the notice must be submitted to the Department of Law within three (3) business days following completion of service on all commercial or professional tenants.

(f) Time of review.

After submission of the proposed offering plan for filing, the Department of Law shall issue a letter to the sponsor or sponsor's attorney stating that the plan is filed, or indicating deficiencies. The Department of Law shall issue such a letter for an offering plan subject to this Part no later than 30 days after submission of the proposed offering plan. The Department of Law may issue a deficiency letter whenever it appears that the proposed offering plan is deficient in one or more respects. The Department of Law may, in its discretion, deem an offering plan as not submitted if the proposed offering plan and exhibits are incomplete and therefore do not meet the requirements of section 20.2 of this Part, procedure for submission.

(g) Statutory compliance.

Unless expressly provided herein, nothing contained in this Part shall be construed as limiting the requirements set forth in article 23-A of the General Business Law, and in article 9B of the Real Property Law ("the New York Condominium Act") or the laws regulating condominiums in the State where the property is located.

(h) Waiver.

In the interests of justice, the Department of Law may waive compliance with any provision of these regulations and can permit variations of regulations so long as the variation is consistent with the purpose and intent of the regulation and statute or unless prohibited from doing so by statute or by final court order.

(i) Exemptions.

Upon written application of the sponsor, or sponsor's attorney, the Department of Law, in its discretion, may exempt a plan from the application of any provision of this Part where it is found that enforcement of the provision is not necessary to effectuate the purposes of the General Business Law or to protect the investing public. The application shall:

(1) be annexed to and be submitted with the attorney's transmittal letter;

(2) set forth the provisions from which the exemption is sought and the grounds for the exemption; and

(3) be signed by sponsor or the sponsor's attorney.

The transmittal letter and certifications required by section 20.4 of this Part shall be in the form required by this Part, without modification, and shall be based on the assumption that any exemption sought pursuant to this section has been granted. In the event that the Department of Law denies the application for exemption, the Department of Law may issue a deficiency letter as provided in subdivision (f) of this section. No additional fee is required for an exemption application.

(j) Out-of-state condominiums.

A sponsor of a condominium located outside of New York State which makes or takes part in a public offering or sale in or from the State of New York of condominium units must file an offering plan with the Department of Law. To comply with this requirement, the sponsor of an out-of-state plan may file a complete offering plan drafted in accordance with New York law and this Part. In the alternative, the Department of Law may, in its discretion, allow the sponsor to file the offering plan approved by or filed with the state or jurisdiction in which the condominium is located and an addendum with such additional information as is required by the Department of Law. Sponsor must represent that the plan complies with all applicable local laws.

(k) Effectiveness of regulations.

The effective date of these regulations is the date of filing with the Secretary of State. As of such date:

(1) This Part is effective immediately for offering plans that meet the requirements of subdivision (a) of this section.

(2) Section 20.5 of this Part is effective for amendments to plans submitted after the effective date of these regulations that meet the requirements of subdivision (a) of this section, regardless of when such plans were filed.

(3) Section 20.6 of this Part is effective for advertisements, appearing on or after the effective date of these regulations, for offering plans that meet the requirements of subdivision (a) of this section, regardless of when such plans were filed.

(l) Withdrawals, abandonments and rejections.

(1) If the offering plan is withdrawn prior to filing, written notice thereof shall be served simultaneously by the sponsor on the Department of Law and on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.

(2) If the offering plan is to be abandoned after filing and the sponsor has accepted purchase agreements, the sponsor shall promptly submit an amendment to the Department of Law together with form RS-3 as promulgated by the Department of Law. If payments under purchase agreements have been received, the amount of such funds and the manner and time when these funds will be returned to purchasers must be disclosed. The funds must be returned within five days after the amendment abandoning the plan has been accepted for filing. If there are no outstanding purchase agreements the sponsor need not submit an amendment but shall submit a form RS-3 to the Department of Law which shall be served simultaneously by the sponsor on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.

(3) If the offering plan is finally rejected by the Department of Law and there is no outstanding right to cure defects, the sponsor shall promptly serve notice of such rejection on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.

(m) Disclaimers.

The requirements set forth in section 20.3 of this Part apply to the offering plan generally and shall not be negated or contradicted by inconsistent provisions in other portions of the offering plan, or by provisions purporting to discharge liability or to terminate the continuing effect of representations in the offering plan upon an event such as the closing or the delivery of the deed. Disclaimer provisions, either direct or indirect, through stated reliance on an expert with respect to factual matters required to be represented or set forth in the offering plan, may not be included except as and to the extent permitted in these regulations.

History

Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016

N.Y. Comp. Codes R. & Regs. Tit. 13 § 20.2 Procedure for submission

(a) The proposed offering plan and the exhibits described in this Part shall be submitted to the New York Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005.

(b) The exhibits shall accompany the proposed offering plan submitted to the Department of Law and shall be subject to the sanctions of article 23-A of the General Business Law. A notation of "Orig" on the list below means that at least one document must be a duly executed, original document.

(1) A transmittal letter addressed to the Department of Law that is signed and affirmed by the individual attorney who prepared the plan, containing the statements required by section 20.4(a) of this Part without qualification or alteration in substance. As specified in paragraph (5) of this subdivision, the transmittal letter must expressly indicate any exhibit that is not included (apart from those noted) and set forth the reasons for the omission and list any documents submitted as exhibit B-20. Exemption applications submitted pursuant to section 20.1(i) of this Part must be annexed to and submitted with the transmittal letter. Omissions and additions to the table of contents must be noted and explained. The transmittal letter must note whether the offering plan is for a building or development which is newly constructed, vacant or nonresidential and to what extent any existing structures are being rehabilitated. Pursuant to section 20.3(j)(7) of this Part, the transmittal letter must note any commercial units and whether they are being offered for sale. Pursuant to section 20.3(p)(14) of this Part the transmittal letter must note financing offered to purchasers which contains any unusual risks. Pursuant to section 20.1(j) of this Part, the transmittal letter must note if the plan is an out-of-state plan. The transmittal letter must also note if there is currently an investigation pending by the Department of Law of the sponsor, a principal of the sponsor or of the property to be constructed or to be converted to condominium ownership.

(2) Checks (certified or uncertified) for the filing fee under General Business Law section 352-e(7)(a) payable to "New York State Department of Law" and stapled or clipped to the transmittal letter, with form of receipt issued by the Department of Law. The filing fee is based on the total amount of the offering price. For out-of-state condominiums the offering price represents the total offering price of all unsold units at the date of submission to the Department of Law. To expedite processing, the sponsor should submit two checks, each in the amount of one-half of the total fee. One of the two checks will be a non-refundable deposit. One check will be returned if the Department of Law issues a final deficiency letter.

(3) Signed originals of the following forms:

(i) M-2 and M-10 forms, if new forms are submitted as exhibits D-1 and D-2, with a check for the filing fee under General Business Law section 359-e(5) attached; and

(ii) RI-1 forms, submitted as exhibit D-3.

(4) One paper copy of a typed or printed, bound offering plan and one digital copy of the offering plan.

(5) One paper copy of all exhibits to the offering plan and one digital copy of all exhibits to the offering plan. The paper copy of the exhibits shall be in a binder from which documents can be removed easily, and the binder must be indexed with tabs. The cover of the binder must be labeled with the name and the address of the condominium and the name, address and telephone number of the attorney who prepared the plan. Both the binder and the digital copy must contain an index of the documents. The transmittal letter required by paragraph (1) of this subdivision must note the omission of any exhibit, other than the exceptions stated below and the reason for the omission. If exhibits A-4, B-3, B-4, B-8, B-9, B-10, B-11, B-16, B-17, B-18, B-19, B-20, B-21, B-22, B-23, B-24 are omitted solely because the exhibit is not applicable to the offering, the omission need not be noted in the transmittal letter.

(i) Part A of the exhibits (certifications) shall consist of the following documents. Photocopies or conformed copies of the certifications must appear in the offering plan.

(A-1) Certification by the sponsor and the sponsor's principals signed by "sponsors" and "principals" as defined in section 20.1(c) of this Part (Orig); see section 20.4(b) of this Part.

(A-2) Certification by the sponsor's engineer or architect concerning the description of the property and building condition in Part II of the plan and at exhibit C-1 (Orig); see section 20.4(c) of this Part.

(A-3) Certification by expert on adequacy of budget for the first year of condominium operation (Orig); see section 20.4(d) of this Part.

(A-4) Certification by expert on adequacy of common charges payable by the commercial unit owner(s) (Orig); see section 20.4(e) of this Part.

(ii) Part B of the exhibits (general) shall consist of the following documents:

(B-1) Title company report, including a report on housing or building code violations of record, if applicable, dated or updated within 30 days of submission (Orig).

(B-2) A projection from a qualified expert or local supplier of the consumption, rate and total cost for furnishing heat, hot water and other utilities. If unit owners directly pay the cost of heating their own units, include a similar projection for heat, hot water and electricity for individual units.

(B-3) Proposed management agreement.

(B-4) Copies of any contract which (i) will be binding on the condominium for $2,500 or more per year, or (ii) has a term in excess of two years, or (iii) is with the sponsor, a business associate or affiliate of the sponsor, or a principal of the sponsor.

(B-5) Copy of a letter from an insurance company or its authorized agent, stating proposed insurance coverage and amounts, and the annual premium or premiums.

(B-6) Copy of an opinion from an independent, licensed insurance broker, insurance appraiser or real estate appraiser representing that the fire insurance coverage budgeted in the plan is adequate (i) so that the insured shall not be a co-insurer if the policy contains a co-insurance provision, or (ii) to cover replacement cost if the policy is for an agreed amount which waives co-insurance. If the policy represents replacement cost coverage, indicate the replacement cost per square foot.

(B-7) Copy of a fee quotation from a certified public accountant for preparing the yearly financial statements for the condominium.

(B-8) Copy of section 352-a/section 352-b Designation of Secretary of State as agent (applicable only to out-of-state issuers, sponsors, principals and/or selling agents), and filing receipt.

(B-9) For condominiums located outside New York State, copy of statutes and regulations concerning the registration and formation of condominiums. All condominiums located outside New York State must include evidence of compliance with local laws and regulations concerning the registration and formation of condominiums.

(B-10) Copy of the form of promissory note and mortgage required by sponsor if the plan offers financing, together with any other document which significantly affects a purchaser's obligations for financing offered by sponsor.

(B-11) Copy of any mortgage financing commitment letter pertaining to end loans or to building construction loans, and amendments or extensions of the commitment letter.

(B-12) Copy of sponsor's or present owner's deed to the property, and copy of contract of sale between owner and sponsor if sponsor is contract vendee.

(B-13) Copy of a specimen title insurance policy, applicable to individual units, which unconditionally insures that a valid condominium has been established. At closing, the policy shall not contain an exception indicating the existence of a mortgage or other liens affecting the unit insured and any other unit.

(B-14) Original letter from a title company stating it has reviewed the declaration, the by-laws and other relevant documents and is prepared to insure title to purchasers in accordance with exhibit B-13 of this subparagraph and is prepared to insure that a valid condominium will be established upon the recording of the declaration and by-laws and the filing of the floor plans as required by the New York Condominium Act or applicable state and local law.

(B-15) If applicable, an estimate of the assessed valuation after completion of construction or rehabilitation from the local tax assessor. If not available, an estimate of the assessed valuation after completion of construction or rehabilitation from a real estate broker, appraiser, attorney or other professional familiar with the tax assessment practices in the locality in which the property is located.

(B-16) If applicable, copies of any documents relating to tax exemption or abatement benefits. Copy of proof of the level and duration of benefits described in plan should be included.

(B-17) Copy of the agreements or other documents of local taxing authorities relating to the separate assessment of each condominium unit for real estate taxes, if available.

(B-18) Copy of the escrow agreement between the sponsor and the board of managers relating to the payment of real estate taxes pending the separate assessment of each condominium unit for real estate taxes, if applicable.

(B-19) Copy of documentary evidence that the holder of any mortgage existing after the conveyance of the first unit will either:

(a) consent to the formation of a condominium and acknowledge that its lien will be limited to unsold condominium units; or

(b) subordinate the lien of its mortgage to the declaration of condominium; or

(B-20) Copy of any other material document(s), each of which should be described in the transmittal letter.

(B-21) For rehabilitated buildings, an affidavit by sponsor stating how the building became vacant, that there was no harassment, and whether any apartments were vacated pursuant to vacate orders. If so, provide copy of vacate order.

(B-22) An affidavit by sponsor stating that no money has been taken during any market test pursuant to Cooperative Policy Statement No. 1, if applicable.

(B-23) Copies of all existing and proposed professional and commercial leases and subleases, and concession agreements.

(B-24) Rent-roll certified by sponsor, managing agent or current owner as of a date that is within 60 days prior to submission, including the name of each commercial or professional tenant, unit number, rent, term, and termination date of lease (Orig).

(B-25) Copy of the escrow agreement between the sponsor and the attorney(s) acting as escrow agent. If the model form is not used, so indicate. Copy of bank forms to be used to open any escrow account.

(B-26) Copy of surety bonds or letter of credit proposed to secure down payments and any underlying agreement or related agreement, and any undertaking called for in the regulations or proposed to be furnished.

(iii) Part C of the exhibits (engineering) shall consist of the following documents:

(C-1) Architect's or engineer's detailed description of the property and building condition with the architect's or engineer's seal and original signature. The description must be dated within 90 days of submission to the Department of Law and conform to the requirements of section 20.7 of this Part; see exhibit A-2. The Department of Law may in its discretion require a further inspection and report.

(C-2) Asbestos report, except in the case of newly constructed buildings, dated within 90 days of submission to the Department of Law. The report must conform to the requirements of section 20.7(ac) of this Part.

(C-3) Copy of currently valid temporary, partial or permanent certificate of occupancy or its equivalent. If a certificate of occupancy is not available because the building was constructed before the municipality began to issue certificates of occupancy, include an affidavit from the sponsor that the proposed use by the condominium is identical to the original use of the building. If no certificate of occupancy has yet been issued, so indicate and forward to the Department of Law when issued.

(C-4) Copy of approved building plans, if available, or if required by General Business Law section 352-e e or if required by local law, any specifications required by government agencies having jurisdiction, and copies of all required construction permits from government agencies having jurisdiction.

(iv) Part D of the exhibits (other information) shall consist of the following documents:

(D-1) Signed M-10 form(s), broker-dealer statement, for the selling agents (Orig), unless exempted by General Business Law section 359-e, and signed M-2 form(s), salespersons' statements, for all individual employees who act as salespersons (Orig) unless exempted by General Business Law section 359-e. Forms do not have to be submitted if currently valid registration forms are on file with the Department of Law from prior offerings and a copy of the form is submitted as exhibit D-1.

(D-2) Signed M-10 form(s) for the sponsoring entity which shall include all officers, directors, partners or principals who are "dealers" for purposes of General Business Law section 359-e (Orig). Forms do not have to be submitted if currently valid registration forms are on file with the Department of Law from prior offerings and a copy of the form is submitted as exhibit D-2.

(D-3) Signed RI-1 form(s), registrant information form(s), concerning prior convictions, judgments, administrative actions, bankruptcy, employment and business affiliations for all principals of the sponsor (Orig).

(D-4) Sponsor's affidavit that sponsor's net worth is or will be sufficient to meet the requirements of General Business Law section 352-k and all of the unsecured obligations sponsor assumes in the offering plan including sponsor's obligations for unsold units (Orig).

(D-5) An affidavit from sponsor and principals of sponsor, as defined in section 20.1(c) of this Part, stating whether sponsor and principals of sponsor have taken part in real estate syndications of securities consisting of participation interests or investments in real estate, including limited partnership interests or private or public offerings of cooperative interests in realty, including condominiums, in or from New York, which were initially offered during the preceding five years. State the addresses of the realty, the name of the syndication or partnership and whether it received an exemption and the approximate date the offering plan was filed and the date of the closing with the apartment corporation for cooperatives or the date of first unit closing for condominiums.

(D-6) Completed statistical information card (available from the Department of Law).

(d) Upon preliminary advice from the Department of Law that the proposed offering plan may be filed, sponsor must submit:

(1) Checks (certified or uncertified) for the balance of the filing fees, if any, pursuant to General Business Law section 352-e(7)(a) and by separate check any additional filing fees pursuant to General Business Law section 359-e (5), payable to "New York State Department of Law."

(2) One paper copy of the typed or printed, bound offering plan and one digital copy of the offering plan with the filing date left blank (the filing date shall be inserted after receipt of the letter from the Department of Law accepting the plan for filing; all offering plans must be dated before being presented to offerees).

(3) A new attorney transmittal letter; see section 20.4(a) of this Part. The letter may indicate that exhibits have previously been supplied.

(4) If required by the Department of Law:

(i) a new certification by sponsor and sponsor's principals; see section 20.4(b) of this Part;

(ii) a new certification by sponsor's engineer or architect; see section 20.4(c) of this Part;

(iii) a new certification by sponsor's expert on the adequacy of the budget; see section 20.4(d) of this Part; and

(iv) a new certification by sponsor's expert on the adequacy of common charges payable by the commercial unit owner(s); see section 20.4(e) of this Part.

(e) The plan is filed on the date indicated in the letter from the Department of Law stating that the plan has been accepted for filing.

(f) The sponsor shall commence the offering within a reasonable time after the filing and if applicable shall submit an affidavit of service of the plan and notice on the commercial or professional tenants within five days of such service.

History

Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016

N.Y. Comp. Codes R. & Regs. Tit. 13 § 20.6 Advertisements

(a) Except as provided in subdivision (b) of this section, all advertising in print or other media as well as circulars, flyers, cards, letters and other literature employed to solicit interest ("advertisement") for offering plans filed pursuant to this Part shall contain the following statement in easily readable print separated from the body of the advertisement or spoken in a distinctly audible voice.

THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR. FILE NO. CD-__.

(b) Notwithstanding subdivision (a) of this section, in all classified type advertisements not more than five inches long and not more than one column of print wide, the following statement may be used in lieu of the statement required in subdivision (a) of this section at the end of the advertisement and separated from the body of the advertisement:

SEE OFFERING PLAN FOR FULL TERMS. FILE NO. CD-__.

(c) Any chart or diagram used in an advertisement must be consistent with the offering plan. Any room or floor plan must be to scale.

(d) No abbreviations shall be employed in advertisements unless the meaning is unmistakably clear.

(f) Anticipated common or other carrying charges shall be preceded by the word "projected" or "estimated" or abbreviations of those terms. In estimating carrying charges, including real estate taxes and, if applicable, individual unit mortgages, there shall be no subtraction or representation of specific dollar saving because of anticipated tax deductions, unless all assumptions are disclosed.

(g) Advertisements of amenities or services available at a fee charged in addition to the common charges or in addition to the purchase price must refer to the additional fee. Advertisements of amenities or services that will not be available at closing must state the approximate date of availability.

(h) An artist's rendering of a property in an advertisement must be marked as an artist's rendering and must accurately and realistically depict the dimensions, height and landscaping of the property and surrounding roads, buildings and open space.

(i) Advertisements of financing offered or procured by sponsor must include the term of the financing when the term is for less than five years.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 21 NEWLY CONSTRUCTED AND VACANT COOPERATIVES

N.Y. Comp. Codes R. & Regs. Tit. 13 § 21.1 General

(a) Applicability.

The offering statement or "offering plan" required by section 352-e of the General Business Law for a cooperative that meets the requirements set forth in this section is subject to this Part. Except as provided in paragraph (4) of this subdivision, offering plans submitted pursuant to this Part are not subject to the provisions of any other Part.

(1) The building is completely vacant of individuals residing in the building on the date of submission of the offering plan to the Department of Law or the building is to be newly constructed.

(2) The cooperative is not organized as a time-sharing arrangement.

(3) One or more of the cooperative units being offered are used for residential purposes or for combined residential/home occupation purposes.

(4) The conversion of a vacant or newly constructed building to two or more condominium units and the conversion of one or more of the condominium units to an apartment corporation is primarily subject to this Part. In addition, the offering plan must comply with the requirements of Part 20 to the extent necessary to comply with subdivision (b) of this section.

(b) Standard of compliance.

An offering plan must, at a minimum:

(1) contain in detail the terms of the transaction and be complete, current and accurate;

(2) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(3) not omit any material fact;

(4) not contain any untrue statement of a material fact;

(5) not contain any fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale;

(6) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and

(7) not contain any representation or statement which is false, where the sponsor or the person who made such representation or statement:

(i) knew the truth;

(ii) with reasonable effort could have known the truth;

(iii) made no reasonable effort to ascertain the truth; or

(iv) did not have knowledge concerning the representation or statement made.

As used in this Part, the word sponsor(s) means any person, partnership, joint venture, corporation, company, trust, association or other entity or agent thereof who makes or takes part in a public offering or sale in or from the State of New York of securities consisting primarily of shares or participation interests or investments in real estate, including cooperative interests in realty.

(d)

(1) Principal(s).

As used in this Part, the word principal(s) means all individual sponsors; all general partners of sponsors that are partnerships; all officers, directors and shareholders of a corporate sponsor that are actively involved in the planning and consummation of the offering; and all other individuals who:

(i) own an interest in or control sponsor; and

(ii) actively participate in the planning and consummation of the offering, regardless of the form of organization of sponsor.

(2) Consummation of the plan means transfer of title to the apartment corporation and the issuance of shares and a proprietary lease to at least one subscriber under the plan following a declaration of effectiveness by the sponsor and acceptance of the amendment by the Department of Law confirming or declaring the plan effective.

(3) Filing means the issuance of a letter from the Attorney General stating that an offering plan or amendment has been accepted for filing.

(e) Service.

Unless otherwise provided by statute or regulation, any documents required to be served by this Part shall be served on subscribers or purchasers who have executed and delivered subscription agreements or purchase agreements to the sponsor and who are not in default, shareholders and any other person entitled to service pursuant to local law or regulation (collectively "offerees"), in the following manner:

(1) personal delivery; and

(2) mailing by regular or registered or certified mail, with or without return receipt requested, addressed to the offeree at the last residence of such offeree. If sponsor has no information of the last residence address but has written information of the place of business or employment of such offeree, the mailing shall be addressed to such last business or employment address.

Service shall be complete upon completion of personal delivery on all offerees or three days after mailing to all offerees not personally served. An affidavit of service identifying the offerees served, stating the manner of service, and the date of service shall be part of the documents required to be retained in subdivision (z) of section 21.3 of this Part.

(f) Time of review.

Not later than 30 days after the date of submission of the offering plan for filing, the Department of Law shall issue a letter to the sponsor or sponsor's attorney stating that the plan is filed, or indicating deficiencies. The Department of Law may issue a deficiency letter whenever it appears that the Department of Law cannot make any finding mandated by law or that the offering plan is deficient in one or more respects.

(g) Statutory compliance.

Unless expressly provided herein, nothing contained in this Part shall be construed as limiting the requirements set forth in article 23-a of the General Business Law.

(h) Out-of-state.

A sponsor of a cooperative located outside of New York who makes or takes part in a public offering or sale in or from the State of New York of cooperative units must file an offering plan with the Department of Law that provides the full and fair disclosure required by this Part. The Department of Law, in its discretion, may allow the sponsor to comply with any requirement of this Part which would require a departure from the offering plan approved by or filed with the state where the cooperative is located by employing an addendum at the end of the offering plan containing the information required and, where necessary, by deleting from the offering plan any representations or statements that are inconsistent with or not permitted by this Part or the General Business Law.

(i) Exemptions.

Upon written application of the sponsor, or sponsor's attorney, the Department of Law, in its discretion, may by ruling exempt a plan from the application of any provision of this Part where it is found that enforcement of the provision is not necessary to effectuate the purposes of the General Business Law or to protect the investing public. The application shall:

(1) be annexed to and be submitted with the attorney's transmittal letter;

(2) set forth the provisions for which the exemption is sought and the grounds for the exemption; and

(3) be signed by sponsor or the sponsor's attorney.

The certifications required by section 21.4 of this Part shall be in the form required by this Part, without modification, and shall be based on the presumption that any exemption sought pursuant to this section has been granted. In the event the application for exemption is denied, the Department of Law shall issue a deficiency letter as provided in subdivision (f) of this section.

(j) Transition.

With respect to any offering plan which:

(1) was submitted to the Department of Law pursuant to the prefiling procedure set forth in section 17.3 of this Subchapter before the effective date of this Part;

(2) had not been filed with the Department of Law on the effective date of this Part; and

(3) meets the requirements of subdivision (a) of this section.

The Department of Law, in its discretion, may issue a letter to the sponsor or sponsor's attorney stating that an offering plan is filed if the sponsor's attorney affirms that the offering plan substantially complies with this Part and executes a transmittal letter to that effect. For purposes of this section, substantial compliance shall mean that the offering plan contains all information required to be disclosed by this Part either in the bound offering plan or in a supplemental submission annexed to the plan.

(k) Digital copy.

As used in this Part, digital copy means a copy that is identical in content to a paper copy except that it is recorded electronically in read-only .pdf format or other electronic format that the Department of Law determines to be acceptable. Digital copies of the plan shall include all the supporting documents included in part II of the plan. Digital copies of the exhibits to the plan shall include all documents referenced in section 21.2(c)(3) of this Part, as applicable. Digital copies of the amendment shall include all exhibits, back-up documents, and other supplemental documents annexed to the amendment, as applicable. The Department of Law shall periodically issue a Guidance Document as defined by State Administrative Procedure Act section 102(14), setting forth particular guidelines and procedures for the submission of digital copies. Such Guidance Document will be available on the Department of Law's website, as required by State Administrative Procedure Act section 202(e).

History

Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016

N.Y. Comp. Codes R. & Regs. Tit. 13 § 21.2 Procedure for submission

(a) The offering plan and the exhibits described below shall be submitted to the New York Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005.

(b) The exhibits shall accompany the offering plan submitted to the Department of Law and shall be subject to the requirements and sanctions of article 23-A of the General Business Law. Whenever an exhibit document is marked "original" on the list set forth in subdivision (c) of this section, it means that the document must be duly executed, original document. Whenever a document is marked "copy" on the list set forth in subdivision (c) of this section, it means that a true and complete copy of the document must be included.

(c) The offering plan and exhibits submitted pursuant to this Part must contain the following components and be in the following format:

(1) A transmittal letter addressed to the Department of Law that is signed and affirmed under penalty of perjury by the attorney for the sponsor, containing the unqualified statements required by section 21.4(a) of this Part. The transmittal letter must expressly indicate any exhibit that is not included and set forth the reasons for the omission. Exemptions requested pursuant to section 21.1(i) of this Part must be annexed to an be submitted with the transmittal letter. Pursuant to section 21.3(q) of this Part, the transmittal letter must note whether the offering plan contains any description of or reference to a wraparound mortgage on the property.

(2) One paper copy of a typed or printed, bound offering plan and one digital copy of the offering plan.

(3) One paper copy and one digital copy of parts A (Certifications) and B (General) of the exhibits. The paper copy of the exhibits shall be indexed with numbered tabs and secured in folders so that documents can be removed easily. In addition, conformed copies of the certifications must appear in the offering plan.

(i) Part A of the exhibits (Certifications) shall consist of the following documents:

(a)

(A-1) index of documents in parts A and B;

(b)

(A-2) certification by sponsor and sponsor's principals (orig.);

(c)

(A-3) certification by sponsor's engineer or architect (orig.);

(d)

(A-4) certification by expert as to adequacy of projected income and expenses of the cooperative for the first year of cooperative operation (orig.).

(ii) Part B of the exhibits (General) shall consist of the following documents:

(a)

(B-1) projections from qualified experts or the local suppliers of the consumption, and total cost for furnishing heat, hot water, electricity and other utilities to the building including public areas. If shareholders directly pay the cost of heating their own units, include similar projections for heat, hot water and electricity for individual units;

(b)

(B-2) copy of title company report dated within 30 days of submission;

(c)

(B-3) copy of proposed management agreement;

(d)

(B-4) copies of any contract which will be binding on the apartment corporation for $2,500 or more per year;

(e)

(B-5) copy of letter from an insurance company or its authorized agent, stating proposed insurance coverage and amounts, the applicable tariff classifications, and the annual premium or premiums.

(f)

(B-6) copy of an opinion from a licensed insurance broker, insurance appraiser or real estate appraiser concerning adequacy of coverage to avoid being a co-insurer and/or the adequacy of coverage to replace the building.

(g)

(B-7) copy of section 352-a/352-b Designation of Secretary of State as agent (applicable only to out-of-state issuers, sponsors, principals and/or selling agents).

(h)

(B-8) if the plan involves construction or rehabilitation and one is available, an estimate of the assessed valuation after completion of construction or rehabilitation from the local tax assessor. If applicable but not available, an estimate of the assessed valuation after completion of construction or rehabilitation from a real estate broker, appraiser, attorney or other professional familiar with the tax assessment practices in the locality in which the property is located;

(i)

(B-9) for cooperatives located outside of New York, copy of statutes and regulations governing cooperatives and evidence of compliance with that law;

(j)

(B-10) copy of the mortgage and note or bond required by sponsor if sponsor is offering financing or required by a mortgage lender procured by sponsor together with any other document which significantly affects a purchaser's obligations for financing offered or procured by sponsor. If the documents are not available at the time of submission to the Department of Law, so indicate and forward when available;

(k)

(B-11) copy of Certificate of Incorporation and receipt from Secretary of State for the apartment corporation;

(l)

(B-12) copy of specimen stock certificate. Include any restrictions on transferring and any endorsements;

(m)

(B-13) copy of any mortgage and note or bond that will be a lien on the property after closing or which presently encumbers the property;

(n)

(B-14) copy of any mortgage financing commitment letter;

(o)

(B-15) copies of professional and commercial leases;

(p)

(B-16) copy of contract of sale or exchange between the sponsor and the apartment corporation that conforms to the contract described in the offering plan;

(q)

(B-17) other material document(s), each of which should be described in the transmittal letter, e.g., copy of regulatory agreement with a government agency;

(r)

(B-18) Copy of the escrow agreement between the sponsor and the attorney(s) acting as escrow agent. If the model form is not used, so indicate. Copy of bank forms to be used to open any escrow account;

(s) *(B-19) Copy of surety bonds or letter of credit proposed to secure down payments and any underlying agreement or related agreement, and any undertaking called for in the regulations or proposed to be furnished.

(iii) One copy of part C of the exhibits (Engineering). Part C of the exhibits shall consist of the following documents:

(a)

(C-1) copy of approved building plans if available or if required by General Business Law section 352-e e or if required by local law. Any specifications required by government agencies having jurisdiction and copies of all required construction permits from government agencies having jurisdiction. Except for an offering plan governed by General Business Law section 352-e e, if the approval of the building plans on the construction permits are not available at the time of submission of the offering plan to the Department of Law, so indicate and forward when available;

(b)

(C-2) architect's or engineer's detailed description of the physical aspects of the cooperative with the architect's or engineer's stamp and original signature;

(c)

(C-3) copy of temporary, partial or permanent certificate of occupancy to be in effect after construction or rehabilitation, if available. If the certificate of occupancy is not available at the time of submission of the offering plan to the Department of Law, so indicate and forward to the Department of Law when available.

(iv) One copy of part D of the exhibits (fees, and other information) in a separate folder similarly secured and indexed. Part D of the exhibits shall consist of the following documents:

(a)

(D-1) personal or certified checks for filing fees under General Business Law sections 352-e(7)(a) and 359-e(5) payable to the New York State Department of Law placed within an envelope at the first tab with form of receipt issued by the Department of Law. To expedite processing, the sponsor should submit two checks, each in the amount of one half of the total fee due under General Business Law section 352-e (7)(a) at the time of submission. Each check for filing fees should be accompanied by a form of receipt issued by the Department of Law. One of the two checks will be returned to the sponsor if the Department of Law issues a deficiency letter;

(b)

(D-2) signed M-10 form(s), broker-dealer statement, for the selling agents (Orig), unless exempted by General Business Law section 359-e, and signed M-2 form(s), salespersons' statements, for all individual employees who act as salespersons (Orig), unless exempted by General Business Law section 359-e. Forms do not have to be submitted if currently valid registration forms are on file with the Department of Law from prior offerings (Orig) and a copy of the form is submitted as Exhibit D-1;

(c)

(D-3) signed M-10 form(s), registration for broker-dealer, for the sponsor signed by all officers, directors, partners or principals. Forms do not have to be submitted if currently valid registration forms are on file with the Department of Law from prior public offerings (orig.);

(d)

(D-4) signed RI-1 form(s), registrant information form(s) concerning prior convictions, judgments, administrative actions, bankruptcy, employment and business affiliations for all principals of the sponsor (orig.);

(e)

(D-5) proof of financial responsibility of sponsor (sponsor's certified statement or affidavit of sponsor's net worth) and sponsor's certification that its net worth together with the proceeds of firmly committed construction financing, are sufficient to meet sponsor's unsecured obligations under the plan to complete all work and meet sponsor's obligations for unsold shares (orig.);

(f)

(D-6) an affidavit from sponsor and principals of sponsor, as defined in subdivisions (c) and (d) of section 21.1 of this Part, stating whether sponsor and principals of sponsor have taken part in public offerings of cooperative interests in realty including condominiums in or from New York which were initially offered during the preceding five years. State the address of the realty and approximate date of the closing for cooperatives and the first closing for condominiums;

(g)

(D-7) exemption application pursuant to General Business Law section 359-e;

(h)

(D-8) completed statistical information card(s) available from the Department of Law.

(d) Upon preliminary advice from the Department of Law that the proposed offering plan may be filed, sponsor must submit:

(1) checks (certified or uncertified) for the balance of the filing fees, if any, pursuant to General Business Law section 352-e (7)(a) and by separate check any additional filing fees pursuant to General Business Law section 359-e (5), payable to "New York State Department of Law;"

(2) one paper copy of the typed or printed, bound offering plan and one digital copy of the offering plan with the filing date left blank (the filing date shall be inserted after receipt of the letter from the Department of Law accepting the plan for filing; all offering plans must be dated before being presented to offerees);

(3) a new attorney transmittal letter; see section 21.4(a) of this Part. The letter may indicate that exhibits have previously been supplied; and

(4) if required by the Department of Law:

(i) a new certification by sponsor and sponsor's principals; see section 21.4(b) of this Part;

(ii) a new certification by sponsor's engineer or architect; see section 21.4(c) of this Part; and

(iii) a new certification by sponsor's expert on the adequacy of the budget; see section 21.4(d) of this Part.

(e) The plan is filed on the date indicated in the letter from the Department of Law stating that the plan has been accepted for filing.

History

Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016

N.Y. Comp. Codes R. & Regs. Tit. 13 § 21.4 Transmittal letter and certifications

(a) Transmittal letter.

A transmittal letter addressed to the Department of Law that is signed and affirmed under penalty of perjury by the attorney who prepared the offering plan and containing the following unqualified statements must be submitted with the plan and exhibits:

I/We am/are the attorney(s) who prepared the cooperative offering plan for the captioned property.

Enclosed for filing pursuant to Part 21, Newly Constructed and Vacant Cooperatives, are three copies of the offering plan together with the exhibits.

I/We am/are fully familiar with the provisions of article 23-A of the General Business Law, the regulations promulgated by the Attorney General in Part 21 and such other laws and regulations as may be applicable to the offering.

I/We prepared the attached offering plan and exhibits based on information from the sponsor. I/We have read all the printed copy submitted to the Department of Law but expressly disclaim any responsibility to have made an independent inspection of the building(s) or property or investigation of the information furnished to me/us by sponsor.

I/We have no actual knowledge of a violation of article 23-A of the General Business Law or of Part 21 promulgated by the Department of Law, nor do I/we know of any material fact omitted or any untrue statement of a material fact included in the offering plan.

(b) Include in the plan and in the exhibits a certification subscribed and sworn to by the sponsor and sponsor's principals, in the following form:

We are the sponsor and the principals of sponsor of the cooperative offering plan for the captioned property.

We understand that we have primary responsibility for compliance with the provisions of article 23-A of the General Business Law, the regulations promulgated by the Attorney General in Part 21 and such other laws and regulations as may be applicable.

We have read the entire offering plan. We have investigated the facts set forth in the offering plan and the underlying facts. We have exercised due diligence to form a basis for this certification.

We jointly and severally certify that the offering plan does, and that documents submitted hereafter by us which amend or supplement the offering plan will:

(i) set forth the detailed terms of the transaction and be complete, current and accurate;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment, suppression, false pretence or fictitious or pretended purchase or sale;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and

(vii) not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representations or statements made.

(c) Include in the plan and in the exhibits a certification subscribed and sworn to by sponsor's engineer or architect (who must either be registered as an architect or be licensed to practice as a professional engineer in the state where the cooperative is located).

(1) The certification must be in the form below for a newly constructed cooperative:

The sponsor of the offering plan for cooperative ownership of the captioned property retained my/our firm to prepare a report describing the property when constructed (the "report").

We examined the building plans and specifications that were prepared by __, dated __, and prepared the report dated __, a copy of which is intended to be incorporated into the offering plan so that prospective purchasers may rely on the report.

I/We understand that I/we am/are responsible for complying with article 23-A of the General Business Law and the regulations promulgated by the Attorney General in Part 21 insofar as they are applicable to this report.

I/We have read the entire report and investigated the facts set forth in the report and the facts underlying it with due diligence in order to form a basis for this certification. This certification is made for the benefit of all persons to whom this offer is made.

I/We certify the report does:

(i) set forth in narrative form the physical condition of the entire property as it will exist upon completion of construction, provided that construction is in accordance with the plans and specifications that I/we examined;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the physical condition of the property as it will exist upon completion of construction, provided that construction is in accordance with the plans and specifications that I/we examined;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment or suppression;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and

(vii) not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representations or statements made.

(2) The certification must be in the form below for a property undergoing rehabilitation:

The sponsor of the offering plan for cooperative ownership of the captioned property retained my/our firm to prepare a report disclosing the condition of the property when rehabilitated (the "report"). I/We visually inspected the property on __, examined the building plans and specifications that were prepared by __, dated __, and prepared the report dated __, a copy of which is intended to be incorporated into the offering plan so that prospective purchasers may rely on the report.

I/We certify the report does:

(i) set forth in detail the condition of the entire property as it will exist upon completion of rehabilitation, provided rehabilitation is in accordance with the plans and specifications that I/we examined;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the physical condition of the property as it will exist upon completion of rehabilitation, provided rehabilitation is in accordance with the plans and specifications that I/we examined;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment or suppression;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and

(vii) not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representations or statements made.

(3) The certification must be in the form below for a property being sold in "as is" condition or undergoing minimal rehabilitation.

The sponsor of the offering plan for cooperative ownership of the captioned property retained my/our firm to prepare a report describing the condition of the property (the "report"). I/We visually inspected the property on __, and prepared the report dated __, a copy of which is intended to be incorporated into the offering plan so that prospective purchasers may rely on the report.

I/We certify the report does:

(i) set forth in narrative form the physical condition of the entire property;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the physical condition of the property;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment or suppression;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and

(vii) not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representations or statements made.

(d) Include in the body of the plan a certification subscribed and sworn to by an expert concerning the adequacy of schedule(s) B (and B-1) in the following form. The expert's experience must include management of cooperatives, or condominiums or rental properties. Include the number of properties managed and length of time managed together with other relevant real estate experience, qualifications and licenses. Include references to schedule B-1 only if applicable. Alternative language for new construction or major rehabilitation is in parentheses.

The sponsor of the cooperative offering plan for the captioned property retained my/our firm to review schedule(s) B (and B-1) containing projections of income and expenses for the first year of cooperative operation.

I/We have reviewed the schedule(s) and investigated the fact set forth in the schedule(s) and the facts underlying it/them with due diligence in order to form a basis for this certification.

I/We certify that the projections in schedule(s) B (and B-1) appear reasonable and adequate based on present prices adjusted to reflect continued inflation and present levels of consumption for comparable units similarly situated.

I/We certify that this certification and all documents prepared by me/us hereafter that concern the schedule(s) do:

(i) set forth in detail the terms of the transaction as it relates to the schedules and be complete, current and accurate;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment or suppression;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and

(vii) not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representations or statements made.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this certification is not contingent on the conversion of the property to a cooperative or on the profitability or price of the offering. I/We understand that a copy of this certification is intended to be incorporated into the offering plan so that prospective purchasers may rely on it.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 21.6 Advertisements

(a) Except as provided in subdivision (b) of this section, all advertising in print or other media as well as circulars, flyers, cards, letters and other literature employed to solicit interest (advertisement) for offering plans filed pursuant to this Part shall contain the following statement in easily readable print separated from the body of the advertisement or spoken in easily understandable terms:

THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR.

(b) Notwithstanding subdivision (a) of this section, in all classified type advertisements not more than five inches long and not more than one column of print wide, the following statement may be used, in lieu of the statement required in subdivision (a) of this section:

SALE ONLY ON TERMS IN OFFERING PLAN.

(c) Any chart or diagram used in an advertisement must be consistent with the offering plan. Any room or floor plan must be to scale.

(d) No abbreviations shall be employed in advertisements, unless the meaning is unmistakably clear.

(f) Anticipated maintenance charges shall be preceded by the word "projected". There shall be no subtraction or representation of specific dollar or percentage saving because of anticipated tax deductions.

(g) Advertisements of amenities or services available at a fee charged in addition to the maintenance charge or in addition to the purchase price must refer to the additional fee. Advertisements of amenities or services that will not be available at closing must state the approximate date of availability.

(h) Artist rendering of a property in an advertisement must accurately and realistically depict the dimensions, height and landscaping of the project and surrounding roads, buildings and open space.

(i) Advertisement of financing offered or procured by sponsor must include the term of the financing when the term is less than three years.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 22 NEWLY CONSTRUCTED, VACANT HOMEOWNERS ASSOCIATIONS OR NON-RESIDENTIAL PROPERTY OWNERS ASSOCIATIONS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 22.1 General

(a) Applicability.

The offering statement or "offering plan" required by section 352-e of the General Business Law (GBL) for membership in a homeowners association or other property owners association (HOA) that meets the requirements set forth below is subject to this Part, Newly Constructed, Vacant or Non-Residential Homeowners Associations. Residentially occupied HOAs are subject to the disclosure requirements concerning tenants' rights of Part 18 of this Title and the substantive disclosure requirements of this Part. Those offerings of memberships in an HOA which do not meet the requirements set forth below are subject to Part 17 of this Title if they are not subject to Part 20 or 21 of this Title. Offerings previously filed with the Department of State pursuant to article 9-A of the Real Property Law (RPL) are hereby exempted from the filing required by this Part.

(1) All homes or lots to be sold in conjunction with membership interests in the HOA are completely vacant of individuals residing in the homes or entitled to residential occupancy on the date of submission of the proposed offering plan to the Department of Law or the homes are to be newly constructed. In the case of a newly constructed out-of-state project, the homes may be partially occupied by out-of-state purchasers.

(2) The HOA and the homes or lots to be sold in conjunction with membership interests in the HOA are not organized as a timesharing arrangement.

(3) Members of the HOA will take title in fee simple to a home or lot sold in conjunction with membership interests in the HOA.

(4) The units to be sold in conjunction with membership interests in the HOA are not part of a newly constructed, vacant or non-residential condominium (subject to Part 20 of this Title) or a newly constructed, vacant or non-residential cooperative (subject to Part 21 of this Title).

(5) In the event that any major system, i.e., heating or electric, is so structured that one unit cannot function independently of any other unit, the provisions of the following sections of Part 20 of this Title shall apply in addition to the disclosure requirements contained in this Part unless an exemption pursuant to section 22.1(i) has been requested and granted: section 20.2(c)(5) (exhibits required); section 20.3(a)(2) (cover to include total amount of offering based on aggregate price at which homes or lots are initially offered); section 20.3(d)(4) (pricing of homes); section 20.3(e) (description of property including description of individual homes); section 20.3(g) (Schedule A requirements concerning price and description of individual homes); section 20.3(h) (Schedule B requirements concerning budget); section 20.3(k) (changes in prices and homes); section 20.3(o) (procedure to purchase); section 20.3(q) (effectiveness provision); section 20.3(r) (terms of sale); section 20.3(s) (closing costs and adjustments); section 20.3(t) (sponsor's obligations with respect to individual homes); section 20.3(w)(6) (insurance coverage on individual homes); section 20.7 (description of the property, including description of individual homes). In making the disclosure required by these provisions of Part 20 of this Title, ignore any references to "condominium" or to article 9-B of the Real Property Law. Also include a representation that the offering prices set forth in Schedule A may be changed only by a duly filed amendment to the plan when the change in price is an across-the-board increase or decrease affecting one or more lines of homes or home models, or is to be advertised, or is a price increase for an individual purchaser. Individually negotiated price decreases may be made without amendment to the plan. The transmittal letter and certifications required by section 22.4 of this Part must include a representation of compliance with the above sections.

(6) Conversions of residential rental developments to ownership of a home and membership in an HOA are subject to the substantive requirements of Part 18 of this Title as modified to be consistent with the disclosures required by this Part.

(b) Standard of compliance.

An offering plan for an HOA must, at a minimum:

(1) contain in detail the terms of the transaction and be complete, current and accurate;

(2) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(3) not omit any material fact;

(4) not contain any untrue statement of a material fact;

(5) not contain any fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale;

(6) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(7) not contain any representation or statement which is false, where the sponsor or the person who made such representation or statement:

(i) knew the truth; or

(ii) with reasonable effort could have known the truth; or

(iii) made no reasonable effort to ascertain the truth; or

(iv) did not have knowledge concerning the representation or statement made.

As used in this Part:

(1) Sponsor means any person, partnership, joint venture, corporation, company, trust, association or other entity which makes or takes part in a public offering or sale in or from the State of New York of securities consisting primarily of shares or participation interests or investments in real estate including interests in an HOA and other cooperative interests in realty. "Sponsor" shall not be deemed to include a selling agent who has complied with section 359-e of the General Business Law or an attorney or other expert retained by the sponsor solely to render professional advice or opinions in connection with the offering. "Sponsor" shall also be deemed to include offerors of at least three homes or lots which are not purchased for occupancy by the offeror or one or more members of his or her immediate family; such sponsor will be deemed, however, to be a sponsor only in relationship to the homes or lots which such offeror owns and offers for sale.

(2) Principal means each individual sponsor, each general partner of sponsor that is a partnership, each officer, director and shareholder of a corporate sponsor that is actively involved in the planning and consummation of the offering, and every other individual who both (i) owns an interest in or controls sponsor and (ii) actively participates in the planning and consummation of the offering, regardless of the form of organization of sponsor.

(3) Purchase agreement means any written agreement executed by both parties for the purchase of a home or lot associated with membership in an HOA or other cooperative interest in realty. Purchaser means any person, partnership, joint venture, corporation, company, trust, association or other entity which executes and delivers to the sponsor or selling agent a purchase agreement.

(4) Presentation date means the date of completion of service, as defined in subdivision (d) of this section, of a copy of the plan or amendment filed with the Department of Law.

(5) Filing means the issuance of a letter from the Attorney General stating that an offering plan or amendment has been accepted for filing.

(6) Digital copy means a copy that is identical in content to a paper copy except that it is recorded electronically in read-only .pdf format or other electronic format that the Department of Law determines to be acceptable. Digital copies of the plan shall include all the supporting documents included in part II of the plan. Digital copies of the exhibits to the plan shall include all documents referenced in section 22.2(c)(6) of this Part, as applicable. Digital copies of the amendment shall include all exhibits, back-up documents, and other supplemental documents annexed to the amendment, as applicable. The Department of Law shall periodically issue a Guidance Document as defined by State Administrative Procedure Act section 102(14), setting forth particular guidelines and procedures for the submission of digital copies. Such Guidance Document will be available on the Department of Law's website, as required by State Administrative Procedure Act section 202(e).

(d) Service.

(1) Unless otherwise provided by statute or regulation or by exemption granted pursuant to subdivision (i) of this section, any document required to be served by this Part shall be served on:

(i) commercial or professional tenants;

(ii) purchasers who have executed and delivered purchase agreements to the sponsor or selling agent and whose purchase agreements are in effect;

(iii) members of the HOA;

(iv) any other person entitled to service pursuant to local law or regulation (collectively "offerees"), in the following manner:

(a) personal delivery; or

(b) mailing by regular mail or registered or certified mail with or without return receipt requested, addressed to the offeree at the last known residence of such offeree or, if the offeree has provided written information of an alternative address for notices, at the alternative address. If sponsor has no information of the last residence address, but has written information of the place of business or employment of such offeree, the mailing shall be addressed to such last business or employment address.

(2) Service by personal delivery shall be deemed complete upon delivery. Service by mailing shall be presumed complete on the fifth day after mailing. An affidavit of service identifying the offerees served, stating the manner of service and the date of service is a document required to be retained by section 22.3(w) of this Part. The completion of service shall be the latest date on which service upon all offerees is deemed or presumed complete.

(e) Notice to commercial or professional tenants and affidavit of service.

Date of Notice: __

"We have submitted to the New York State Department of Law, Real Estate Finance Bureau, a proposed offering plan for the conversion of (insert address and name of development, if any) to a commercial or professional homeowners or property owners association. The final offering plan has not yet been filed with the Department of Law. The law requires us to disclose all material information concerning the building and the conversion process in this proposed offering plan. A copy of the proposed offering plan is available for inspection and copying at a reasonable charge at the office of sponsor (or selling agent) located at (insert address of sponsor or selling agent) and the Department of Law. The law requires the Department of Law, within 30 days from the date of submission of the proposed offering plan, either to file the offering plan or to indicate how the offering plan is deficient. No units may be sold or offered for sale and no purchase agreements may be executed unless and until the Department of Law files the final offering plan. A copy of the filed plan will then be served on each commercial or professional tenant. You may send written comments on the proposed offering plan to the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005. You may also send your written comments to (insert name and address of sponsor or selling agent)."

An affidavit of service of the notice must be submitted to the Department of Law within three business days following completion of service on all commercial or professional tenants.

(f) Time of review.

After submission of the proposed offering plan, the Department of Law shall issue a letter to the sponsor or sponsor's attorney stating that the plan is filed, or indicating deficiencies. The Department of Law shall issue a letter for an offering plan no later than 30 days after its submission. The Department of Law may issue a deficiency letter whenever it appears that the proposed offering plan is deficient in one or more respects. The Department of Law may, in its discretion, deem an offering plan not submitted if the proposed offering plan and exhibits are incomplete and therefore do not meet the requirements of section 22.2 of this Part, procedure for submission.

(g) Statutory compliance.

Unless expressly provided herein, nothing contained in this Part shall be construed as limiting the requirements set forth in article 23-A of the General Business Law.

(h) Waiver.

In the interests of justice, the Department of Law may waive compliance with any provision of these regulations and can permit variation of regulations so long as the variation is consistent with the purpose and intent of the regulation and statute or unless prohibited from doing so by final court order.

(i) Exemptions.

(1) be annexed to and be submitted with the attorney's transmittal letter;

(2) set forth the provisions for which the exemption is sought and the grounds for the exemption; and

(3) be signed by sponsor or the sponsor's attorney.

The transmittal letter and certifications required by section 22.4 of this Part shall be in the form required by this Part, without modification, and shall be based on the assumption that any exemption sought pursuant to this section has been granted. In the event that the Department of Law denies the application for exemption, the Department of Law may issue a deficiency letter as provided in subdivision (f) of this section. No additional fee is required for an exemption application.

(j) Out-of-state homeowners associations.

A sponsor of an HOA located outside of New York State which makes or takes part in a public offering or sale in or from the State of New York of membership interests in an HOA must file an offering plan with the Department of Law. To comply with this requirement, the sponsor may file a complete offering plan drafted in accordance with New York law and this Part. In the alternative, the Department of Law may, in its discretion, allow the sponsor to file the offering plan approved by or filed with the state or jurisdiction in which the HOA is located or a property report filed by the Department of Housing and Urban Development under the Interstate Land Sales Full Disclosure Act (15 USC section 1702) and an addendum with such additional information as is required by the Department of Law. Sponsor must represent that the plan complies with all applicable local laws.

(k) Exemption from General Business Law section 359-e.

An HOA whose membership interests or other securities are to be sold pursuant to an offering plan filed with the Department of Law is deemed exempted from the registration requirements of General Business Law section 359-e, provided that all offering activities are engaged in exclusively by persons duly registered under the filing requirements of General Business Law section 359-e.

(l) Effectiveness of regulations.

The effective date of these regulations is the date of filing with the Secretary of State. As of such date:

(1) This Part is effective immediately for offering plans that meet the requirements of subdivision (a) of this Part.

(2) Section 22.5 of this Part is effective for amendments to plans submitted after the effective date of these regulations that meet the requirements of subdivision (a) of this section, regardless of when such plans were filed.

(3) Section 22.6 of this Part is effective for advertisements appearing on or after the effective date of these regulations, for offering plans that meet the requirements of subdivision (a) of this section, regardless of when such plans were filed.

(m) Withdrawals, abandonments and rejections.

(2) The offering plan may be abandoned after filing if there are no outstanding purchase agreements. The sponsor need not submit an amendment but shall submit a form RS-3 to the Department of Law and serve it simultaneously on any commercial or professional tenants, in the manner specified by paragraph (d)(1) of this section. The plan may not be abandoned if sponsor has entered into purchase agreements, unless the plan provides for an escape clause or an effectiveness contingency which is highlighted as a special risk. In such case, the provisions of section 20.1(l)(2) of this Title apply, if the plan has not become effective.

(3) If the offering plan is finally rejected by the Department of Law and there is no outstanding right to cure defects, the sponsor shall promptly serve notice of such rejection on any commercial or professional tenants in the manner specified by paragraph (d)(1) of this section.

(n) Disclaimers.

The requirements set forth in section 22.3 of this Part apply to the offering plan generally and shall not be negated or contradicted by inconsistent provisions in other portions of the offering plan, or by provisions purporting to discharge liability or to terminate the continuing effect of representations in the offering plan upon an event such as the closing or the delivery of the deed. Disclaimer provisions, either direct or indirect, through stated reliance on an expert with respect to factual matters required to be represented or set forth in the offering plan, may not be included except as and to the extent permitted in these regulations.

History

Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016

N.Y. Comp. Codes R. & Regs. Tit. 13 § 22.4 Transmittal letter and certifications

(a) Transmittal letter.

A transmittal letter addressed to the Department of Law that is signed and affirmed under penalty of perjury by the individual attorney who prepared the offering plan, and containing the following unqualified statements must be submitted with the plan and exhibits (i) at the time the plan is submitted for filing, and (ii) immediately prior to its acceptance for filing:

"I am the attorney who prepared the homeowners association plan for the captioned property. I affirm as follows: Enclosed for filing pursuant to Part 22, Newly Constructed, Vacant or Non-Residential Homeowners Association, are three (3) copies of the offering plan together with two (2) sets of Exhibits. I am fully familiar with the provisions of Article 23-A of the General Business Law and the regulations promulgated by the Attorney General in Part 22. I prepared the attached offering plan and Exhibits based on information from the sponsor. I have read all the printed copy submitted to the Department of Law but expressly disclaim any responsibility to have made an independent inspection of the building(s) or property or investigation of the information furnished to me by sponsor. I have no actual knowledge of any violation of Article 23-A of the General Business Law or Part 22 of the regulations promulgated by the Department of Law, nor do I have actual knowledge of any material fact omitted or any untrue statement of a material fact included in the offering plan."

(b) Certification by sponsor.

Include in Part II of the plan and in the exhibits a certification subscribed and sworn to by the sponsor and sponsor's principals in the following form:

"We are the sponsor and the principals of the sponsor of the homeowners association offering plan for the captioned property. We understand that we have primary responsibility for compliance with the provisions of Article 23-A of the General Business Law, the regulations promulgated by the Department of Law in Part 22, and such other laws and regulations as may be applicable. We have read the entire offering plan. We have investigated the facts set forth in the offering plan and the underlying facts. We have exercised due diligence to form a basis for this certification. We jointly and severally certify that the offering plan does, and that documents submitted hereafter by us which amend or supplement the offering plan will:

(i) set forth the detailed terms of the transaction and be complete, current and accurate;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) not contain any representation or statement which is false, where we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made. This certification is made under penalty of perjury for the benefit of all persons to whom this offer is made. We understand that violations are subject to the civil and criminal penalties of the General Business Law and Penal Law."

Sponsor's certification must include the additional paragraph below if the HOA property is to be newly constructed and is limited to roads and/or sewers and/or water lines constructed in accordance with local government specifications (for public roads):

"We certify that the roads and/or sewers, and/or water lines, when constructed, will be in accordance with local government specifications (for public roads). After completion of such amenities and before conveyance of the common property to the HOA, the plan will be amended to include a certification by an engineer or architect (who must be registered as an architect or be licensed to practice as a professional engineer in the jurisdiction where the HOA is located) stating that the roads and/or sewers, and/or water lines have, in fact, been constructed in accordance with local government specifications (for public roads) and indicating the date of completion. In the alternative, and/or if the construction of the roads and/or sewers and/or water lines has not been completed prior to conveyance to the HOA, a bond will be posted, funds will be escrowed, or other adequate security will be provided in an amount to be determined by an engineer licensed to practice as a professional engineer in the jurisdiction where the HOA is located which amount shall not be less than the amount required to complete such construction to the required specifications."

If the HOA includes any common property other than (1) unimproved land, (2) landscaped areas, park areas or picnic areas, (3) roads constructed in accordance with local government specifications for public roads, or (4) sewers and/or water lines constructed in accordance with local government specifications, include in Part II of the plan and in the exhibits a certification subscribed and sworn to by an engineer or architect (who must be registered as an architect or be licensed to practice as a professional engineer in the jurisdiction where the HOA is located). If the engineer or architect is a principal of the sponsor, the certification must be submitted by an independent engineer or architect. The second certification containing the language in parenthesis, below, shall be submitted with any addendum to a report.

"The sponsor of the offering plan to convert the captioned property to HOA ownership retained me/our firm to prepare a report describing the construction and/or renovation of the property (the "Report"). I/We visually inspected existing portions of the renovated property, if any, on ______, and I/We examined the building plans and specifications that were prepared by __ dated __ and prepared the Report dated __. I am/We are supplementing the Report in this addendum dated __, a copy of which is intended to be incorporated into the offering plan so thatprospective purchasers may rely on the Report (and addendum).

I am/We are a registered architect/licensed engineer in the state where the property is located.

I/we understand that I am/we are responsible for complying with Article 23-A of the General Business Law and the regulations promulgated by the Department of Law in Part 22 insofar as they are applicable to this Report (addendum).

We have read the entire Report (addendum) and investigated the facts set forth in the Report (addendum) and the facts underlying it with due diligence in order to form a basis for this certification. This certification is made for the benefit of all persons to whom this offer is made.

I/We certify that the Report (addendum):

(i) sets forth in narrative form the description and/or physical condition of the entire property (the aspects of the property discussed in the addendum) as it will exist upon completion of renovation and/or construction, provided that renovation and/or construction is in accordance with the plans and specifications that I/we examined;

(ii) in my/our professional opinion affords potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the description and/or physical condition of the property (the aspects of the property discussed in the addendum) as it will exist upon completion of renovation and/or construction, provided that renovation and/or construction is in accordance with the plans and specifications that I/we examined;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment, or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this Report (addendum) is not contingent on the conversion of the property to an HOA or on the profitability or price of the offering. This statement is not intended as a guarantee or warranty of the physical condition of the property."

(d) Certification by expert on adequacy of budget (or revised or updated budget).

Include in Part II of plan and in the exhibits a certification subscribed and sworn to by an expert concerning the adequacy of Schedule A in the following form. The certification must be dated within 90 days prior to the date of the submission of the offering plan to the Department of Law. The expert's certification must be based on experience in the management of homeowner association property, cooperatives, condominiums or rental properties and must disclose the approximate number of properties managed and the length of time managed together with other relevant real estate experience, qualifications and licenses.

"The sponsor of the homeowners association offering plan for the captioned property retained me/our firm to review or prepare Schedule A containing projections of income and expenses for the first year of operation as a homeowners association. My/Our experience in this field includes:

I/We understand that I am/we are responsible for complying with Article 23-A of the General Business Law and the regulations promulgated by the Department of Law in Part 22 insofar as they are applicable to Schedule A.

I/We certify the projections in Schedule A appear reasonable and adequate under existing circumstances, and the projected income appears to be sufficient to meet the anticipated operating expenses for the projected first year of operation as a homeowners association. I/We certify that the Schedule:

(i) sets forth in detail the projected income and expenses for the first year of HOA operation;

(ii) affords potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the first year of operation as a homeowners association;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment, or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where

I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

I/We further certify that I am/we are not owned or controlled by the sponsor.

I/We understand that a copy of this certification is intended to be incorporated into the offering plan. This statement is not intended as a guarantee or warranty of the income and expenses for the first year of operation as a homeowners association.

(e) Sworn statement.

Certifications by the sponsor and sponsor's principals, by the engineer or architect and by the expert concerning the adequacy of the budget, as required by this section, must be dated and sworn to before a notary public.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 22.6 Advertisements

(a) Except as provided in subdivision (b) of this section, all advertising in print or other media as well as circulars, flyers, cards, letters and other literature employed to solicit interest (advertisement) for offering plans filed pursuant to this Part shall contain the following statement in easily readable print separated from the body of the advertisement or spoken in a distinctly audible voice.

THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR. FILE NO. H-____.

SEE OFFERING PLAN FOR FULL TERMS. FILE NO. H-____.

(c) Any chart or diagram used in an advertisement must be consistent with the offering plan. Any room or floor plan must be to scale.

(d) No abbreviations shall be employed in advertisements unless the meaning is unmistakably clear.

(f) Anticipated association or other carrying charges shall be preceded by the word "projected" or "estimated" or abbreviations of those terms. In estimating association charges, including real estate taxes and, if applicable, individual unit mortgages, there shall be no subtraction or representation of specific dollar savings because of anticipated tax deductions, unless all assumptions are disclosed.

(g) Advertisements of amenities or services available at a fee charged in addition to association assessments or other charges or in addition to the purchase price must refer to the additional fee. Advertisements of amenities or services that will not be available at closing must state the approximate date of availability.

(i) Advertisements of financing offered or procured by sponsor must include the term of the financing when the term is for less than five years.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 23 OCCUPIED CONDOMINIUMS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 23.4 Transmittal letter and certifications

(a) Transmittal letter.

A transmittal letter addressed to the Department of Law that is signed and affirmed by the individual attorney who prepared the offering plan, and containing the following unqualified statements must be submitted with the plan and exhibits (1) at the time the plan is submitted for filing, and (2) immediately prior to its acceptance for filing:

"I am the attorney who prepared the condominium offering plan for the captioned property. I affirm as follows:

Enclosed for filing pursuant to 13 NYCRR Part 23, Occupied Condominiums are copies of the offering plan together with the exhibits.

I am fully familiar with the provisions of article 23-A of the General Business Law and the regulations promulgated by the Department of Law in Part 23.

I prepared the attached offering plan and exhibits based on information from the sponsor. I have read all the printed copy submitted to the Department of Law but expressly disclaim any responsibility to have made an independent inspection of the building(s) or property or investigation of the information furnished to me by sponsor.

I have no actual knowledge of any violation of article 23-A of the General Business Law or Part 23 of the regulations promulgated by the Department of Law, nor do I have actual knowledge of any material fact omitted or any untrue statement of any material fact included in the offering plan."

(b) Certification by sponsor.

Include in Part II of the plan and in the exhibits a certification subscribed and sworn to by the sponsor and sponsor's principals in their capacity as principals, in the following form:

We are the sponsor and the principals of sponsor of the condominium offering plan for the captioned property.

We understand that we have primary responsibility for compliance with the provisions of article 23-A of the General Business Law, the regulations promulgated by the Department of Law in 13 NYCRR Part 23 and such other laws and regulations as may be applicable.

We have read the entire offering plan. We have investigated the facts set forth in the offering plan and the underlying facts. We have exercised due diligence to form a basis for this certification.

We jointly and severally certify that the offering plan does, and that documents submitted hereafter by us which amend or supplement the offering plan will:

(v) set forth the detailed terms of the transaction and be complete, current and accurate;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment, suppression, false pretense or fictitious or pretended purchase or sale;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

Include in Part II of the plan and in the exhibits the following certification subscribed and sworn to by an engineer or architect (who must either be registered as an architect or be licensed to practice as a professional engineer in the jurisdiction where the condominium is located). The certification and inspection report must both be dated within 90 days prior to the date of submission of the offering plan to the Department of Law. A second certification containing the language in parenthesis, below, shall be submitted with any addendum to a report.

The sponsor of the offering plan to convert the captioned property to condominium ownership retained me/our firm to prepare a report disclosing the condition of the property, (the report).

I/We visually inspected the property on,

, and prepared the report dated __, (I am/we are supplementing the report in this addendum, dated __,) a copy(ies) of which is (are) intended to be incorporated into the offering plan so that prospective purchasers may rely on the report (and addendum).

I/We understand that I am/we are responsible for complying with article 23-A of the General Business Law and the regulations promulgated by the Department of Law in 13 NYCRR Part 23 insofar as they are applicable to this report (addendum).

I/We have read the entire report (addendum) and investigated the facts set forth in the report (addendum) and the facts underlying it and conducted the visual inspection referred to above with due diligence in order to form a basis for this certification. I/we certify that the report (addendum) and all documents prepared by me/us disclose all the material facts (relevant to the topics of the addendum) which were then discernible from a visual inspection of the property. This certification is made for the benefit of all persons to whom this offer is made. I/we certify that the report (addendum) based on my/our visual inspection:

(i) sets forth in narrative form the physical condition of the entire property (the aspects of the property discussed in the addendum) and is current and accurate as of the date of inspection;

(ii) in my/our professional opinion affords potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the physical condition of the property (the aspects of the property discussed in the addendum);

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment, or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this report (addendum) is not contingent on the conversion of the property to a condominium or on the profitability or price of the offering. This statement is not intended as a guarantee or warranty of the physical condition of the property.

(d) Certification by expert on adequacy of budget (or revised or updated budget).

Include in Part II of the plan and in the exhibits a certification subscribed and sworn to by an expert concerning the adequacy of schedule B in the following form. The certification must be dated within 90 days prior to the date of the submission of the offering plan to the Department of Law. The expert's certification must be based on experience in the management of cooperatives or condominiums or rental properties and must disclose the approximate number of properties managed and length of time managed together with other relevant real estate experience, qualifications and licenses.

The sponsor of the condominium offering plan for the captioned property retained me/our firm to review or prepare schedule B containing projections of income and expenses for the first year of condominium operation. My/our experience in this field includes:

I/We have reviewed the schedule and investigated the facts set forth in the schedule and the facts underlying it with due diligence in order to form a basis for this certification. I/We also have relied on my/our experience in managing residential buildings.

I/We certify that the projections in schedule B appear reasonable and adequate under existing circumstances, and the projected income appears to be sufficient to meet the anticipated operating expenses for the projected first year of condominium operation.

I/we certify that the schedule:

(i) sets forth in detail the projected income and expenses for the first year of condominium operation;

(ii) affords potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the first year of condominium operation;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment, or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

I/We further certify that I am/we are not owned or controlled by the sponsor. I/we understand that a copy of this certification is intended to be incorporated into the offering plan. This statement is not intended as a guarantee or warranty of the income and expenses for the first year of condominium operation.

(e) Certification by expert on adequacy of common charges payable by the commercial unit owner(s).

Include in Part II of the plan and in the exhibits a certification subscribed and sworn to by an expert concerning the adequacy of common charges payable by the commercial unit owner(s) in the following form. The certification must be dated within 90 days prior to the date of the submission of the offering plan to the Department of Law. The expert's certification must be based on experience in the management of cooperatives or condominiums or rental properties, including buildings with commercial space, and must disclose the approximate number of properties managed and length of time managed together with other relevant real estate experience, qualifications and licenses.

The sponsor of the condominium offering plan for the captioned property retained me/our firm to review or prepare schedule B which includes projections of common charges payable by the owners of the commercial unit(s). My/Our experience in this field includes:

I/We understand that I/we am/are responsible for complying with article 23-A of the General Business Law and the regulations promulgated by the Department of Law in 13 NYCRR Part 23 insofar as they are applicable to the commercial unit(s) listed in schedule B.

I/We have reviewed the schedule as it impacts upon the commercial unit(s) and investigated the facts underlying it with due diligence in order to form a basis for this certification. I/We also have relied on my/our experience in managing residential buildings.

I/We certify that the projections in schedule B for common charges payable by the owners of commercial unit(s) appear reasonable and adequate under existing circumstances to meet the anticipated operating expenses fairly attributable to such commercial unit(s) for the projected first year of condominium operation, and that the allocation of common charges attributable to the commercial unit(s) also reflects special or exclusive use or availability or exclusive control of particular common areas.

I/We certify that the estimates in schedule B for the common charges payable by the owners of the commercial unit(s):

(i) set forth in detail the projected common charges for the commercial unit(s) for the first year of condominium operation;

(ii) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the common charges payable by the owners of the commercial unit(s);

(iv) do not omit any material fact;

(iv) do not contain any untrue statement of a material fact;

(v) do not contain any fraud, deception, concealment or suppression;

(vi) do not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) do not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

I/We further certify that I am/we are not owned or controlled by the sponsor. I/We understand that a copy of this certification is intended to be incorporated into the offering plan. This statement is not intended as a guarantee or warranty of the common charges attributable to the commercial unit(s) for the first year of condominium operation.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 23.6 Advertisements

(a) Except as provided in subdivision (b) of this section, all advertising in print or other media as well as circulars, flyers, cards, letters and other literature employed to solicit interest (advertisement) for offering plans filed pursuant to this Part shall contain the following statement in easily readable print separated from the body of the advertisement or spoken in a distinctly audible voice:

THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR. FILE NO. CD-__

SEE OFFERING PLAN FOR FULL TERMS. FILE NO. CD-__

(c) Any chart or diagram used in an advertisement must be consistent with the offering plan. Any room or floor plan must be to scale.

(d) No abbreviations shall be employed in advertisements unless the meaning is unmistakably clear.

(f) Anticipated common or other carrying charges shall be preceded by the word projected or estimated or abbreviations of those terms. In estimating carrying charges, including real estate taxes and, if applicable, individual unit mortgages, there shall be no subtraction or representation of specific dollar saving because of anticipated tax deductions, unless all assumptions are disclosed.

(i) Advertisements of financing offered or procured by sponsor must include the term of the financing when the term is for less than five years.

(j) Advertisements directed to nontenant purchasers of occupied units shall state:

(1) Purchasers will assume all the obligations of a landlord. These expenses are not included in common charges.

(2) The costs of owning a unit may exceed the rent.

(3) In the case of a noneviction plan: This is a noneviction plan. Tenants may have the right to remain in occupancy indefinitely.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 23.8 Eligible senior citizens and eligible disabled persons

(a) Election.

A tenant may elect not to purchase as an eligible senior citizen or eligible disabled person as defined in G.B.L., section 352-e(2-a) or 352-eeee, or as an eligible disabled person as defined in G.B.L., section 352-eee, within 60 days from the presentation date by completing the applicable form, SH-1 or SH-2, prescribed by the Department of Law and included in the offering plan immediately preceding the introduction page, signing the election form and having the signature notarized and personally delivering it to the named sponsor or agent at a location specified by the sponsor in the plan, or by mailing it by certified or registered mail, return receipt requested to the named sponsor or agent at an address specified by the sponsor in the plan. G.B.L., section 352-eee does not require that a tenant file an election form in order to qualify as an eligible senior citizen. However, it is advised and requested that a tenant, who believes he or she is or will become an eligible senior citizen within 12 months from the date the plan is filed, complete the election form SH-5 promulgated by the Department of Law and included in the plan. This senior citizen election form should be completed, signed, notarized and returned to the sponsor. In the event that the plan becomes subject to G.B.L., section 352-e(2-a) after the plan was accepted for filing:

(a) the plan must be amended immediately after the statute becomes applicable to such offering, and

(b) such election may be made within 60 days of presentation of such amendment.

(1) An SH-1 or SH-2 election form is timely if it is personally delivered or postmarked before midnight of the 60th day after the presentation date subject to statutory rules of construction. An SH-5 election form may be delivered at any time.

(2) The sponsor or agent shall acknowledge receipt of the election form and promptly return an acknowledged copy to the nonpurchasing tenant.

(b) Determination of disputed elections.

A sponsor who disputes the election by a nonpurchasing tenant to be an eligible senior citizen or an eligible disabled person must apply to the Department of Law for a determination of the person's eligibility within 30 days following receipt of the election form.

(2) In the absence of fraud, an untimely application will not be entertained, in which case the tenant whose eligibility is disputed will be deemed eligible under the statute.

(3) The application shall include the following:

(i) one copy of the election form;

(ii) one original and one copy of an affidavit, sworn to by a person having knowledge of the facts, setting forth the following:

(a) that the application is timely in accordance with these regulations;

(b) the specific ground(s) for disputing the election; and

(iii) two copies of all supporting information or documentation in the possession of the sponsor or the affiant bearing on eligibility.

(4) The application must be complete at submission. The Department of Law need not consider any additional or supplemental information subsequently submitted by sponsor.

(5) The Department of Law shall notify the person that the sponsor disputes his or her election to be an eligible senior citizen or eligible disabled person and shall request him or her to submit an answer to the application on a form prescribed by the Department of Law and furnish information or documentation bearing on the specific grounds raised by sponsor to dispute the election.

(i) The answer and supporting documentation must be submitted to the Department of Law within 10 days of the date of the notice from the Department of Law. Failure to submit an answer shall not preclude the Department of Law from issuing a determination.

(7) On the basis of evidence received, the Department of Law shall issue a written determination of eligibility.

(1) A unit occupied by an eligible senior citizen or eligible disabled person, or a person seeking exemption as an eligible senior citizen or eligible disabled person may not be offered to a third party during any exclusive purchase period granted to bona fide tenants in occupancy unless the sponsor, in writing, waives any right to challenge the eligibility of the occupant of the unit.

(2) Where the sponsor has disputed the eligibility of a person seeking an exemption, the unit may not be offered to a third party for 30 days after the Department of Law has made its determination of eligibility. If a proceeding to review such determination is commenced under article 78 of the Civil Practice Law and Rules in a court of competent jurisdiction, the unit may not be offered to a third party for 30 days after notice of entry of the final order in such proceeding. If such final determination or order finds that the person seeking the exemption is not an eligible senior citizen or eligible disabled person, such person may purchase the unit within 30 days thereafter on the most favorable terms offered to tenants in occupancy at any time prior thereto; provided, however, that if such final determination or order includes a finding that the exemption was sought fraudulently or in bad faith, such person may purchase the unit as provided in paragraph (3) of this subdivision.

(3) Notwithstanding an election not to purchase, an eligible senior citizen or eligible disabled person may purchase the unit on the terms then offered to tenants in occupancy.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 23.9 Applications for no-action letters

(a) Applicability.

Upon application made in accordance with the requirements of this section, the Department of Law may, in its discretion, issue a "no-action letter" stating that it will not take enforcement action based on the transaction described in the application occurring without the filing of an offering plan pursuant to section 352-e of the G.B.L.

(1) A no-action letter may be issued where the Department of Law determines that:

(i) the relationship between the offerors and all the offerees is of such a nature that the offerees do not require the protection of an offering plan; and

(ii) the relationship between all offerees and the condominium units being offered is such that all the offerees are aware of the condition of the property which is the subject of the offering; and

(iii) the filing of an offering plan pursuant to G.B.L. section 352-e is not necessary to effectuate the purpose of G.B.L., article 23-A or to protect the public interest.

(2) The following transactions may qualify for a no-action letter:

(i) Unsold space in an existing condominium. The offering and sale by a condominium established pursuant to an offering made in compliance with section 352-e of the G.B.L. and the New York Condominium Act, of one or more units consisting of space that was not sold under the original offering. Such space may include, but shall not be limited to, a superintendent's apartment, parking spaces, commercial space or professional offices (see subdivision [c] of this section for specific requirements).

(ii) De facto situation. The offering and sale of units in residential or commercial property which is owned and occupied solely by the offerors as joint tenants, tenants by the entirety, tenants-in-common, sole shareholders of a corporate owner or sole partners in a partnership. All of the offerors must have acquired title in one of the above forms at least two years prior to submission of the application for the no-action letter; there must be no vacant or sublet units of any kind in the building; and the proposed offerees must be identical to the offerors (see subdivision [d] of this section for specific requirements).

(iii) Tenant-sponsored condominium. The offering and sale of units in commercial or residential property proposed to be acquired by all tenants of a building under a tenant-sponsored or promoted proposal. All tenants must join in the application for a no-action letter; and there must be no vacant or sublet units of any kind in the building (see subdivision [e] of this section for specific requirements).

(3) A no-action letter shall not be issued where the property was acquired by all the offerees as tenants in common, sole shareholders of the corporate owner or sole partners in a partnership holding title to the property less than two years prior to submission of the application.

(b) Application procedure.

(1) An application for a no-action letter shall be submitted to the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005.

(2) The application shall include a transmittal letter signed by the attorney who prepared the application, which states:

(i) the reasons why the transaction described in the application meets the standards set forth in paragraph (a)(1) of this section;

(ii) that the attorney has no actual knowledge of any omission or untrue statement of a material fact included in the application; and

(iii) that the attorney has prepared or reviewed all legal documents necessary to form the condominium and believes it to be a valid condominium under the New York Condominium Act (or the laws regulating condominiums in the state where the property is located). If the condominium is not in existence at the time the application is submitted, the attorney will cause the condominium to be formed in conformity with applicable law, including the New York Condominium Act (or the laws regulating condominiums in the state where the property is located).

(3) An application must be accompanied by a check in the amount required by G.B.L., section 352-e(7)(a) made payable to the Department of Law.

(c) If unsold space in an existing condominium, as described by subparagraph (a)(2)(i) of this section, is being offered, the following requirements must be met:

(1) If the sale of unsold space results in an alteration of the common interest appurtenant to each unit as expressed in the declaration, written consent of all unit owners affected and holders of all mortgages must be submitted with this application.

(2) The application must include an affidavit from all members of the board of managers setting forth:

(i) the name, residence and business address of each member of the board of managers;

(ii) a description of the proposed transaction, the specific unit(s) being offered, the total number of units in the building, the percentage of common interest allocated to each unit and a schedule of tenancies. If the units being offered are vacant, describe how such vacancies occurred;

(iii) the date the condominium was formed;

(iv) that the use for which the unit(s) and property are being offered will comply with the property's certificate of occupancy, zoning, building and housing laws, rules and regulations. Alternatively, if the proposed use will not comply with the legally permissible use, what steps must be taken to comply with or to change the legally permissible use and the person responsible for taking such steps;

(v) that the offeror(s) will comply with G.B.L., sections 352-e(2)(b) and 352-h and hold all downpayments for the purchase of units in trust for the benefit of the purchasers and that such funds shall not be commingled with the monies of the offeror(s) until actually employed in connection with the consummation of the transaction;

(vi) that the offeror(s) will provide to each offeree the following information:

(a) the purchase price;

(b) the percentage of common interest allocated to the unit;

(d) a copy of any mortgage or ground lease on the property;

(e) a copy of the most recent financial statement of income and expenses for the operation of the property, if applicable;

(f) information known to the offeror(s) which may result in extraordinary expenses for unit owners or for the condominium including, but not limited to, assessments, liabilities, dangerous or hazardous conditions, pending litigation and administrative proceedings;

(g) a copy of the offering plan and all amendments;

(h) a copy of the certificate of occupancy for the building; and

(i) such other information as the Department of Law may require;

(vii) that the offeror will furnish a complete copy of the application for a no-action letter and a copy of the no-action letter to each offeree prior to accepting any downpayment;

(viii) that the offeror will furnish, within five days after a request by the Department of Law, copies, of executed offeree affidavits required pursuant to subparagraph (x) of this paragraph;

(ix) whether the offeror or its principals, have, within the preceding five years, participated in any other applications for a no-action letter or have made any other offerings which were not pursuant to an offering plan filed with the Department of Law and the address of any property which was the subject of such application or offering; and

(x) that an affidavit will be obtained from each proposed offeree prior to the closing on a unit that is subject to this application which will contain the following representations:

(a) the offeree's name, residence and business address and legal status (corporation, partnership, individual, etc.);

(b) that the offeree has read the affidavit of the offeror submitted as part of the application for a no-action letter and understands that no offering literature other than as required by the no-action letter will be provided;

(d) that the offeree is purchasing the unit(s) for personal occupancy and does not intend to resell the unit within two years from the later of the closing or the date the no-action letter is issued by the Department of Law.

(3) The application must include a broker-dealer statement (form M-10) executed by a member of the board of managers and accompanied by a check in the amount required by section 359-e (5) of the General Business Law.

(d) If the application is submitted in a de facto situation, as described by subparagraph (a)(2)(ii) of this section, the following requirements must be met:

(1) The application must include an affidavit signed by all unit owners setting forth:

(i) that all units are currently and have been owned and occupied by the offerors for at least two years; that there are no vacant units; and that there are no units that are occupied by subtenants;

(ii) a description of the proposed transaction;

(iii) that the condominium has complied with the requirements of G.B.L., section 352-ee (if applicable) or is an interim multiple dwelling duly registered with the New York City Loft Board or has a temporary or permanent certificate of occupancy or is otherwise legal for the proposed use;

(iv) the number of units in the building and the name, residence and business address and legal status (corporation, partnership, individual, etc.) of each unit owner;

(v) that the unit owners understand that no offering literature other than as required by the no-action letter will be provided and that they acknowledge that they have been informed that if this transaction constituted a public offering within the meaning of G.B.L., article 23-A, they would be entitled to certain rights and protections pursuant to such article;

(vi) if payment will be made for the units, that the unit owners will comply with G.B.L., sections 352-e(2)(b) and 352-h and hold all downpayments for the purchase of units in trust for the benefit of the purchasers and that such funds shall not be commingled with the monies of the offeror(s) until actually employed in connection with the consummation of the transaction;

(vii) that the unit owners will provide to all future purchasers, prior to closing, the following information:

(a) the purchase price;

(b) the percentage of common interest allocated to the unit;

(d) a copy of any mortgage or ground lease on the property;

(e) a copy of the most recent financial statement of income and expenses for the operation of the property, if applicable;

(f) information known to the unit owners which may result in extraordinary expenses for purchasers or the condominium, including but not limited to assessments, liabilities, dangerous or hazardous conditions, pending litigation and administrative proceedings; and

(g) such other information as the Department of Law may require to be presented to such purchaser;

(viii) that the unit owners agree to furnish a complete copy of the application for a no-action letter and a copy of the no-action letter to each future purchaser prior to accepting any downpayment; and

(ix) whether any unit owner has, within the preceding five years, participated in any other application for a no-action letter or has made any other offerings which were not pursuant to an offering plan filed with the Department of Law and the address of any property which was the subject of such application or offering.

(2) If requested, the application must include a separate broker-dealer statement (form M-10) submitted by each unit owner and accompanied by a check in the amount required by section 359-e (5) of the General Business Law.

(e) If the condominium proposal is tenant-sponsored, as described by subparagraph (a)(2)(iii) of this section, the following requirements must be met:

(1) The application must include an affidavit from the owner of the building setting forth the following information:

(i) that the proposal was initiated by the tenants; that a contract of sale has been executed by the affiant and all tenants; and that there are no vacant or sublet units in the building. The contract of sale should be annexed to the affidavit as an exhibit;

(ii) the building has complied with the requirements of G.B.L., section 352-ee (if applicable) or is an interim multiple dwelling duly registered with the New York City Loft Board or has a temporary or permanent certificate of occupancy or is otherwise legal for the proposed use;

(iii) a description of the proposed transaction;

(iv) that the owner will comply with G.B.L., sections 352-e(2)(b) and 352-h and hold all downpayments for the purchase of units in trust for the benefit of the purchasers and that such funds shall not be commingled with the monies of the owner until actually employed in connection with the consummation of the transaction;

(v) whether the owner, within the preceding five years, has participated in any other application for a no-action letter or has made any other offering which was not pursuant to an offering plan filed with the Department of Law and the address of the property which was the subject of such application or offering; and

(vi) that the owner will provide to each tenant the following information:

(a) the purchase price;

(b) the percentage of common interest in the unit;

(d) a copy of any mortgage or ground lease on the property;

(e) a copy of the most recent financial statement of income and expenses for the operation of the property, if applicable;

(f) information known to the owner which may result in extraordinary expenses for unit owners or for the condominium, including but not limited to assessments, liabilities, dangerous or hazardous conditions, pending litigation and administrative proceedings; and

(g) such other information as the Department of Law may require to be presented to each tenant.

(2) The application must also include an affidavit signed by all tenants setting forth the following information:

(i) a statement that they join in the application for a no-action letter and that this proposal was initiated by the tenants;

(ii) the name, residence and business address of each tenant;

(iii) a schedule setting forth how long each tenant has been in occupancy;

(iv) that the tenants have read the affidavit of the owner submitted as part of the application for a no-action letter;

(v) that the tenants understand that no offering literature other than as required by the no-action letter will be provided and that they acknowledge that they have been informed that if this transaction constituted a public offering within the meaning of G.B.L., article 23-A, they would be entitled to certain rights and protections pursuant to such article;

(vi) that the tenants have inspected the subject property; and

(vii) that each tenant is purchasing the unit for personal occupancy and does not have the intention of reselling the unit within two years from the later of the closing or the date the no-action letter is issued by the Department of Law.

(3) The application must include a broker-dealer statement (form M-10) submitted on behalf of the sponsoring entity, signed by each tenant-sponsor and accompanied by a check in the amount required by section 359-e (5) of the General Business Law. If no sponsoring entity exists, a separate broker-dealer statement must be submitted and signed by each tenant-sponsor.

(f) Conditions to the granting of a no-action letter.

(1) The granting of a no-action letter shall be on such terms and conditions as the Department of Law may impose, in its discretion, in order to protect the public interest.

(2) A no-action letter shall not be granted if the Department of Law determines that such act may contravene the rights under G.B.L., article 23-A of any tenant who is not an offeror.

(3) The issuance of a no-action letter is based solely on the information provided in the application. Any material misstatement or omission of a material fact required by this part may render the no-action letter void ab initio.

(4) The issuance of a no-action letter shall not be construed to be a waiver of or a limitation on the Attorney General's authority to take enforcement action pursuant to article 23-A of the General Business Law and other applicable provisions of law, except as expressly stated in such letter.

(5) The issuance of a no-action letter by the Department of Law shall have no value as precedent and may not be relied upon in the submission of any other application for such letter.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 24 TIMESHARE OFFERING PLANS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 24.4 Transmittal letter and certifications

(a) Transmittal letter.

A transmittal letter addressed to the Department of Law, that is signed and affirmed by the attorney who prepared the offering plan, and containing the following unqualified statements, must be submitted with the plan and exhibits (1) at the time the plan is first submitted for filing, and (2) immediately prior to its acceptance for filing:

"I/We am/are the attorney(s) who prepared the offering plan for the captioned timesharing plan.

I/We affirm as follows:

Enclosed for filing pursuant to 13 NYCRR Part 24, Timeshare Offering Plans, are copies of the offering plan together with the exhibits.

I/We am/are fully familiar with the provisions of article 23-A of the General Business Law and the regulations promulgated by the Department of Law in Part 24.

I/We have no actual knowledge of a violation of article 23-A of the General Business Law or Part 24 of the regulations promulgated by the Department of Law, nor do I/we have actual knowledge of any material fact omitted or any untrue statement of a material fact included in the offering plan."

(b) Certification by sponsor.

Include in part II of the plan and in the exhibits a certification, subscribed and sworn to by the sponsor and sponsor's principals in their capacity as principals, in the following form:

"We are the sponsor and the principals of sponsor of the offering plan for the captioned timesharing plan.

We understand that we have primary responsibility for compliance with the provisions of article 23-A of the General Business Law, the regulations promulgated by the Department of Law in Part 24, and such other laws and regulations as may be applicable.

(1) set forth the detailed terms of the transaction and be complete, current and accurate;

(2) afford potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(3) not omit any material fact;

(4) not contain any untrue statement of a material fact;

(5) not contain any fraud, deception, concealment, suppression, false pretense, or fictitious or pretended purchase or sale;

(6) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(7) not contain any representation or statement which is false, where I/we:

(7) (i) knew the truth;

(7) (ii) with reasonable effort could have known the truth;

(7) (iii) made no reasonable effort to ascertain the truth; or

(7) (iv) did not have knowledge concerning the representation or statement made.

Include in part II of the plan and in the exhibits the following certification subscribed and sworn to by an engineer or architect (who must either be registered as an architect or be licensed to practice as a professional engineer in the jurisdiction where the timeshare property is located). The certification must be dated within 120 days prior to the date of submission of the offering plan to the Department of Law. A second certification containing the language in parentheses, below, shall be submitted with any addendum to a report.

(1) The certification must be in the form below for newly constructed units or facilities:

"The sponsor of the timesharing plan for the captioned property retained me/our firm to prepare a report describing the property when constructed (the "Report"). I/We examined the building plans and specifications that were prepared by __ dated __, and prepared the Report dated __, (I/We are supplementing the Report in this addendum dated __), a copy(ies) of which is (are) intended to be incorporated in the offering plan so that prospective purchasers may rely on the Report (and addendum).

I/We understand that I/We am/are responsible for complying with article 23-A of the General Business Law and the regulations promulgated by the Attorney General in Part 24 insofar as they are applicable to this Report (addendum).

I/We have read the entire Report and investigated the facts set forth in the Report and the facts underlying it with due diligence in order to form a basis for this certification. I/We certify that the Report (addendum) and all documents prepared by me/us disclose all the material facts (relevant to the topics of the addendum) which were then discernible from the building plans and specifications referred to above. This certification is made for the benefit of all persons to whom this offer is made. I/We certify that the Report (addendum):

(i) sets forth in detail the condition of the entire property as it will exist upon completion of construction, provided that construction is in accordance with the plans and specifications that I/we examined;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(vii) (a) knew the truth;

(vii) (b) with reasonable effort could have known the truth;

(vii) (c) made no reasonable effort to ascertain the truth; or

(vii) (d) did not have knowledge concerning the representation or statement made.

(viii) It is to be understood that all aspects of the physical condition of the property cannot be determined from an examination of building plans and specifications, and that all statements contained in this certification are premised on and limited to such plans and specifications.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this Report (addendum) is not contingent on the success of the timesharing plan or on the profitability or price of the offering. This statement is not intended as a guarantee or warranty of the physical condition of the property."

(2) The certification must be in the form below for a project undergoing rehabilitation:

"The sponsor of the timesharing plan for the captioned property retained me/our firm to prepare a report disclosing the condition of the project when rehabilitated (the "Report"). I/We visually inspected the property on __, examined the building plans and specifications that were prepared by __, dated __, and prepared the report dated __ (I/We are supplementing the Report in this addendum dated __), a copy(ies) of which is (are) intended to be incorporated in the offering plan so that prospective purchasers may rely on the Report (and addendum).

I/We understand that I/we am/are responsible for complying with article 23-A of the General Business Law and the regulations promulgated by the Department of Law in Part 24 insofar as they are applicable to this Report (addendum).

I/We have read the entire Report (addendum) and investigated the facts set forth in the Report (addendum) and the facts underlying it, and conducted the visual inspection referred to above, with due diligence in order to form a basis for this certification. I/We certify that the Report (addendum) and all documents prepared by me/us disclose all the material facts (relevant to the topics of the addendum) which were then discernible from a visual inspection of the property and from an examination of the building plans and specifications. This certification is made for the benefit of all persons to whom this offer is made. I/We certify that the Report (addendum):

(i) sets forth in detail the condition of the entire property as it will exist upon completion of rehabilitation, provided rehabilitation is in accordance with the plans and specifications that I/we examined;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(vii) (a) knew the truth;

(vii) (b) with reasonable effort could have known the truth;

(vii) (c) made no reasonable effort to ascertain the truth; or

(vii) (d) did not have knowledge concerning the representation or statement made.

(viii) It is to be understood that all aspects of the physical condition of the property cannot be determined by a visual inspection or from an examination of building plans and specifications, and that all statements contained in this certification are premised on and limited to such examination and visual inspection.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this Report (addendum) is not contingent on the success of the timesharing plan or on the profitability or price of the offering. This statement is not intended as a guarantee or warranty of the physical condition of the property."

(3) The certification must be in the form below for a project being sold in "as is" condition or undergoing minimal rehabilitation:

"The sponsor of the timesharing plan for the captioned property retained me/our firm to prepare a report disclosing the condition of the property (the "Report"). I/We visually inspected the property on __, and prepared the Report dated __ (I/We are supplementing the Report in this addendum dated __), a copy(ies) of which is (are) intended to be incorporated in the offering plan so that prospective purchasers may rely on the Report (and addendum).

I/We have read the entire Report (addendum) and investigated the facts set forth in the Report (addendum) and the facts underlying it, and conducted the visual inspection referred to above, with due diligence in order to form a basis for this certification. I/We certify that the Report (addendum) and all documents prepared by me/us disclose all the material facts (relevant to the topics of the addendum) which were then discernible from a visual inspection of the property. This certification is made for the benefit of all persons to whom this offer is made. I/We certify that the Report (addendum), based on my/our visual inspection:

(i) sets forth in narrative form the physical condition of the entire property (the aspects of the property discussed in the addendum), and is current and accurate as of the date of inspection;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(vii) (a) knew the truth;

(vii) (b) with reasonable effort could have known the truth;

(vii) (c) made no reasonable effort to ascertain the truth; or

(vii) (d) did not have knowledge concerning the representation or statement made.

(viii) It is to be understood that all aspects of the physical condition of the property cannot be determined by a visual inspection, and that all statements contained in this certification are premised on and limited to such visual inspection.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this Report (addendum) is not contingent on the success of the timesharing plan or on the profitability or price of the offering. This statement is not intended as a guarantee or warranty of the physical condition of the property."

(4) The certification must be in the form below where the detailed description of the property is being omitted pursuant to section 24.7(bb) of this Part.

"The sponsor of the timesharing plan for the captioned property retained me/our firm to examine the plans and specifications for the construction of all elements of the buildings, grounds and facilities, to inspect the construction of all elements of the buildings, grounds and facilities, and to issue the certification which follows: Copies of this certification are intended to be incorporated in the offering plan so that prospective purchasers may rely on it.

I/We understand that I/we am/are responsible for complying with article 23-A of the General Business Law and the regulations promulgated by the Attorney General in Part 24 insofar as they are applicable to this certification.

I/We have examined the plans and specifications for the construction of all elements of the buildings, grounds and facilities comprising this timeshare offering, and I/we have also examined and inspected the actual construction of all elements of the buildings, grounds and facilities in order to make this certification. This certification is made for the benefit of all persons to whom this offer is made. I/We certify as follows:

(i) All aspects of the construction of the buildings, grounds and facilities are in accordance with the filed plans and specifications (as amended); are in compliance with all applicable laws and codes; are in compliance with locally accepted construction practices; and are in compliance with all applicable local, state and federal environmental laws and regulations.

(ii) This certification, in my/our professional opinion, affords potential investors, purchasers and participants an adequate basis upon which to found their judgment concerning the physical condition of all aspects of the property.

(iii) This certification does not omit any material fact.

(iv) This certification does not contain any untrue statement of a material fact.

(v) This certification does not contain any fraud, deception, concealment, or suppression.

(vi) This certification does not contain any promise or representation as to the future which is beyond reasonable expectation or is unwarranted by existing circumstances.

(vii) This certification does not contain any representation or statement which is false, where I/we:

(vii) (a) knew the truth;

(vii) (b) with reasonable effort could have known the truth;

(vii) (c) made no reasonable effort to ascertain the truth; or

(vii) (d) did not have knowledge concerning the representation or statement made."

(d) Certification by expert on adequacy of the budget.

Except where (1) a timeshare development has been in full operation for at least two years prior to submission for filing of a plan and (2) the sponsor provides in Part I of the plan certified financial statements for the last two years of operation and (3) highlights as a special risk any loss or extraordinary occurrence, include in Part II of the plan and in the exhibits a certification subscribed and sworn to by an expert, who may be the chief financial officer of the sponsor, concerning the adequacy of Schedule B (and Schedule C) in the following form. The certification must be dated within 90 days prior to the date of the submission of the offering plan to the Department of Law. The expert's certification must be based on experience in the management of hotel, resort or timeshare properties and must disclose the approximate number of properties managed and length of time managed, together with other relevant real estate experience, qualifications and licenses.

"The sponsor of the timeshare offering plan for the captioned property retained me/our firm to review or prepare Schedule(s) B (and C) containing projections of income and expenses for timeshare operation. My/our experience in this field includes: I/We understand that I/we am/are responsible for complying with article 23-A of the General Business Law and the regulations promulgated by the Attorney General in Part 24 insofar as they are applicable to Schedule(s) B (and C). I/We have reviewed the Schedule(s) and investigated the facts set forth in the Schedule(s) and the facts underlying it/them with due diligence in order to form a basis for this certification. I/We certify that the projections in Schedule(s) B (and C) appear reasonable and adequate based on present prices (adjusted to reflect continued inflation and present levels of consumption for comparable units similarly situated). I/We certify that Schedule(s) B (and C):

(i) sets forth in detail the terms of the transaction as it relates to the Schedules and is complete, current and accurate;

(ii) affords potential investors, purchasers and participants an adequate basis upon which to found their judgment;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment, or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(vii) (a) knew the truth;

(vii) (b) with reasonable effort could have known the truth;

(vii) (c) made no reasonable effort to ascertain the truth; or

(vii) (d) did not have knowledge concerning the representation or statement made.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this Certification is not contingent on the success of the offering.

I/We understand that a copy of this Certification is intended to be incorporated into the offering plan so that prospective purchasers may rely on it.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 24.5 Amendments

(a) General.

Documents to supplement or amend an offering plan (collectively, "amendment[s]") shall be deemed part of the offering plan and shall meet the following requirements:

(1) If the offering plan does not comply with General Business Law, section 352-e(1)(b) or section 24.1(b) of this Part, due to change of circumstances, the passage of time or any other reason, the offering plan must be amended promptly.

(3) Except as provided in subdivision (d) of this section, an amendment to an offering plan shall be filed on the date indicated in the letter issued by the Department of Law stating that the amendment has been filed, and not sooner.

(4) Amendments that have been filed with the Department of Law must be attached to the inside front cover of the offering plan before the amended plan is distributed to the public. The cover of the offering plan must be stamped: "This plan has been amended. See inside cover." Any revisions, additions or deletions of specific language in the offering plan should reprint a sufficient portion of the paragraph from the offering plan as revised so that the revised portion of the offering plan may be understood easily. An offering plan may be rewritten to incorporate the amendments into the body of the plan, and must be rewritten, if required by the Department of Law.

(5) If there is a substantial amendment to the offering plan that adversely affects purchasers under contract, the sponsor must grant timeshare purchasers a right of rescission and a reasonable period of time that is not less than 15 days after notice to exercise the right. Sponsor must promptly return any money paid by a purchaser who rescinds.

(b) Procedure for submission of amendments.

Amendments must be mailed to or submitted during business hours to the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005. Include the following when submitting an amendment:

(1) a transmittal letter, signed by the attorney who prepared the amendment, that:

(i) states the date the offering plan was filed, and the Department of Law file number;

(ii) identifies the subject amendment in numerical order;

(iii) states whether prior amendments had been submitted to but not yet filed with the Department of Law;

(iv) identifies, if possible, the attorney in the Department of Law who reviewed the most recent submission; and

(v) gives the current status of the offering plan, and states if there are any outstanding rescission periods;

(vi) notes if there is currently an investigation pending by the Department of Law of the sponsor, a principal of sponsor, or the proposed timeshare; and

(vii) states the date on which sponsor submitted a digital copy of the offering plan and all previously filed amendments to the Department of Law or whether this is the first time sponsor is submitting a digital copy of the offering plan and previously filed amendments, if any;

(2) one paper copy of the typed or printed amendment to the offering plan and one digital copy of the amendment to the offering plan;

(3) check(s) (certified or uncertified) for filing fee(s) under General Business Law, section 352-e(7), payable to New York State Department of Law, stapled or clipped to the transmittal letter;

(4) one digital copy of the offering plan, including all previously filed amendments, if not already submitted to the Department of Law;

(5) one form RS-2, signed by the sponsor; and

(6) evidence of approval for filing in the situs state, if a five business day review is requested pursuant to section 24.1(d) of this Part.

Pursuant to section 24.3(a)(5) of this Part, the term of the initial offer is 12 months, commencing on the date indicated in the letter issued by the Department of Law stating that the plan is filed. Any amendment extends the term of the offering for an additional six-month term from the date of filing of the amendment. In the absence of any amendments, an extension of the term must be made by amendment before the end of the then current term, and must comply with the provisions of this section.

(1) The amendment must disclose all material changes, such as an increase in maintenance charges or a material increase in an expense item.

(2) The amendment must state the number of unsold timeshares remaining and the status of construction of the units and other facilities.

(d) Price change amendments.

Any amendment proposing to change any offering price is subject to the requirements set forth below and must be consistent with section 24.3(k) of this Part.

(2) If the amendment contains price changes and supplements, or amends any other part of the offering plan, the amendment shall be filed on the date indicated in the letter issued by the Department of Law stating that the amendment has been filed.

(3) The transmittal letter for a price change amendment must be accompanied by a completed copy of form C-11 as promulgated by the Department of Law.

History

Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016

N.Y. Comp. Codes R. & Regs. Tit. 13 § 24.6 Advertisements

(a) All advertising (including but not limited to circulars, flyers, cards, letters, brochures, pamphlets, lodging and vacation certificates, direct mail prize giveaways, and radio and television solicitations of interests for offering plans filed pursuant to this Part) shall contain the following statements, or substantially similar language provided such language makes specific reference to, and uses the term "timeshare sales", in easily readable print separated from the body of the advertisement or spoken in a distinctly audible voice:

THIS ADVERTISEMENT IS BEING USED FOR THE PURPOSE OF SOLICITING TIMESHARE SALES.

THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR.

(b) Any chart or diagram used in an advertisement must be consistent with the offering plan. Any room or floor plan must be to scale.

(d) All advertisements in connection with an offering plan filed pursuant to this Part shall be consistent with the representations and information required to be set forth by the General Business Law and this Part. All assertions of fact in advertisements must be provably true.

(e) Anticipated maintenance charges shall be preceded by the word projected or estimated or abbreviations of those terms. In estimating maintenance charges, there shall be no subtraction or representation of specific dollar saving because of anticipated tax deductions.

(f) Advertisements of amenities or services available at a fee charged in addition to the maintenance charges or in addition to the purchase price must refer to the additional fee. Advertisements of amenities or services that will not be available at closing must state the approximate date of availability.

(g) An artist's rendering of a property in an advertisement must be marked as an artist's rendering, and must accurately and realistically depict the dimensions, height and landscaping of the property and surrounding roads, buildings and open space.

(h) Advertisements of financing offered or procured by sponsor must include the term of the financing.

(i) All advertisements must clearly and conspicuously use the term timesharing to describe the product offered for sale by the sponsor.

(j) All advertisements must disclose the price range for the interests being sold.

(k) In addition to the other requirements set forth in this section, all advertisements which offer prizes, gifts, awards or other premiums must:

(1) clearly and conspicuously state whether or not respondents will be required to submit to a sales presentation in order to receive the premium or premiums;

(2) specify the premium or premiums to be given to the respondents and the retail value of each premium;

(3) fully and accurately describe the premium or premiums;

(4) clearly and conspicuously disclose all rules, requirements and preconditions for claiming the premium or premiums, including any costs to the respondent associated with the offer;

(5) not appear to be an urgent and official notification to winners in a contest, and must not use any other means to convey a false sense of urgency or importance.

(l) Any communication by the sponsor or his agents with contract vendees which is sent to purchasers prior to closing shall contain no material information which is not contained in or is inconsistent with disclosures made in the documents submitted to and accepted for filing by the New York State Department of Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 25 NEWLY CONSTRUCTED OR VACANT SENIOR RESIDENTIAL COMMUNITIES

N.Y. Comp. Codes R. & Regs. Tit. 13 § 25.1 General

(a) Applicability.

The offering statement or "offering plan" required by section 352-e of the General Business Law ("GBL") for a senior residential community that meets the requirements set forth below is subject to this Part, "Newly Constructed or Vacant Senior Residential Communities." The offering plan must be filed with the Department of Law prior to the commencement of any offer to the public of residence in the community.

(1) The proposed senior residential community ("residence") will be established as a cooperative, condominium or homeowners association or will require as a prerequisite to admission the payment of a substantial entrance fee by applicants for residence in the community. Continuing care retirement communities authorized under Public Health Law, articles 46 and 46-A are exempt from the filing requirements of this Part.

(2) The residence is established as a residence for senior citizens, and may impose a minimum age requirement for one or more occupants of a unit.

(3) Offerings subject to this Part are also subject to the relevant regulations for cooperatives (Part 21 of this Title), condominiums (Part 20 of this Title), or homeowners associations (Part 22 of this Title), if the Residence offered is to be organized as one of those forms of ownership. If the plan is submitted pursuant to Part 20, 21 or 22 of this Title, it must comply with those Parts and those sections of this Part not addressed by Part 20, 21 or 22 of this Title, such as section 25.3(o)"Terms of Residency Agreement" of this Part.

(4) Residences to be offered which meet the criteria of paragraphs (1) and (2) of this subdivision and also provide services which require a license or operating certificate from other State or local agencies, must obtain approval from such agencies and comply with this Part as well.

(b) Standard of compliance.

An offering plan must, at a minimum:

(1) contain in detail the terms of the transaction and be complete, current and accurate;

(2) afford potential residents an adequate basis upon which to found their judgment;

(3) not omit any material fact;

(4) not contain any untrue statement of a material fact;

(5) not contain any fraud, deception, concealment, suppression, false pretense, false promise or unconscionable contractual provision;

(6) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances; and

(7) not contain any representation or statement which is false, where the sponsor or the person who made such representation or statement:

(i) knew the truth; or

(ii) with reasonable effort could have known the truth; or

(iii) made no reasonable effort to ascertain the truth; or

(iv) did not have knowledge concerning the representation or statement made.

As used in this Part:

(1) Entrance fee means the initial fee paid to obtain admission to a senior residential community, which may be refundable in whole or in part upon departing from the residence, as distinguished from monthly fees incurred after occupancy.

(i) own an interest in or control sponsor; and

(ii) actively participate in the planning or consummation of the offering, regardless of the form of organization of sponsor.

A director of a profit or not-for-profit corporate sponsoring entity, who does not actively participate in the planning or consummation of the offering, is not deemed to be a principal.

(3) Residency agreement means the document executed by the sponsor and a resident pursuant to which a resident will be entitled to occupancy. Such document shall set forth the terms and conditions of residency in the senior residential community.

(4) Senior residential community means a residential community established as a residence for senior citizens, possibly imposing a minimum age requirement for one or more occupants of a unit, and which requires either the purchase of a cooperative, condominium or home in a homeowners' association or the payment of a substantial entrance fee to reside in the Residence.

(5) Sponsor means any person, partnership, joint venture, corporation, company, trust, association or other entity which makes or takes part in a public offering or sale in or from the State of New York of securities consisting primarily of shares or participation interests or investments in real estate including condominium units and other cooperative interest in realty. Sponsor shall not be deemed to include a broker who has complied with section 359-e of the GBL or an attorney or other expert retained by the sponsor solely to render professional advice or opinions in connection with the offering.

(6) Digital copy means a copy that is identical in content to a paper copy except that it is recorded electronically in read-only .pdf format or other electronic format that the Department of Law determines to be acceptable. Digital copies of the plan shall include all the supporting documents included in part II of the plan. Digital copies of the exhibits to the plan shall include all documents referenced in section 25.2(c)(5) of this Part, as applicable. Digital copies of the amendment shall include all exhibits, back-up documents, and other supplemental documents annexed to the amendment, as applicable. The Department of Law shall periodically issue a Guidance Document as defined by State Administrative Procedure Act section 102(14), setting forth particular guidelines and procedures for the submission of digital copies. Such Guidance Document will be available on the Department of Law's website, as required by State Administrative Procedure Act section 202(e).

(d) Service.

(1) Unless otherwise provided by statute or regulation, any document required to be served by this Part shall be served on:

(i) commercial or professional tenants;

(ii) prospective residents;

(iii) unit residents; or

(iv) any other person entitled to service pursuant to local law or regulation (collectively "offerees"), in the following manner:

(a) personal delivery; or

(2) Service by personal delivery shall be deemed complete upon delivery. Service by mailing shall be presumed complete on the fifth day after the date of mailing. An affidavit of service identifying the offerees served, stating the manner of service and the date of service is a document required to be retained under section 25.3(x) of this Part. The completion of service shall be the latest date on which service upon all offerees is deemed or presumed complete.

(e) Time of review.

After submission of the proposed offering plan for filing, the Office of the Attorney General shall issue a letter to the sponsor or sponsor's attorney stating that the plan is filed, or indicating deficiencies. The Office of the Attorney General shall issue such a letter for an offering plan subject to this Part no later than 30 days after submission of the proposed offering plan. The Office of the Attorney General may issue a deficiency letter whenever it appears that the proposed offering plan is deficient in one or more respects. The Office of the Attorney General may, in its discretion, deem an offering plan as not submitted if the proposed offering plan and exhibits are incomplete and therefore do not meet the requirements of section 25.2, "Procedure for submission" of this Part.

(f) Statutory compliance.

Unless expressly provided herein, nothing contained in this Part shall be construed as limiting the requirements set forth in article 23-A of the GBL or the laws regulating senior residential communities in the state where the property is located.

(g) Waiver.

In the interests of justice, the Office of the Attorney General may waive compliance with any provision of these regulations and can permit variations of regulations so long as the variation is consistent with the purpose and intent of the regulation and statute or unless prohibited from doing so by statute or by final court order.

(h) Exemptions.

Upon written application of the sponsor or sponsor's attorney, the Office of the Attorney General, in its discretion, may exempt a plan from the application of any provision of this Part where it is found that enforcement of the provision is not necessary to effectuate the purposes of the GBL or to protect the investing public. The application shall:

(1) be annexed to and be submitted with the attorney's transmittal letter;

(2) set forth the provisions from which the exemption is sought and the grounds for the exemption; and

(3) be signed by sponsor or the sponsor's attorney.

The transmittal letter and certifications required by section 25.4 of this Part shall be in the form required by this Part, without modification, and shall be based on the assumption that any exemption sought pursuant to this section has been granted. In the event that the Office of the Attorney General denies the application for exemption, the Office of the Attorney General may issue a deficiency letter as provided in subdivision (e) of this section. No additional fee is required for an exemption application.

(i) Out-of-state senior residential communities.

A sponsor of a senior residential community located outside of New York State which makes or takes part in a public offering in or from the State of New York of senior residential community units must file an offering plan with the Office of the Attorney General. To comply with this requirement, the sponsor of an out-of-state plan may file a complete offering plan drafted in accordance with New York law and this Part. In the alternative, the Office of the Attorney General may, in its discretion, allow the sponsor to file the offering plan approved by or filed with the state or jurisdiction in which the senior residential community is located and an addendum with such additional information as is required by the Office of the Attorney General. Sponsor must represent that the plan complies with all applicable local laws.

(j) Effectiveness of regulations.

The effective date of these regulations is the date of filing with the Secretary of State. As of such date:

(1) This Part is effective immediately for offering plans that meet the requirements of subdivision (a) of this section. Existing facilities, which have plans previously accepted for filing by the Department of Law, need not submit a new offering plan, but must comply with the requirements of section 25.5 of this Part when amending the plan.

(2) Section 25.5 of this Part is effective for amendments to plans submitted after the effective date of these regulations that meet the requirements of subdivision (a) of this section, regardless of when such plans were filed.

(3) Section 25.6 of this Part is effective for advertisements, appearing on or after the effective date of these regulations, for offering plans that meet the requirements of subdivision (a) of this section, regardless of when such plans were filed.

(k) Withdrawals, abandonments and rejections.

(1) If the offering plan is withdrawn prior to filing, written notice thereof shall be served simultaneously by the sponsor on the Office of the Attorney General and on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.

(2) If the offering plan is to be abandoned after filing and the sponsor has accepted residency agreements, the sponsor shall promptly submit an amendment to the Office of the Attorney General together with form RS-3 as promulgated by the Office of the Attorney General. If payments under residency agreements have been received, the amount of such funds and the manner and time when these funds will be returned to residents must be disclosed. The funds must be returned within five days after the amendment abandoning the plan has been accepted for filing. If there are no outstanding residency agreements the sponsor need not submit an amendment but shall submit a form RS-3 to the Office of the Attorney General which shall be served simultaneously by the sponsor on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.

(3) If the offering plan is finally rejected by the Office of the Attorney General and there is no outstanding right to cure defects, the sponsor shall promptly serve notice of such rejection on all commercial or professional tenants, if any, in the manner specified by paragraph (d)(1) of this section.

(l) Disclaimers.

The requirements set forth in section 25.3 of this Part apply to the offering plan generally and shall not be negated or contradicted by inconsistent provisions in other portions of the offering plan, or by provisions purporting to discharge liability or to terminate the continuing effect of representations in the offering plan upon an event such as the execution of a residency agreement or commencement of occupancy. Disclaimer provisions, either direct or indirect, through stated reliance on an expert with respect to factual matters required to be represented or set forth in the offering plan, may not be included except as and to the extent permitted in this Part.

History

Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016

N.Y. Comp. Codes R. & Regs. Tit. 13 § 25.2 Procedure for submission

(a) The proposed offering plan and the exhibits described below shall be submitted to the New York State Department of Law, Real Estate Finance Bureau, 28 Liberty Street, New York, NY 10005.

(b) The exhibits shall accompany the proposed offering plan submitted to the Office of the Attorney General and shall be subject to the sanctions of article 23-A of the GBL. A notation of "orig" on the list below means that at least one document must be a duly executed, original document.

(1) A transmittal letter addressed to the Office of the Attorney General that is signed and affirmed by the individual attorney who prepared the plan, or by the person or persons who prepared the plan if not an attorney, containing the statements required by section 25.4(a) of this Part without qualification or alteration in substance. As specified in section paragraph (5) of this subdivision, the transmittal letter must expressly indicate any exhibit that is not included (apart from those noted) and set forth the reasons for the omission and list any documents submitted as exhibit B-13. Exemption applications submitted pursuant to section 25.1(h) of this Part must be annexed to and submitted with the transmittal letter. Omissions and additions to the table of contents must be noted and explained. The transmittal letter must note whether the offering plan is for a building or development which is newly constructed, vacant or non-residential and to what extent any existing structures are being rehabilitated. Pursuant to section 25.3(i)(4) of this Part, the transmittal letter must note any commercial units and whether they are being offered for sale. Pursuant to section 25.3(m)(3) of this Part the transmittal letter must note financing offered to prospective residents which contains any unusual risks. Pursuant to section 25.1(i) of this Part, the transmittal letter must note if the plan is an out-of-state plan. The transmittal letter must also note if there is currently an investigation pending by the Office of the Attorney General of the sponsor, a principal of the sponsor or of the property to be constructed or to be converted to a senior residential community.

(2) Checks (certified or uncertified) for the filing fee under GBL, section 352-e(7)(a) payable to "New York State Office of the Attorney General" and stapled or clipped to the transmittal letter, with form of receipt issued by the Office of the Attorney General. The filing fee is based on the number of units offered multiplied by the entrance fee per unit. For out-of-state senior residential communities the appraised valuation represents the total appraised valuation of all unoccupied units at the date of submission to the Office of the Attorney General. To expedite processing, the sponsor should submit two checks, each in the amount of one-half of the total fee. One of the two checks will be a non-refundable deposit. One check will be returned if the Office of the Attorney General issues a final deficiency letter.

(3) Signed originals of the following forms:

(i) M-2 and M-10 forms, if new forms are submitted as exhibits D-1 and D-2, with a check for the filing fee under GBL, section 359-e(5) attached.

(4) One paper copy of a typed or printed, bound offering plan and one digital copy of the offering plan.

(5) One paper copy of all exhibits to the offering plan and one digital copy of all exhibits to the offering plan. The paper copy of the exhibits shall be in a binder from which documents can be removed easily, and the binder must be indexed with tabs. The cover of the binder must be labeled with the name and the address of the senior residential community and the name, address and telephone number of the attorney who prepared the plan. Both the binder and the digital copy must contain an index of the documents. The transmittal letter required by paragraph (1) of this subdivision must note the omission of any exhibit, other than the exceptions stated below and the reason for the omission. If exhibits B-3, B-4, B-8, B-9, B-10, B-11, B-12, B-14, B-15 B-16, B-17 are omitted solely because the exhibit is not applicable to the offering, the omission need not be noted in the transmittal letter.

(i) Part A of the exhibits (certifications) shall consist of the following documents. Photocopies or conformed copies of the certifications must appear in the offering plan.

(a)

(A-1) Certification by the sponsor and the sponsor's principals signed by "sponsors" and "principals" as defined in section 25.1(c) (orig) of this Part; see section 25.4(b) of this Part.

(b)

(A-2) Certification by the sponsor's engineer or architect concerning the description of the property and building condition in Part II of the plan and at exhibit C-1 (orig); see section 25.4(c) of this Part.

(c)

(A-3) Certification by expert on adequacy of budget for the first year of senior residential community operation (orig); see section 25.4(d) of this Part.

(ii) Part B of the exhibits (general) shall consist of the following documents:

(a)

(B-1) Title company report, including a report on housing or building code violations of record, if applicable, dated or updated within 30 days of submission (orig).

(b)

(B-2) A projection from a qualified expert or local supplier of the consumption, rate and total cost for furnishing heat, hot water and other utilities. If unit residents directly pay the cost of heating their own units, include a similar projection for heat, hot water and electricity for individual units.

(c)

(B-3) Copy of proposed management agreement.

(d)

(B-4) Copies of any contract which:

(1) will be binding on the senior residential community for $10,000 or more per year; or

(2) has a term in excess of three years; or

(3) is with the sponsor, a business associate or affiliate of the sponsor, or a principal of the sponsor.

(e)

(B-5) Copy of a letter from an insurance company or its authorized agent, stating proposed insurance coverage and amounts, and the annual premium or premiums.

(f)

(B-6) Copy of an opinion from an independent, licensed insurance broker, insurance appraiser or real estate appraiser representing that the fire insurance coverage budgeted in the plan is adequate:

(1) so that the insured shall not be a co-insurer if the policy contains a co-insurance provision; or

(2) to cover replacement cost if the policy is for an agreed amount which waives co-insurance. If the policy represents replacement cost coverage, indicate the replacement cost per square foot.

(g)

(B-7) Certified annual financial statements for the last two years for the senior residential community, if the facility is operating as of date of submission.

(h)

(B-8) Certified financial statements for the last two years for the sponsoring entity.

(i)

(B-9) Copy of sections 352-a/352-b Designation of Secretary of State as agent (applicable only to out-of-state issuers, sponsors, principals and/or broker), and filing receipt.

(j)

(B-10) For senior residential communities located outside New York State, copy of statutes and regulations concerning the registration and formation of senior residential communities. All senior residential communities located outside New York State must include evidence of compliance with local laws and regulations concerning the registration and formation of senior residential communities.

(k)

(B-11) Copy of the form of promissory note required by sponsor if the plan offers financing, together with any other document which significantly affects a resident's obligations for financing offered by sponsor. If the documents are not available at the time of submission to the Department of Law, so indicate and forward when available.

(l)

(B-12) Copy of any financing commitment letter pertaining to building construction loans, and amendments or extensions of the commitment letter, and a copy of any mortgage and note or bond that will be a lien on the property after commencement of occupancy or which presently encumbers the property. If construction financing is not available at the time of submission to the Department of Law, so indicate and forward as soon as available.

(m)

(B-13) Copy of sponsor's or present owner's deed to the property, and copy of contract of sale between owner and sponsor if sponsor is contract vendee. If sponsor's interest will be a leasehold, include such leasehold in this exhibit.

(n)

(B-14) Copy of any other material document(s), each of which should be described in the transmittal letter.

(o)

(B-15) For rehabilitated buildings, an affidavit by sponsor stating how the building became vacant, that there was no harassment, and whether any apartments were vacated pursuant to vacate orders. If so, provide copy of vacate order.

(p)

(B-16) An affidavit by sponsor stating that no money has been taken during any market test pursuant to Cooperative Policy Statement No. 1, if applicable.

(q)

(B-17) Copies of all existing and proposed professional and commercial leases and subleases, and concession agreements.

(r)

(s)

(B-19) Copy of surety bonds or letter of credit proposed to secure entrance fees and any other deposits and any underlying agreement or related agreement, and any undertaking called for in the Regulations or proposed to be furnished.

(t)

(B-20) Copy of any license or operating certification from the Department of Health for services to be provided by the facility.

(u)

(B-21) Copy of Certificate of Incorporation and receipt from Secretary of State, if the residence is organized as a corporation.

(iii) Part C of the exhibits (engineering) shall consist of the following documents:

(a)

(C-1) Architect's or engineer's detailed description of the property and building condition with the architects or engineer's seal and original signature. The description must be dated within 90 days of submission to the Office of the Attorney General and conform to the requirements of section 25.7 of this Part; see exhibit A-2. The Office of the Attorney General may in its discretion require a further inspection and report.

(b)

(C-2) Asbestos report, except in the case of newly constructed buildings, dated within 90 days of submission to the Office of the Attorney General. The report must conform to the requirements of section 25.7 of this Part.

(c)

(C-3) Copy of currently valid temporary, partial or permanent certificate of occupancy or its equivalent. If a certificate of occupancy is not available because the building was constructed before the municipality began to issue certificates of occupancy, include an affidavit from the sponsor that the proposed use by the senior residential community is identical to the original use of the building. If no certificate of occupancy has yet been issued, so indicate and forward to the Office of the Attorney General when issued.

(d)

(C-4) Copy of approved building plans required by local law, any specifications required by government agencies having jurisdiction, and copies of all required construction permits from government agencies having jurisdiction. If such plans have not yet been approved, provide evidence of zoning and site plan approval by the appropriate local government authority.

(iv) Part D of the exhibits (other information) shall consist of the following documents:

(a)

(D-1) Signed M-10 form(s), broker-dealer statement, for the broker (orig), and signed M-2 form(s), statements for all individual employees who act as brokers (orig). Forms do not have to be submitted if currently valid registration forms are on file with the Office of the Attorney General from prior offerings and a copy of the form is submitted as exhibit D-1.

(b)

(D-2) Signed M-10 form(s) for the sponsoring entity which shall include all officers, directors, partners or principals who are "dealers" for purposes of GBL, section 359-e (orig). Uncompensated directors of not-for-profit corporations need only disclose their name, a contract address and phone number. Forms do not have to be submitted if currently valid registration forms are on file with the Office of the Attorney General from prior offerings and a copy of the form is submitted as exhibit D-2.

(c)

(D-4) Sponsor's affidavit that sponsor's net worth is or will be sufficient to meet the requirements of GBL, section 352-k and all of the unsecured obligations sponsor assumes in the offering plan including sponsor's obligations for unoccupied units (orig).

(d)

(D-5) An affidavit from sponsor and principals of sponsor, as defined in section 25.1(c) of this Part, stating whether sponsor and principals of sponsor have taken part in real estate syndications of securities consisting of participation interests or investments in real estate, including limited partnership interests or private or public offerings of cooperative interests in realty, including senior residential communities, in or from New York, which were initially offered during the preceding five years. State the addresses of the realty, the name of the syndication or partnership and whether it received an exemption and the approximate date the offering plan was filed and the date of the closing with the apartment corporation for cooperatives or the date of commencement of occupancy for senior residential communities.

(e)

(D-6) Completed statistical information card (available from the Office of the Attorney General).

(f)

(D-7) Exemption application pursuant to General Business Law, section 359-e.

(d) Upon preliminary advice from the Office of the Attorney General that the proposed offering plan may be filed, sponsor must submit:

(1) Checks (certified or uncertified) for the balance of the filing fees, if any, pursuant to GBL, section 352-e(7)(a) and by separate check any additional filing fees pursuant to GBL, section 359-e(5), payable to New York State Office of the Attorney General.

(2) One paper copy of the typed or printed, bound offering plan and one digital copy of the offering plan with the filing date left blank (the filing date shall be inserted after receipt of the letter from the Department of Law accepting the offering plan for filing; all offering plans must be dated before being presented to offerees).

(3) A new attorney transmittal letter; see section 25.4(a) of this Part. The letter may indicate that exhibits have previously been supplied.

(4) If required by the Office of the Attorney General:

(i) a new certification by sponsor and sponsor's principals; see section 25.4(b) of this Part;

(ii) a new certification by sponsor's engineer or architect; see section 25.4(c) of this Part;

(iii) a new certification by sponsor's expert on the adequacy of the budget; see section 25.4(d) of this Part.

(e) The plan is filed on the date indicated in the letter from the Office of the Attorney General stating that the plan has been accepted for filing.

History

Amended New York State Register December 30, 2015/Volume XXXVII, Issue 52, eff. 2/1/2016

N.Y. Comp. Codes R. & Regs. Tit. 13 § 25.4 Transmittal letter and certifications

(a) Transmittal letter.

A transmittal letter addressed to the Office of the Attorney General that is signed and affirmed by the individual attorney who prepared the offering plan, or by the pro se preparer, and containing the following unqualified statements must be submitted with the plan and exhibits (i) at the time the plan is submitted for filing, and (ii) immediately prior to its acceptance for filing:

"I am the attorney (person) who prepared the senior residence offering plan for the captioned property. I affirm as follows:

Enclosed for filing pursuant to Part 25, Senior Residential Communities are copies of the offering plan together with the Exhibits.

I am fully familiar with the provisions of Article 23-A of the General Business Law and the regulations promulgated by the Office of the Attorney General in Part 25.

I prepared the attached offering plan and Exhibits based on information from the sponsor. I have read all the printed copy submitted to the Office of the Attorney General but expressly disclaim any responsibility to have made an independent inspection of the building(s) or property or investigation of the information furnished to me by sponsor.

I have no actual knowledge of any violation of Article 23-A of the General Business Law or Part 25 of the regulations promulgated by the Office of the Attorney General, nor do I have actual knowledge of any material fact omitted or any untrue statement of any material fact included in the offering plan."

(b) Certification by sponsor.

Include in Part II of the plan and in the Exhibits a certification subscribed and sworn to by the sponsor and sponsor's principals in their capacity as principals, in the following form:

"We are the sponsor and the principals of sponsor of the senior residence offering plan for the captioned property. We understand that we have primary responsibility for compliance with the provisions of Article 23-A of the General Business Law, the regulations promulgated by the Office of the Attorney General in Part 25 and such other laws and regulations as may be applicable.

(i) set forth the detailed terms of the transaction and be complete, current and accurate;

(ii) afford potential residents an adequate basis upon which to found their judgment;

(iii) not omit any material fact;

(iv) not contain any untrue statement of a material fact;

(v) not contain any fraud, deception, concealment, suppression, false pretense or false promise or unconscionable contractual provisions;

(vi) not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

Include in Part II of the plan and in the exhibits the following certification subscribed and sworn to by an engineer or architect (who must either be registered as an architect or be licensed to practice as a professional engineer in the jurisdiction where the residence is located). If the engineer or architect is a principal of the sponsor, the certification must be submitted by an independent engineer or architect. The certification and inspection report must both be dated within 90 days prior to the date of submission of the offering plan to the Office of the Attorney General. A second certification containing the language in parenthesis, below, shall be submitted with any addendum to a report.

"The sponsor of the offering plan to create a senior residence retained me/our firm to prepare a report describing the construction and/or renovation of the property (the "Report"). I/We visually inspected existing portions of the renovated property, if any, on ______, and I/we examined the building plans and specifications that were prepared by __________ dated _____ and prepared the Report dated _____. (I am/We are supplementing the report in this addendum dated ____,) a copy(ies) of which is (are) intended to be incorporated into the offering plan so that prospective residents may rely on the Report (and addendum).

I am/we are a registered architect/licensed engineer in the state in which the property is located.

I/We understand that I am/we are responsible for complying with Article 23-A of the General Business Law and the regulations promulgated by the Office of the Attorney General in Part 25 insofar as they are applicable to this Report (addendum).

I/We have read the entire Report (addendum) and investigated the facts set forth in the Report (addendum) and the facts underlying it with due diligence in order to form a basis for this certification. This certification is made for the benefit of all persons to whom this offer is made.

I/We certify that the Report (addendum):

(ii) in my/our professional opinion affords potential residents an adequate basis upon which to found their judgment concerning the description and/or physical condition of the property (the aspects of the property discussed in the addendum) as it will exist upon completion of renovation and/or construction, provided that renovation and/or construction is in accordance with the plans and specifications that I/we examined;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment, or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

I/We further certify that I am/we are not owned or controlled by and have no beneficial interest in the sponsor and that my/our compensation for preparing this Report (addendum) is not contingent on the commencement of operation of the property as a senior residential community or on the profitability of the offering. This statement is not intended as a guarantee or warranty of the physical condition of the property."

(d) Certification by expert on adequacy of budget (or revised or updated budget).

Include in Part II of the plan and in the exhibits a certification subscribed and sworn to by an expert concerning the adequacy of schedule(s) B-1 and B-2 in the following form. The certification must be dated within 90 days prior to the date of the submission of the offering plan to the Office of the Attorney General. The expert's certification must be based on experience in the management of cooperatives or condominiums or rental properties and must disclose the approximate number of properties managed and length of time managed together with other relevant real estate experience, qualifications and licenses.

"The sponsor of the senior residence offering plan for the captioned property retained me/our firm to review or prepare Schedule(s) B-1 and B-2, containing projections of income and expenses for the first year of operation. My/our experience in this field includes:

I/We have reviewed the Schedule(s) and investigated the facts set forth in the Schedule(s) and the facts underlying it with due diligence in order to form a basis for this certification. I/We also have relied on my/our experience in managing residential buildings.

I/We certify that the projections in Schedule(s) B-1 and B-2 appear reasonable and adequate under existing circumstances, and the projected income appears to be sufficient to meet the anticipated operating expenses for the projected first year of operation as a senior residence.

I/We certify that the Schedule(s):

(i) sets forth in detail the projected income and expenses for the first year of operation as a senior residence;

(ii) affords potential residents an adequate basis upon which to found their judgment concerning the first year of operation;

(iii) does not omit any material fact;

(iv) does not contain any untrue statement of a material fact;

(v) does not contain any fraud, deception, concealment, or suppression;

(vi) does not contain any promise or representation as to the future which is beyond reasonable expectation or unwarranted by existing circumstances;

(vii) does not contain any representation or statement which is false, where I/we:

(a) knew the truth;

(b) with reasonable effort could have known the truth;

(d) did not have knowledge concerning the representation or statement made.

I/We understand that violations are subject to the civil and criminal penalties of the General Business Law and Penal Law."

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 25.6 Advertisements

THE COMPLETE OFFERING TERMS ARE IN AN OFFERING PLAN AVAILABLE FROM SPONSOR. FILE NO. CR- _____.

SEE OFFERING PLAN FOR FULL TERMS. FILE NO. CR-_____.

(c) Any chart or diagram used in an advertisement must be consistent with the offering plan. Any room or floor plan must be to scale.

(d) No abbreviations shall be employed in advertisements unless the meaning is unmistakably clear.

(f) Anticipated monthly fees and optional service fees shall be preceded by the word "projected" or "estimated" or abbreviations of those terms.

(g) Advertisements of amenities or services available at a fee charged in addition to the monthly fees must refer to the additional fee. Advertisements of amenities or services that will not be initially available must state the approximate date of availability.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Chapter III THEATRICAL SYNDICATION FINANCING

Part 50 THEATRICAL FINANCING

N.Y. Comp. Codes R. & Regs. Tit. 13 § 50.3 Contents of offering literature for a particular specified production filed pursuant to section 50.1(n)(1) of this Part in connection with an offer to fund a particular specified production

(a) There shall be set forth on the outside front cover page the following:

(1) a statement in capital letters printed in boldface roman type at least as large as 10-point modern type and at least two points leaded (or if typed, with underlining):

THE ATTORNEY GENERAL OF THE STATE OF NEW YORK DOES NOT PASS ON THE MERITS OF THIS OFFERING.

There shall be no other reference to filing with the Attorney General or the Department of Law anywhere in the offering literature:

(2) the name or proposed name of the theatrical production company and its proposed purpose;

(3) the name of the issuer or other offeror;

(4) the maximum and minimum amount of the offering;

(5) the amount of overcall, if any;

(6) the proposed site of the production, such as Broadway, off-Broadway, bus and truck, regional theatre; and the seating capacity of the theatre for which the production is geared;

(7) if a portion of the funds is to be used to pay for the costs of a "workshop" or other developmental production, this fact must be disclosed immediately after the proposed site of the production, in a box which shall contain the following or substantially similar language:

$__ of the total amount to be raised pursuant to this offering will be used to pay for the costs of a "workshop" production (if other form of developmental production, so state).Depending upon the outcome of that venture, there is a possibility that a subsequent full-scale production may never take place. Investors who authorize the use of their contributions prior to the completion of the offering, in particular, should note that their contributions may have been expended for the "workshop" production and may not be returned to them even if the production which is the subject of this offer is never presented.

If the "workshop" or other developmental production has already been produced, the second sentence of the legend, above, may be deleted and the body of the offering literature shall include the information required by section 50.3(d)(25) of this Part.

(8) the date of the offering literature (leave blank until notified of acceptance for filing by Department of Law), followed by a statement that the offering literature may not be used for a period of more than nine months thereafter. Such statement shall not eliminate the need to amend the offering literature during said nine-month period as provided herein.

(b) Table of contents.

Immediately following the cover page, there shall be included a table of contents showing the location in the offering literature of the information required to be included pursuant to this section.

There shall be set forth in the forepart of the offering literature, under an appropriate caption, a carefully organized series of short, concise paragraphs summarizing the principal factors that make the offering speculative or one of high risk. Included shall be a paragraph containing the following or substantially similar language: The issuer (or other offeror) may abandon this venture at any time for any reason whatsoever. If such abandonment occurs after all the interests offered hereunder have been purchased and before the opening of any production financed by the company, the investors must be prepared for the loss of all or substantially all of the amount of their investment.

(d) Body.

Where applicable, the following facts should be set forth with respect to the proposed or contemplated production:

(1) The nature of the production, i.e., drama, comedy, musical, revue. A brief description of the plot is not required but may be set forth if desired.

(2) The form of business organization of the theatrical production company.

(3) The principal address of the theatrical production company.

(4) The date or proposed date of the formation of the theatrical production company (if the form of business organization is a limited partnership, whether it will be formed before it is fully subscribed or upon completion of the offering); the date or proposed date of the production.

(5) The type of investment unit being offered, i.e., limited partnership, corporate stock, promissory note; the minimum amount of each investment unit; the maximum amount of capital being raised and the minimum amount of capital that must be raised to complete the offering, which may be no less than 75 percent of the maximum amount of capital that may be raised, including any overcall.

(6) The time when subscriptions are due and payable and the amount and terms of the overcall, if any. In the event additional funds are required for the business of the theatrical production company above the amount being offered, including any overcall, set forth the responsibility, if any, on the part of the producers to make such funds available.

(7) The names and residence addresses of the producers and a short, concise, factual description of their relevant background and theatrical business experience for the past five years. Such description should be used to aid the investor in evaluating the relevance of the producer's experience to the present undertaking. For example, if a Broadway production is contemplated, Broadway experience or the lack of it should be cited. The use of adjectives and undefined terms should be avoided. If prior productions are cited, provide data regarding the return to investors in said productions. If any of the producers are partnerships or corporations, the names and residence addresses of all principals and a short, concise, factual description of their relevant background and theatrical business experience for the past five years. If the producing corporation is owned or controlled by another corporation, the above stated information is required for such corporation or any other corporation ultimately in control of the producer. Additionally, where the producer is a corporation owned or controlled by another corporation, state who will control the management and affairs of the theatrical production company. Identify any executive producer or individual with a similar title and state what his functions will be.

(8) A brief description of all contracts or agreements entered into by the theatrical production company, or which it is intended will be assigned to or acquired by the theatrical production company. This description should include the name of the party or entity with which the contract has been made, the nature of the transaction or services involved and the terms thereof. Creative personnel who have committed themselves to the production may be described briefly and factually with respect to their background as it is relevant to the function they will perform. With respect to any agreement respecting the right to produce, develop or invest in the theatrical production, include also the expiration date, provisions for the extension of such date, a description of the subsidiary rights and disclose any disputes or claims regarding the production rights. In the event that a theatre owner, an electrical or scenery contractor or other such contractor has committed himself to an investment in the theatrical production company, the possible lack of competition resulting therefrom, with regard to such services, should be disclosed. In the event a series of contracts has been entered into of a similar nature with such parties as players who will not be in a starring role, musicians, etc., such contracts may be summarized in one category.

(9) Use of proceeds of the offering, including an itemization in reasonable detail of proposed preproduction expenses. The budget should reflect that there will be sufficient funds available to produce the play if the minimum capitalization is raised. Sufficient funds should be provided for the certification of financial reports by an independent public accountant. If any of the proceeds of the offering are to be used to pay for travel, lodging, meals or any other expenses of the producer or any other individual, the amount, the nature and the reasons for such proposed expenditures must be fully set forth. If the production is expected to open "out of town," the budget may include a total allocation for the per diem expenditures of production personnel. Itemize and state the total amount of all expenses that have currently been advanced, indicating the payors of such advance, the time and conditions of repayment thereof, and how such funds were used. Fully set forth the reasons for any expenditure of funds, including expenditures for travel, lodging and meals and identify the individuals who incurred such expenses. Such expenditures must be for the particular production which is the subject of the offering.

(10) The date on which all funds must be returned to investors in the event the offering is not completed, which date may not be more than 18 months from the commencement of the offering. State that all monies raised by the offering shall be held in a special bank account in trust until actually employed for preproduction or production purposes of the particular theatrical production company or returned to the investors therein. The name and address of the bank in which the account is located must be specified.

(11) If investors may authorize the use of their contribution for preproduction or production purposes prior to the completion of the offering or prior to the time when refunds to investors may be required, set forth a description of the risks to the investor resulting from such authorization and use, including:

(i) that if insufficient funds are raised to complete the offering, or if the offering is not completed for any other reason, the investors may lose part or all of their contribution without a production having been presented;

(ii) that such investors who do not waive their right to refund, must rely solely on the ability of the producer to reimburse them for the contributions so expended which might exceed the producer's assets, in which case such investors might never be reimbursed;

State that an investor obtains no advantage, unless such advantage has been negotiated with the general partner, but incurs a distinct risk by authorizing the use of his contribution prior to the completion of the offering. No authorization for the use of contributions prior to the completion of the offering shall be effective unless and until the signature of the investor has been obtained on the separate signature page of the investment agreement as set forth in section 50.2(a)(4) of this Part. If any contributions may be so used, set forth whether or not the producer is personally obligated to return funds which have been expended in the event the offering is abandoned. The conditions under which the offering will be deemed abandoned shall be indicated.

(12) If advance interests for the contribution of front money have been or are to be offered upon different terms than investment units, such advance interests should be described. The description should include the total dollar amount of all such advance interests which have been or are to be offered; whether such interests are to be repaid out of the proceeds of the offering; whether such interests may be converted into investment units and the terms and conditions of such convertibility; the extent, if any, by which purchasers of advance interests will receive a portion of the producer's share of net profits; whether the proceeds of such interests may be expended for preproduction purposes prior to the completion of the offering; the personal obligation, if any, on the part of the producers to return any proceeds which have been so expended in the event the offering is abandoned; and all other material terms of the advance interests being offered. With respect to advance interests previously sold, state the total amount of funds obtained through such sales and how such funds were used.

(13) Set forth the plan of distribution of the syndication units being offered, including the names and addresses of underwriters or sales distributors, if any; selling or underwriting commissions, if any; and the source of payment of all such commissions.

(14) State the conditions upon which original investments are to be returned to investors.

(15)

(i) State the conditions upon which net profits of the venture are to be distributed and at what intervals such distributions are to be made. Specifically state the share of such profits to be distributed to investors and the share to the producer or producers. State the method by which the computation of the amount of net profits available for distribution is to be determined. If, at the date of filing the offering literature with the Department of Law, there is an agreement to make payments based on a percentage of net profits, refer to the percentage of net profits which will remain for distribution to the investors after the deduction of such payments as "adjusted net profits" and explain what percentage of net profits this represents. For example, if an actor in a starring role is to receive payments equaling 10 percent of the net profits, explain that the investors will share in a percentage of the "adjusted net profits" and that such "adjusted net profits" are 90 percent of the net profits. This disclosure must be made in connection with each reference to the distribution of profits. Whether or not there are any present agreements to make such payments, if the producer has reserved the right to make payments calculated as a percentage of net profits, state that the producer has the right to reduce the amount of the funds available for distribution to investors by making arrangements providing for payments based on a percentage of net profits and state the maximum percentage by which the funds may be reduced.

(ii) Define all terms which will determine adjusted net profits, such as gross receipts, running expenses, other.

(iii) State the potential gross weekly box office receipts and set forth all persons, by name or function, who are to receive a percentage of the gross receipts and the total percentage of the gross receipts so allocated. On the basis of such total percentage, and other fixed expenditures, set forth the weekly fixed operating costs. Using such figures, state how long the show would have to run before net profits can accrue. If the producer has reserved the right to make payments calculated as a percentage of gross box office receipts in addition to those specifically set forth in the offering literature, state that the producer has such right and that such payments would further increase the amount of time the show would have to run before net profits can accrue. If the producers have the right to accumulate funds for any purpose prior to making distributions of either return of contributions or share of net profits, set forth the purposes for which such accumulation may be made.

(16) If the offeror or other issuer or any other person is either obligated to or may supply additional funds necessary to the theatrical production company, or to the theatrical production over the amount being offered (including overcall), set forth whether such additional investment is to receive any priority in distributions over that of the original investors.

(17) State the extent to which the share of losses of the theatrical production company is to be borne by the investors and by the producers.

(18)

(i) Set forth the circumstances, if any, under which investors are obligated to repay profits which have been distributed to them or capital which has been previously returned to them. If such obligation exists, indicate if such repayment is to be made with interest.

(ii) State the extent, if any, to which investors are personally liable for debts of the theatrical production company in excess of their capital contributions. If the venture is to be a limited partnership and if investors' funds are to be used for preproduction or production purposes prior to the time when the legal requirement for the formation of a limited partnership has been met, a specific statement should be made as to whether investors whose funds are so used may be personally liable for all debts of the venture occurring prior to the formation of the limited partnership.

(19) State the time at which the assets of the theatrical production company are to be liquidated and set forth the method of distribution of all proceeds of such liquidation.

(20) In the event the investors' rights to receive either return of contributions or share of net profits resulting from any interest which the theatrical production company retains in the play (including all subsidiary rights) are to be terminated at any time, this must be clearly stated.

(21)

(i) State whether the issuer or other offeror shall have sole control over the management and affairs of the theatrical production company. Set forth whether the issuer or other offeror, his affiliates, relatives or entities in which he has any interest, will engage in transactions with the theatrical production company or any production or supply goods and services to it. Such disclosure should include, but not necessarily be limited to, such transactions as agreements to pay or payments of management or producers' fees; the furnishing of office facilities, commonly referred to as "cash office charge"; the supplying of theatre facilities, electrical equipment, drapes and props; transactions in regard to the publication or sale of souvenir programs or show albums, as well as the furnishing of personal services such as those of stage director, press agent, etc.; and the purchasing or leasing from the production company of subsidiary rights in the play or road and second company rights.

(ii) The furnishing of office facilities by the issuer or other offeror or any other person may be charged to the theatrical production company as a weekly lump sum under the heading "cash office charge" for a period commencing two weeks prior to rehearsals and ending two weeks after the close of the theatrical production; provided, however, that only one lump sum fee for maintaining an office may be charged. Additional office payments may be charged to the production only if set forth in the proposed budget in a specific line in the budget which identifies the particular purpose for which the funds will be used.

(iii) In the event that the producer, his affiliates, relatives, or entities in which he has an interest have an intent to enter into any transactions referred to in subparagraph (i) of this paragraph, such intention should be specifically stated and the terms upon which the transaction is to be made should be set forth. Where no intention has been formed as to whether the producer will engage in such transactions, there should be a statement as to the producer's right to enter into such transactions with the theatrical production company and a statement that no intention has yet been formed as to whether or not such transactions shall actually take place, and a further statement of whether or not the terms of such transaction shall be reasonable and reflect prevailing industry norms. There need not be a statement as to the producer's right to acquire subsidiary, road or second company rights in the play if all investors are to be offered an opportunity to participate in such acquisition on terms at least as favorable and in the same proportionate interest as they have in the theatrical production company.

(22) The conditions upon which the venture is to be terminated should be set forth. If the venture is to terminate upon conditions such as the death, insanity or retirement of any of the producers, there should be a statement regarding the rights and obligations of the parties remaining.

(23)

(i) State that the theatrical production company will comply with the financial reporting requirements set forth in subdivision 2 of section 23.03 of article 23 of the Arts and Cultural Affairs Law, and accounting regulations issued by the Attorney General.

(ii) If the producer may apply for an accounting exemption pursuant to section 51.6 of this Title, theatrical accounting regulations, it should be stated that annual financial statements may not be certified by independent public accountants. The fact that the financial statements of the theatrical production company may not be certified should also be stated in the risk factor section of the offering literature.

(24) State whether any person, corporation, partnership or other entity listed in paragraph (7) of this subdivision has been convicted of any crime under any State or Federal law, signed any consent decrees or had adverse final judgments involving the sale of securities or the subject matter of article 23 or its predecessor, article 26-A of the General Business Law, or the regulations thereunder. Explain fully.

(25) If a portion of the funds raised by the offering is to be used to pay the costs of a "workshop" or other developmental production which has already taken place, describe the prior production (including where and when it took place) and explain why and to whom such sums must be paid. Also, include a statement of income and expenditures of the prior production.

(26) Other information material to the offering.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 50.5 Amended offering literature

(a) Offering literature and investment agreements filed pursuant to section 50.1(n) of this Part may be used for a period of not more than nine months from the date of the original submission for filing with the Department of Law. After nine months, the offering may be continued by the submission for filing of amended offering literature setting forth all material information relating to the offering at such time. Offering literature filed with the Securities and Exchange Commission as an amendment shall be submitted for filing to the Department of Law prior to its use in New York State.

(b) In the event of any material change in the information contained in the offering literature, as originally submitted or amended, which occurs prior to the completion of the offering, the offeror or other issuer of syndication interests in a theatrical production company shall file with the Department of Law and distribute to prospective purchasers amended offering literature disclosing such material changes. In the event of any material change in the terms of the offer or the information contained in the offering literature which requires the filing of amended offering literature, an offer by letter shall be made to each investor to rescind his investment in the theatrical production company, provided, however, that an offer of rescission shall not be required when the issuer or other offeror has, prior to the completion of the offering, acquired an interest in a theatrical production or any elements thereof for the benefit of the theatrical production company where such acquisition is consistent with the business plan of the theatrical production company as set forth in the offering literature pursuant to section 50.4 of this Part.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 50.6 Method of filing offering literature other than that filed with the Securities and Exchange Commission, as referred to in section 50.1(m) of this Part

(a) Offering literature, other than that filed with the Securities and Exchange Commission, which is required to be filed with the Department of Law pursuant to section 50.1(n) and (o) of this Part and article 23 of the Arts and Cultural Affairs Law, shall be filed with the Department of Law at its office in the City of New York, as follows:

(1) A filing pursuant to section 50.1(n)(1) of this Part may only be made by filing two copies of the offering circular or prospectus or private placement memorandum, two copies of the investment agreement and other documents required by section 50.7 of this Part prior to the offering of the syndication interests.

(2) A filing made pursuant to section 50.1(n)(2) of this Part may only be made by filing two copies of the investment agreement and other documents required by section 50.7 of this Part prior to the offering of the syndication interests.

(3) A filing made pursuant to section 50.1(o) of this Part may only be made as follows:

(i) The Department of Law must be notified, on form ATS-4 by the issuer or other offeror of his intent to proceed by means of waivers within 30 days after the initial receipt of monies other than front money from an investor, unless the waivers have been filed prior to such time.

(ii) All original waivers, two copies of the investment agreement and one copy of the certificate of limited partnership (if this form is used) shall be filed with the Department of Law, not later than the first public performance of the theatrical production or, in the case of an offering made pursuant to section 50.4 of this Part, within seven days of the completion of the minimum offering together with one copy of all contracts and options with authors or a statement by the issuer or other offeror or the attorney for the theatrical production company that, with respect to each theatrical production to be produced, developed or invested in by such company, the issuer or other offeror has secured or will secure the rights to the production or an option therefor from the authors. At the time of the filing, the producers shall represent that they have no knowledge or belief that the offering was made to more than 35 offerees, and that the producers do not know of any investors represented by nominees other than those listed on the waivers as submitted.

(b)

(1) All funds derived from the sale of such theatrical syndication interests, with the exception of funds raised pursuant to section 50.1(o) of this Part, shall be held in trust in a special bank account until the Attorney General has issued to the issuer or other offeror a letter stating that the offering has been permitted to be filed; and the Attorney General, not later than 15 days after such submission, shall issue such a letter or, in the alternative, a notification in writing indicating deficiencies therein. If the Attorney General has issued such a notification in writing indicating deficiencies, the issuer or other offeror shall immediately return to the investors all funds derived from such sale or, in the alternative, shall retain such funds in trust for a period not to exceed 30 days from receipt of such notification. Within said 30-day period, the issuer or other offeror shall submit to the Department of Law revised offering literature. If, within said 30-day period, the Attorney General issues a letter stating that the offering has been permitted to be filed, the issuer or other offeror shall distribute to each investor the revised offering literature together with a written offer to rescind the original investment, which shall be substantially in the form of ATS-7. If, at the expiration of said 30-day period, the Attorney General has not issued a letter stating that the offering has been permitted to be filed, then all funds held in trust shall be returned immediately to the investors.

(2) A proposed draft of a contemplated offering may be submitted to the Department of Law solely for the purpose of receiving comments thereon, prior to the formal submission of the offering literature pursuant to this Part and article 23 of the Arts and Cultural Affairs Law.

(c) An amendment to an offering pursuant to section 50.5 of this Part shall be made by filing one redlined copy of each amended document in accordance with the provisions of section 50.5 of this Part. In the event of any material change in the terms of the offer or the information contained in the offering literature, as originally submitted or amended, which occurs prior to the completion of the offering, the amended offering literature shall state that an offer to rescind the original investment in the particular production will be made to each person who invested prior to the amendment. A copy of a proposed letter pursuant to which the offer of rescission will be made and the names and addresses of all persons who invested prior to the amendment shall be submitted to the Department of Law at the time of the submission of the amended offering literature. If no contributions were received prior to the amendment, the issuer or other offeror may represent that fact in a letter to the Department of Law, which shall be submitted to the Department of Law at the time of the submission of the amended offering literature.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 50.7 Exhibits and documents to be submitted to the Department of Law

Upon submission to the Department of Law pursuant to section 50.1(n) of this Part, the issuer or other offeror should submit all relevant documents relating to the offering, including the following, where applicable:

(a) partnership agreements, certificates of limited partnership and all amendments thereto, certificates of incorporation and bylaws or any other pertinent documents relating to the form of business organization;

(b) a specimen of the investment unit being offered, unless such investment unit is a copy of the business agreement under which the venture is to operate;

(d) all documents relating to the underwriting, distribution or sale of syndication interests;

(e) agreements entered into by the theatrical production company or which it is intended will be assigned to or acquired by the theatrical production company, including but not limited to investment agreements; contracts with co-producers, developers, regional theatres; production contracts with authors and extensions or modifications thereof; contracts with actors having starring roles, directors, choreographers, press agents, company managers, advertising agencies, costume and scenic designers, suppliers, theatres, etc.;

(f) agreements relating to the disposition of any subsidiary rights;

(g) not later than 30 days after the total capitalization has been raised, a list of all shareholders, general partners, limited partners and joint venturers. Such list shall include the name and address, the amount invested and the date the investment was made for each person so listed. If the theatrical production company is a limited partnership, a copy of the certificate of limited partnership may be submitted in lieu of this list; and

(h) in connection with an offer pursuant to section 50.4 of this Part a notification to the Department of Law setting forth the nature of each production produced, developed or invested in by the theatrical production company where such production was not specifically named in the original filing with the Department of Law. Such notification shall be submitted not later than 50 days after the initial expenditure of funds for the named production.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 50.8 Abandonment or withdrawal

The producer must file with the Department of Law, within four weeks of the abandonment or the withdrawal of any offering, form ATS-2 setting forth the information required.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 51 Theatrical Accounting

N.Y. Comp. Codes R. & Regs. Tit. 13 § 51.1 Definitions

(a) Front money shall have the same definition as that contained in section 50.1(i) of this Title.

(b) Opening shall mean the initial performance of the original production and shall not include any tryout or preview performance of such production or workshop.

(c) Theatrical production and theatrical production company shall have the same definitions as contained in article 23 of the Arts and Cultural Affairs Law.

(d) Producer or other principal shall mean and include every person or firm directly or indirectly controlling the business affairs or operations of a theatrical production company, as defined herein.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 51.2 Records to be kept by an issuer or other offeror of a theatrical production company

(a) Permanent type books and records of account shall be kept by the issuer or other offeror of each theatrical production company, with entries in ink on paper of quality suitable for maintaining a permanent record. Entries in pencil, work sheets and similar entries and stationery, temporary in nature, shall not be deemed adequate as permanent type books and records of account. Nothing herein shall prohibit the use of recordkeeping automation such as entries made by punched cards.

(b) The books and records of a theatrical production company are to be organized in such a way as to fully record and clearly reflect all financial transactions, and with a view to assembling information and data appropriate for financial reports to be rendered. The following constitutes the minimum basic requirement for permanent type books of account to be kept (which may be combined in one volume):

(1) cash receipts book;

(2) cash disbursement book;

(3) general journal;

(4) general ledger (which should include in accounts or columns: production cost distribution; weekly running income and expense distribution; and closing costs distribution);

(5) payroll records;

(6) house seat record book. (This shall record the disposition of house seats and passes allocated to the theatrical production company. It shall clearly indicate on a daily basis the number of house seats and passes for each performance, location and box office price thereof, the persons in the theatrical production company who are entitled to such seats and the disposition by them of these seats as recorded on receipt slips signed by them. If any monies are received in excess of the box office prices for such tickets by any person, such receipt should be set forth as well as a statement as to disposition of such proceeds. This record shall further indicate the location and dates of any house seats or passes which are not used by, or at the direction of, anyone connected with the theatrical production company and shall indicate whether such seats have been sold or made available for sale at the box office, through theatre ticket brokers or otherwise as well as the price, if any, at which such tickets were actually sold and the disposition of the proceeds); and

(7) such other permanent and subsidiary books and records as are necessary to permit the preparation of true, accurate and complete financial reports.

(c) Books and records shall be kept from the start of all financial transactions pertaining to the theatrical production company, beginning with the offering of interests in a theatrical production company, and not merely from the initial expenditure of investors' funds. Records shall be kept regarding the expenditure of the funds of any principal or front money investors when such funds are to be reimbursed out of the proceeds of the offering or credited as investment units. Funds received from investors as capital contributions should be entered in the books when received by the theatrical production company or the escrowee, on an individual basis including the entry of the investor's name and address.

(d) The issuer or other offeror of each theatrical production company shall maintain and preserve or cause to be maintained and preserved in good order all permanent books of account and all subsidiary records and documents (including, but not necessarily consisting exclusively of, bank statements, cancelled checks, bank deposit book or duplicate deposit slips, and other documents relating to the bank statements, theatre settlement statements, vouchers, invoices, bills, receipts, sales slips, memoranda, schedules, summaries, contracts, instruments, tax report copies, correspondence, notes, letters, excerpts and any other pertinent and applicable materials) that pertain to, explain and/or support all transactions and all entries made or that should have been made.

(e) The minimum basic books of account and subsidiary records and documents as described in subdivisions (b) and (d) of this section shall be maintained and preserved by the issuer or other offeror in good order for a period of not less than two years after the last public performance of each theatrical production produced, developed or invested in by the theatrical production company or the date at which the production company has lost its right to produce, develop or invest in the play or has terminated, dissolved or otherwise formally indicated abandonment of intent to produce, develop or invest in such play, whichever is earlier. Irrespective of the above, post-closing records accounting for subsidiary rights shall be accurately maintained and preserved for a period of not less than two years after the timely making thereof.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 51.3 Financial reports to be rendered by a theatrical production company

The financial reports listed below are to be prepared in the manner set forth in the applicable portion of section 51.5 of this Part and are to be submitted when due to all investors, and, except where otherwise noted, to the Department of Law and where the report is unaudited, accompanied by a letter of transmittal subscribed to by the issuer or other offeror as set forth in section 51.4 of this Part.

(a) A pre-opening report consisting of a balance sheet covering each six-month period (or portion thereof) occurring prior to the first paid performance of any production produced, developed or invested in by the theatrical production company. Each such report shall also include a schedule of production costs incurred during the period and, if applicable, a cumulative schedule of total production costs. The first such report shall be due six months and 30 days after the initial expenditure of investors' funds for any such production other than the funds of any principal or front money investors (but shall include such latter transactions) or not later than 30 days after the close of the period covered thereby. This subdivision shall only be applicable to periods not covered by a previously issued annual report, as defined hereafter, or an annual report required to be issued by this Part, which covers a period ending with the close of the applicable six-month period.

(b) A monthly report consisting of a summary balance sheet (or financial summary or analysis) and profit and loss statement for each theatrical production produced, developed or invested in by the theatrical production company covering each monthly period (or portion thereof) beginning with the date of the first paid tryout performance (or opening if there is none) of any such production and continuing until the last public performance of the original production. Such monthly report is due not later than 30 days after the close of the period covered thereby. The monthly report shall be submitted to all investors but need not be submitted to the Department of Law. (Until the capital is recouped, the monthly reports should describe the excess of income over expense as amounts recovered for the period, and not as profit.)

(c) An annual report consisting of a balance sheet (or similar financial summary or analysis) and profit and loss statement for each 12-month period (or portion thereof), occurring prior to the last public performance of any production produced, developed or invested in by the theatrical production company. All annual reports covering a period ending prior to the opening of any such production or in which the opening occurred shall also include a schedule of production costs incurred during the period, and if applicable, a cumulative statement of total production costs. The first annual report shall be due four months after the close of 12 months following initial expenditure of investors' funds (other than the funds of any principal or front money investors) in any such production, but shall include all previous financial transactions. If the production closes prior to the end of the 12-month period after the initial expenditure of investors' funds, then the first report is due four months after the last public performance. Each succeeding annual report is due four months after the close of the period covered thereby. The statement of production costs should show comparison with the budgeted amount, with large variations explained. Such annual reports shall continue to be made for each year in which the theatrical production company has had any earnings or expenditures or other financial transactions of any nature and shall include in addition to a balance sheet (or financial summary or analysis) a statement of earnings and expenditures as well as a description of any financial transactions such as settlement of accounts, loans by the theatrical production company, and any other transactions not reflected in the statement of earnings and expenditures. The issuer or other offeror's accountant may obtain a 30-day extension in filing the annual report by advising the Department of Law in writing, prior to the due date of the annual report, that such report will be submitted no later than 30 days following the original due date.

(d) In those cases where the proceeds of the theatrical production company, or any part thereof, are used to develop or invest in a production or productions not under the direct control of the issuer or other offeror, such issuer or other offeror shall require, through a legally enforceable contract, that the above reports be provided as set forth in this Part.

(e) With respect to a theatrical production company formed to produce, develop or invest in more than one specified or nonspecified theatrical production, in addition to the above reports, an annual report of the theatrical production company, consisting of a balance sheet and profit and loss statement for each fiscal year of the theatrical production company.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 51.4 Letter of transmittal by issuer or other offeror (to be submitted with unaudited reports)

All reports to be prepared for the theatrical production company must be accompanied by a letter of transmittal on the letterhead of either the theatrical production company or the issuer or other offeror and shall be subscribed to by the issuer or other offeror. The letter shall include:

(a) what statements have been prepared;

(b) inclusive dates of the periods covered;

(d) a statement by the issuer or other offeror that the accompanying financial report has been personally examined by him or them and that such report fairly presents the financial and operating information of productions actually produced by them, and is accurate and complete. If the theatrical production company uses its proceeds to develop or invest in productions it does not directly control, then the letter required by this section shall be subscribed to by the producer of such production; and

(e) a representation that the accompanying financial report has been submitted to all investors.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 51.5 Contents of financial reports

All financial reports are to be prepared in the manner set forth below except that areas not specifically covered by this section shall be governed by generally accepted accounting principles consistently applied.

(a) Balance sheet (or similar financial statement or analysis) prepared as part of the pre-opening report and the annual report shall contain the following information:

(1) Capital section.

(i) The total original capitalization should be stated, with a separate schedule, if necessary, indicating any amounts yet unpaid and the persons from whom such amounts are due.

(ii) Capital contributions in the form of service or property should be so designated, with a supplemental schedule indicating the service or property that has or will be contributed if the information is not contained on the statement.

(iii) The total overcall, if any, should be stated, with a separate schedule, if the information is not contained on the statement, indicating any amounts yet unpaid and the persons from whom such amounts are due.

(iv) Capital contributions in excess of the original capitalization and overcall should be set forth and the source thereof stated. If necessary, a separate schedule should be used.

(v) Distributions constituting return of capital should be set forth. If preferential distributions were made, identify the person to whom made.

(vi) Distributions of profit should be set forth. If preferential distributions were made, identify the person to whom made.

(vii) Both current and accumulated charges to capital, including production cost, running losses, closing costs and similar items of cost (properly classified).

(viii) Both current and accumulated credits to capital, including profits from run or other income (properly classified).

(ix) Capital reserves and other capital items (specify); supply appropriate descriptive detail.

(2) Assets section.

(i) Cash on hand and in banks (segregate amount for sinking fund reserve).

(ii) Loans and accounts receivable, including identification of persons or entities from whom amounts are due (attach schedule, if necessary).

(iii) Amounts due from any of the principals or producers, and/or his spouse, relatives and/or entities owned or controlled by them or in which they have any financial interests should be separately shown, apart from loans and accounts receivable.

(iv) Prepaid items, with explanations where appropriate concerning advances which may have no recoverable value under certain circumstances. (For example, author's advances to be applied against author's royalties, but not returnable if insufficient royalties are earned.)

(v) Bonds and deposit guarantees; each such bond and deposit should be shown separately. If conditional in any way, appropriate footnotes should be supplied.

(vi) Any amounts currently due to the theatrical production company for payments made in excess of or in advance of contractual requirements. Unless set forth in the statement, state in a separate schedule the person or entity to whom payment was made, the nature of the transactions and the amount of such excess payment.

(vii) Any other assets; specify and supply appropriate descriptive detail.

(3) Liabilities section.

(i) Loans and accounts payable are to include a list of each creditor and the amounts payable thereto.

(ii) Liabilities and reserves for taxes (e.g., New York City commercial rent tax, N.Y.S. unincorporated business tax).

(iii) Accruals, as appropriate.

(iv) Any amounts payable to principals and producer or persons related to them or entities owned or controlled by them or in which they have any financial interest. Such payments should be set forth separately from other loans and accounts payable and the nature of the transaction giving rise to such amount payable should be set forth.

(v) Liabilities for royalties.

(vi) Any other liabilities; specify and supply appropriate descriptive detail.

The difference between total assets and total liabilities must agree with the balance in the capital account section of the balance sheet.

(b) The balance sheet prepared for purposes of the monthly report shall be prepared as set forth under subdivision (a) of this section except that separate or supplemental schedules required in subdivision (a) of this section need not be used; names of individual investors from whom original capital contributions or overcall is due need not be stated; the names of individual debtors and creditors need not be given; prepaid items may be set forth without further explanation; bonds and deposits may be shown as a total sum without further breakdown. However, all transactions with producers or other principals or related parties or entities in which they have a financial interest must be specifically noted by footnote or parenthetical remark.

(1) The pre-opening report and annual report covering each period ending prior to the opening, or in which the opening occurred, shall include a production cost schedule. These schedules may be shown on one statement in columnar form and shall encompass the following categories:

(i) Sets and scenery

Designing

Construction

Other materials and cost

(ii) Properties, purchases and rentals

(iii) Costumes and wardrobe

Designing

Costs to make and acquire

(iv) Sound, lighting and electrical equipment

Purchases and rentals

(v) Fees to directors (specify)

(vi) Music copying and arranging, if any

(vii) Rehearsal costs

Salaries by categories (e.g., cast, crew, stage managers, stagehands, assistants, etc.)

Scripts and parts

(viii) Publicity

Press agent--salaries

Press agent--expenses

Photos, signs, printing

Advertising

(ix) Personnel transportation

(x) Personnel subsistence and expense

(xi) Transportation and handling of property

Hauling and carting; take in; set up and hang

(xii) Net loss (or gain) on tryout or preview performances (annex a statement covering income and expenses regarding these performances prepared in the same manner as the profit and loss statement used in monthly reports. See subdivision [d] of this section.)

(xiii) Other production costs (specify)

(xiv) General and administrative expenses

Office expense or charge

Insurance

Legal

Accounting

Payroll taxes (if not included in cost of salaries above)

Welfare and pension fund contributions (if not included in cost of salaries above)

Salaries (if not included above--such as general and company manager)

Other (specify).

(2) In general, for classifications not specifically mentioned above provide as much detail as possible. As a minimum, create a separate category for any individual item or homogeneous class of expenses not specifically mentioned above which amounts to one percent or more of the total production costs. The categories listed are a minimum. As long as there is no loss in detail, the categories do not necessarily have to be grouped in the manner set forth above.

(3) The production cost schedule and cumulative production cost schedule must expressly state the amount involved and the name of the recipient for any item of cost whatsoever, where such item or part thereof was paid to, or liability was incurred on behalf of, the producer or other principal, parties related to them or any entity in which they have a financial interest. This may be accomplished by appropriate footnote or parenthetical remark. This requirement shall include disclosure of any reimbursement for expenses previously advanced by such person or entity.

(d) Profit and loss statement.

(1) During the run of the theatrical production. The profit and loss statement required in the monthly report and the portion of the annual report covering the period after the initial paid performance, shall be prepared in the following manner:

(i) The statement of income shall include, by separate classification, all income received by the theatrical production company whether from box office receipts; proceeds from the sale of tickets in excess of box office prices, advertising rebates, subsidiary rights and other income of any nature whatever.

(ii) As a minimum, the following categories of expense should be presented insofar as any such expense was actually incurred:

(a) Salaries

Cast

Stage managers

Musicians, if any

Company crew and department heads

Stagehands

Wardrobe and dressers

Press agent

Company and general manager

Other (specify)

(b) Royalties

Producer

Director (specify whether general, lighting, etc.)

Choreographer

Designers (specify--scenery, costumes, etc.)

Arranger

Composer

Other payments (specify purpose) based on a percentage of gross admissions or profits

Newspapers

Signs, printing

Press agent's expenses

Subscription, circularizing, displays and photos

Others (specify)

(d) Departmental and rentals

Electrical

Carpentry

Properties

Costume and wardrobe

Rental (specify)

Other (specify)

(e) General and administrative expenses

Office charge or allowance

Insurance

Accounting

Legal

Dues

Payroll taxes

Pension and welfare fund contributions

Gross business tax (N.Y.C. excise tax)

Commercial rent tax (N.Y.C. occupancy tax)

Other (specify)

(f) Transportation expenses

Personnel transportation

Personnel subsistence (hotel and living)

Transportation and handling of property

Other (specify)

(2) In preparation of these reports, income and expenses for the monthly reports are to be set forth on the basis of each weekly period or portion thereof and should include a statement as to the number of performances in each week. The profit and loss statement for the annual report may present income and expenses on an annual basis. In all profit and loss statements if any party involved in a transaction is the producer, or other principal or any party related thereto, or an entity in which they have a financial interest, the details must be stated by appropriate footnote or parenthetical remark.

(e) The financial report prepared immediately after the close of the theatrical production shall contain a schedule of all closing costs.

(f) Statement of earnings and expenditures. The statement of earnings and expenditures of the theatrical production company to be used in the reports following the last public performance of each theatrical production produced, developed or invested in by the theatrical production company shall contain the following:

(1) An itemization of all earnings of the theatrical production company from subsidiary rights or from any other source, including an identification of each such source, as well as a cumulative statement thereof.

(2) An itemization of all expenditures of the theatrical production company. If any payment was made to the issuer or other offeror, other principal, or any party related thereto, or an entity in which they have any financial interest, this must be so noted.

(3) A description of any other financial transactions engaged in by the theatrical production company which are not included in the listing of earnings and expenditures, e.g., loans by the theatrical production company, settlement of accounts with creditors. Such additional description should include the nature of the transaction, the party involved, and the amount thereof. If the party involved is the issuer or other offeror, other principal or any party related thereto, or an entity in which they have a financial interest, this must be so stated.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 51.6 Exemptions

The Attorney General may, upon written application of the issurer or other offeror of a theatrical production company which produces or develops productions, issue an exemption from the requirement of providing a "certified statement" pursuant to section 23.03 (2) of the Arts and Cultural Affairs Law, for theatrical productions which are to have a total capitalization of less than $250,000 or will offer syndication interests to less than 36 persons. In those cases where all of the proceeds of the production company are used to invest in specified or nonspecified productions, such theatrical production company shall be exempted from filing certified statements provided that it forwards to its investors all the financial reports of the theatrical productions in which it has invested which are required by this Part. However, the Attorney General may require as a condition of granting such exemption that the producer comply with sections 51.2 through 51.5 of this Part. Such application must be made no later than the date upon which the initial report required under this Part is due to be filed.

Part 52 Procedural Regulations Governing Hearings Held Under The New York Theatre Ticket Distribution Act

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.1 Scope of part

This Part shall govern the conduct of hearings held by the Securities Bureau of the Department of Law pursuant to chapter 325, Laws of 1965; the New York Theatre Ticket Distribution Act, and as amended from time to time.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.2 Opportunity to be heard

The Attorney General shall not cancel or suspend the name of any particular individual or individuals from a ticket distributor registration without giving the registrant an opportunity to be heard.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.3 Notice of hearing

The notice of the hearing shall be in writing and shall state:

(a) the date, time and place of the hearing;

(b) the law or laws the registrant is charged with violating and the charge;

(d) that the registrant is entitled to be represented by counsel in the proceeding;

(e) the purpose of the hearing;

(f) that subpoenas will be made available to the registrant to compel the presence and testimony of witnesses at the hearing, upon reasonable written request of the registrant to the hearing officer; and

(g) the effect of the registrant's failure to appear at the hearing.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.4 Service of notice of hearing, orders and other communications

(a) The notice of hearing from the Attorney General shall be duly served if enclosed in a properly postpaid wrapper addressed to the registrant at the address last given in the ticket distribution registration filed by him with the Attorney General and declared as registered mail, return receipt requested, or if such notice addressed to such person is delivered to such address by an employee or agent of the Attorney General. An affidavit by an employee or agent of the Department of Law that such notice has in the regular course of business of the Department of Law been duly dispatched or delivered, in a manner authorized by this section, shall be presumptive evidence of proper service. For the purpose of calculating time of notice, service shall be deemed effected upon the date of delivery to such address. The notice of hearing shall be served upon the registrant at least 15 days prior to the date of the hearing.

(b) Notices, orders and communications from the Attorney General other than the notice of hearing shall be duly served if enclosed in a properly postpaid wrapper addressed to the registrant to be notified or communicated with at the address last given in the ticket distribution registration filed by him with the Attorney General and deposited, as ordinary mail, in a post office, post office box, or mail chute maintained by the United States Government or if delivered as provided in subdivision (a) of this section. An affidavit by an employee or agent of the Department of Law that such notice, order or communication has in the regular course of the business of the Department of Law been duly dispatched or delivered, in a manner authorized by this section, shall be presumptive evidence of proper service. For the purpose of calculating the time of notice, service shall be considered effected upon the date of delivery to such address; provided that, where service is by ordinary mail, service shall be considered effected three days after mailing.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.5 Personal appearance; representation by attorney

(a) Any registrant who intends to avail himself of the opportunity to be heard, shall personally appear on the date set forth in the notice of hearing or any adjourned date and shall be prepared to proceed. Any registrant may be represented at the hearing by an attorney. Such attorney shall notify the Attorney General in writing of his appearance on behalf of the registrant. Thereafter, all further notices, orders and communications from the Department of Law may be served upon such attorney and such service shall be deemed to be service upon the registrant.

(b) Should the registrant fail to appear at the hearing or, having appeared, fail to make his defense, the hearing officer shall hear the evidence given by the Attorney General and shall make his findings and recommendations on the basis of the aforesaid evidence.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.6 Hearing officers; assignment of hearings

Where the Attorney General does not conduct the hearing it shall be conducted by a hearing officer appointed by and directly responsible to the Attorney General. Hearings shall be assigned to a particular hearing officer by the Attorney General or his designee.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.7 Hearings to be public; stenographic record of hearings

Unless otherwise ordered by the Attorney General, in the public interest, suspension and revocation hearings held by the Attorney General shall be open to the public. Stenographic records of hearings shall be made and transcripts thereof may be furnished to any party upon payment to the stenographer of the reasonable cost thereof, as established by the Department of Law.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.8 Application for adjournment

An application for an adjournment shall be made to the hearing officer and shall set forth in detail the grounds therefor. Adjournments may be granted in the discretion of the hearing officer where good cause exists.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.9 Amendment of notice of hearing

The notice of hearing may be amended upon application by the trial examiner to the hearing officer at any time prior to the conclusion of the hearing. If such application is granted, the hearing officer may, in his discretion, grant additional time to the registrant for further preparation.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.10 Conduct of hearing; powers of hearing officer

The hearing officer shall not be bound by common law or statutory rules of evidence or by technical or formal rules of procedure in the conduct of hearings. He shall have authority to administer oaths, issue subpoenas, rule upon offers of evidence and otherwise so regulate the course of the hearings as to preserve fundamental concepts of fairness and to effectuate the purposes and provisions of the Act.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.11 Opportunity to testify and cross-examine; issuance of subpoenas

A registrant shall be afforded reasonable opportunity to present testimony under oath or other evidence relevant and material to the subject matter of the hearing and to cross-examine any witnesses who testify at such hearing. At the reasonable request of a registrant, the hearing officer shall issue subpoenas to compel the attendance of witnesses and the giving of testimony or production of other evidence. Registrant shall effect his own service.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.12 Interrogatories

(a) Where it has been determined that a witness who is outside the State of New York will voluntarily answer interrogatories, the trial examiner may prepare interrogatories to be answered by such witness and the registrant shall have the opportunity to prepare cross-interrogatories as prescribed in this section.

(b) The interrogatories and cross-interrogatories shall be settled and forwarded by the hearing officer to be answered in writing and subscribed to under oath by such witness. Upon application to the Attorney General, the Attorney General may make an order providing for the taking of such witness's oral testimony pursuant to the settled interrogatories by a person designated by the Attorney General. The expenses of taking such testimony shall be borne by the applicant therefor unless the Attorney General provides otherwise.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.13 Oral argument; briefs

Oral arguments shall be made only before the hearing offcer and shall be included in the record of the hearing. Such oral argument may, in the discretion of the hearing officer, be curtailed provided that a party shall be given an opportunity to submit his argument in writing. Briefs as to facts or law shall be received and may be requested to be submitted. The hearing officer may fix the time within which briefs shall be filed. Briefs received subsequent to such time need not be considered.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.14 Hearing officer's report; exceptions to report

Upon the conclusion of a hearing the hearing officer shall, by written memorandum to the Attorney General, set forth his findings and recommendations for action by the Attorney General thereon.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.15 Final determination made by the attorney general

The record of the hearing, together with the memorandum of the hearing officer, shall be transmitted to the Attorney General for final determination and order.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.16 Petition to reopen hearing

After the conclusion of a hearing but prior to the making of an order by the Attorney General, a hearing may, upon petition and in the discretion of the hearing officer, be reopened for the presentation of new evidence. Such petition to reopen the hearing shall state in detail the nature of the new evidence, together with the reasons for the failure to submit such evidence prior to the conclusion of the hearing. The hearing officer may upon his own motion and upon reasonable notice to the parties reopen a hearing for the presentation of additional evidence.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 52.17 Orders of the attorney general

All orders of the Attorney General shall be in writing and shall be filed with the Department of Law, which shall cause certified copies thereof to be served upon the registrant.

Part 53 TICKET DISTRIBUTORS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.1 Registration statement form

The ticket distributor registration statement required under section 23.23 of article 23 of the Arts and Cultural Affairs Law shall be designated form TD-1A and shall be filed with the Bureau of Securities of the Department of Law at 28 Liberty Street, New York, NY 10005 during normal business days of the Department of Law between the hours of 9 a.m. and 5 p.m.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.2 Information required

The TD-1A form for each particular theatre, stadium, garden, arena or other place where theatre or sporting events are held shall set forth:

(a) the name and address of the theatre, stadium, garden, arena or other place where theatre or sporting events are held;

(b) the name and address of the owner, and the operator or operating lessee thereof;

(c) the names, residence addresses, social security numbers, dates of birth and positions of all persons or firms directly or indirectly controlling the business of the owner, operator or operating lessee as principals, officers, directors, trustees, controlling shareholders or managing agents;

(d) the names, residence addresses, social security numbers, dates of birth and positions of all other theatre and sporting events personnel, as defined in article 23 of the Arts and Cultural Affairs Law, including treasurers and assistant treasurers and any other person who has control over the allocations or distributions of tickets of the theatre, stadium, garden, arena or other places named in the form TD-1A.

(e) Further information shall be set forth for any person named on the registration as follows:

(1) if any such person has been convicted of any crime relating to the sale of tickets to theatrical productions or sporting events, or violations of article 23 of the Arts and Cultural Affairs Law, the details of such convictions shall be set forth including the date of the conviction, the court where the conviction was obtained and the crime or violation charged;

(2) if any such person has been the subject of an order of the Attorney General cancelling or suspending his name from a ticket distributor registration or any amendment thereto, pursuant to article 26-A of the General Business Law, or article 23 of the Arts and Cultural Affairs Law, the details of such order shall be set forth including the date of such order, the theatre, stadium, garden or other place involved, whether the name was cancelled or suspended; if the person was suspended, the length of suspension.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.3 Date and signature

The date of the filing of the registration shall be set forth, and the name and position of the person filing the form, and the signature of said person.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.4 Responsibility

It shall be the responsibility of each owner, lessee or operator, manager, treasurer, assistant treasurer, or any other theatre or sporting events personnel, to file the forms TD-1A and TD-2A and maintain his name as reported thereon on a current basis. However, such forms may be filed by others on his behalf.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.5 Reporting of changes

All changes or modifications in the information registered on form TD-1A shall be reported, within 20 days of such change or modification, on form TD-2A.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.6 Updating the form

An updated TD-1A form may be filed at any time, but not less than once every 12 months. When a change of ownership of a theatre, stadium, garden, arena or other place where theatre or sporting events are held occurs, an updated form TD-1A shall be filed. Any form TD-1A's prior to the effective date of this Part shall be deemed in compliance with this Part unless:

(1) a change or modification takes place requiring an amendment, or

(2) more than 12 months have passed since such form has been filed.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.7 Data to be recorded

All theatre and sporting events ticket personnel as defined in this section shall keep or cause to be kept books, records, memoranda of correspondence containing the following information in connection with the sale or distribution of tickets:

(a) the number of tickets sold, allocated or distributed to ticket brokers licensed pursuant to article 25 of the Arts and Cultural Affairs Law of the State of New York or other known brokers, specifying the price and location of each ticket sold, allocated or distributed to each broker and the date and time of performance on each such ticket;

(b) the number of tickets among those allocated and distributed to brokers by theatre and sporting events ticket personnel, returned by each broker to theatre and sporting events ticket personnel, specifying the price of each such returned ticket and the date and time of performance on each such ticket;

(c) the number of tickets sold or distributed as house seats with recipients thereof, or to duly licensed theatre and sporting events party agents representing charitable or eleemosynary organizations, specifying the price and location of each ticket sold, allocated or distributed and the date and time of performance on each such ticket; and

(d) all mail order correspondence, including disposition thereof.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.8 Access to records

All records required to be kept pursuant to this section shall be preserved for a period of not less than one year subsequent to the date of performance to which such record relates, and shall be made available for inspection upon request to duly authorized agents of the Department of Law at the premises of the theatre, stadium, garden, arena or other place where theatre or sporting events are held, or pursuant to a subpoena at the office of the Department of Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 53.9 Advance ticket sales; letter of credit or bond or contract of indemnity in lieu of deposit

The letter of credit, bond or contract of indemnity required under section 23.08(2) of article 23 of the Arts and Cultural Affairs Law shall be in the form available from the New York State Department of State, Division of Licensing Services, 162 Washington Avenue, Albany, NY 12231 and shall be filed with the New York State Department of State, Division of Licensing Services, 162 Washington Avenue, Albany, NY 12231, along with a cover letter setting forth the name and address of the person submitting the letter of credit, bond or contract of indemnity and indicating for whom such letter of credit, bond or contract of indemnity is filed and the purpose for which it is filed. The face amount of the letter of credit, bond or contract of indemnity, together with any escrow deposit, shall be equivalent to the amount of money collected from the advance ticket sales governed by section 23.08. There shall be included in the cover letter accompanying the letter of credit, bond or contract of indemnity, or in a separate statement, a representation by the ticket distributor that any monies collected from advance ticket sales in excess of the amount of the letter of credit, bond or contract of indemnity will be held in an escrow account, as provided by subdivision (l) of 23.08.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Chapter IV INTRASTATE FINANCING

Part 80 INTRASTATE FINANCING

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.2 Contents of prospectus

(a) Cover.

"THE ATTORNEY-GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. N.Y. #__" (THE "N.Y." NUMBER SHALL BE ASSIGNED BY THE ATTORNEY-GENERAL)

There shall be no other reference to filing with the Attorney-General or the Department of Law anywhere in the prospectus.

(2) There shall be set forth on the outside front cover page of every prospectus the following:

(i) Name and address of the issuer.

(ii) Date of incorporation or organization of issuer and type of issuer entity.

(iii) Type of security being offered.

(iv) Price per unit and minimum and maximum unit that will be sold to any individual purchaser.

(v) Total amount of offering.

(vi) Offering expenses.

(vii) Net proceeds to issuer.

(viii) Date of prospectus and date after which it may not be used.

(ix) The name and address of the principal distributor of the securities.

(x) A statement that "these securities are offered only to bona fide residents of New York State."

(3) The aforesaid shall not constitute a limitation on the contents of the front cover where additional material is essential for full and fair disclosure. However, in no event shall the name of any governmental agency appear on said cover without written authorization from said agency.

(b) Body.

The prospectus should be prepared in clear and simple language. It should contain a table of contents and, where applicable, should contain the information set forth below:

(1) "Introductory Statement".

This section should state the name and the address of the issuer, the year in which the issuer was organized, its form of organization, and a brief statement as to the type of business the issuer is engaged in or proposes to engage in.

(2) "Factors to be Considered by Prospective Purchasers".

Examples of subject matter are given below. This section should state in detail necessary for full explanation of the following types of information, where applicable, plus other applicable risk factors:

(i) that the company is newly organized without history or past business;

(ii) that the type of business proposed is competitive and other companies engaged in this business are larger and better established;

(iii) that the offering price has been arbitrarily determined;

(iv) that there is no public market for these securities;

(v) that the experience and background of the promoters is limited;

(vi) that the promoters have criminal records, have been subject to professional disciplinary proceedings, have made assignments for the benefit of creditors, have been adjudicated bankrupts or have been a principal of any entity that made an assignment for benefit of creditors or was adjudicated a bankrupt or involved in a reorganization in bankruptcy;

(vii) that the current assets of the issuer are less than its current liabilities or that the issuer has a capital deficit;

(viii) that in the event less than all of the offered securities are sold, the risks to investors will increase and the amounts available for the intended purposes will decrease;

(ix) that as a result of this offering the promoters will profit at the expense of the investors and the extent of the dilution thereof of investment of the public;

(x) that if the offering is in the nature of a debt security purchasers will be unable to prevent the dissipation of the assets of the company to their detriment, and that no sinking fund is provided for the retirement of the offered securities;

(xi) that control of the company will remain in the promoters;

(xii) that purchase of the offered securities involves a high degree of risk.

(3) "Profits of Promoters" section.

This section should indicate the direct or indirect interest of any of the promoters of the venture in transactions with the issuer or in any proposed transaction. It should disclose the approximate dollar amounts of all material profits and should indicate what restrictions, if any, there are with respect to future personal dealings with the issuer.

(4) "Use of Proceeds of Offering".

This section should state the principal purposes for which the proceeds of the offering are to be used, including a detailed breakdown of offering expenses, and the amount to be used for each purpose. It should indicate in what order of priority the proceeds will be used for the respective purposes. The specifics of the use should be set forth as opposed to general statements such as "working capital". It is recommended that the section provide that the proceeds of the offering will be held in trust in a special account in a named bank until used for the purposes set forth in the prospectus. Further, it is suggested that provision be made for a minimum amount of money to be raised before any part of the proceeds can be used, and that unless such minimum amount is raised by a definite date all subscriptions will be returned in full. Such arrangements should be fully described. If any securities being sold are to be offered for consideration other than cash, these details should be provided.

(5) "Capitalization".

This section should set forth in tabular form the various types or classes of securities of the issuer outstanding or to be outstanding as a result of the offering, the amount authorized at the date of the prospectus, and the amount as of a date within 90 days prior to the prospectus, and the amount to be outstanding if all of the securities offered by the prospectus are sold. Below this table should be a table setting forth known or anticipated fixed debt maturities or fixed interest or other obligations, including leasehold commitments, for a five-year period.

(6) "Description of Business".

This section should briefly describe the business conducted by the issuer and its subsidiaries and the development of such business during the past five years. If the business consists of the production or distribution of different kinds of products or the rendering of different kinds of services, indicate, insofar as practical, the relative importance of each product or service or class of similar products which contributed 15 percent or more to the gross volume of business during the last fiscal year. This section should also indicate briefly, to the extent material, the general competitive conditions in the industry in which the issuer and its subsidiaries are engaged or intend to engage, and the position of the enterprise in the industry. If several products or services are involved, separate consideration should be given to the principal products or services or classes or products or services.

(7) "Description of Property".

This section should state briefly the location and general character of the principal plants, offices, machinery and equipment and other materially important physical properties of this issuer and its subsidiaries. Where material, details on mortgages, installment contracts, leases and other obligations should be provided.

(8) "Officers, Director and Principals".

This section should contain the name and home address of each officer, director, partner, principal, trustee and other promoters of the issuer, their business background, their experience with respect to the issuer's business, and the percentage of time those in management intend to devote to the business of the issuer. It should also indicate the dollar amount of investment in the company and the compensation and fees of all officers, directors and principals.

(9) "Principal Holders of Securities."

This section should indicate the name and address of all persons who beneficially or of record own 10 percent or more of any outstanding class of the securities of the issuer, the type or class of such security, the type of ownership, the amount owned, and the percentage of class. Where the security holders are offering their securities for resale, their adjusted basis should be stated.

(10) "Description of Securities".

This section should set forth in the form of organization of the issuer outlining briefly such items as dividend rights, voting rights, liquidation rights, pre-emptive rights, conversion rights, sinking fund provisions, liability to further calls or assessments, amendment procedures, repurchase rights, outstanding options, provisions for meetings, etc. together with a summary of the various material documents, such as the certificate of incorporation, by-laws, stockholders agreements, partnership agreement, debenture, indenture, etc. It should also contain full details about the securities offered by the prospectus.

(11) "Pending Legal Proceedings".

This section should indicate any material legal proceedings pending or known to be contemplated, other than ordinary routine claims and litigation incidental to the business, to which the issuer or any of its subsidiaries is a party or of which any of their property is the subject.

(12) "Method of Offering".

This section should indicate what persons are to solicit purchasers on behalf of the issuer, any compensation to be received by them and how the proposed issue is to be offered.

(13) "Annual Reports and Books and Records".

This section should indicate the obligations of the issuer to provide annual reports to investors and a statement as to the nature of the books and records to be maintained, where they will be maintained, the extent to which they will be available for inspection by investors, and the fiscal year of the issuer.

(14) "Experts".

This section should indicate the name and address of all experts, such as accountants, engineers, or attorneys, who passed upon matters relating to the offering.

(15) "Financial Statements".

This section should contain the issuers profit and loss statement for its most recent three fiscal years (or such lesser number of fiscal years during which the issuer has been in existence). If the latest fiscal year ended more than four months prior to the date of the prospectus, a profit and loss statement for a period from the end of such latest fiscal year to a date within four months prior to the date of filing and comparable figures for the same period during the preceding fiscal year should also be provided. In addition, the issuers balance sheet as of the last fiscal year and as of the end of such additional period, if any, should be provided. The balance sheets and profit and loss statements shall be prepared in accordance with generally accepted accounting principles applied on a basis consistent with previous years or periods and shall include an opinion by an independent public accountant as to fairness of presentation of issuer's financial position and results of operations reflected in the financial statements, except where an exemption from said requirement has been granted.

(16) "Other Material Information".

This section should contain all other material details of the offering, if any, not heretofore covered, plus a representation that the prospectus contains a fair summary of material facts, does not knowingly omit any material fact and does not contain any untrue statement of a material fact.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.3 Supplemental information to be submitted

Copies of all material corporate or organizational documents of the proposed issuer together with all material documents mentioned in the prospectus (including a sample form of the security to be offered) should be submitted to the Department of Law in duplicate together with a manually signed consent and authorization of every person named in the prospectus as an expert, officer, director or principal.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.4 Small offerings

In lieu of the prospectus called for by the New York Intrastate Financing Act, an issuer proposing a small offering, as defined in these regulations, may submit to the Department of Law a prospectus on form INTRASTATE-5 (Short Form Prospectus) which prospectus may be accepted for filing by the Department of Law, if, on its face, the offering is fair, just and equitable and not part of a series of offerings which in total exceed $40,000. Said small offering prospectus shall consist of form INTRASTATE-5 reproduced by photocopy or otherwise plus any additional supplemental information called for by the Department of Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.5 Offerings to a related group

In lieu of the prospectus called for by the New York Intrastate Financing Act, an issuer proposing an offering to a related group, as defined in these regulations, may submit to the Department of Law a prospectus on form INTRASTATE-5 (Short Form Prospectus) which prospectus may be accepted for filing by the Department of Law, if, on its face, the offering is fair, just and equitable. Said related group prospectus shall consist of form INTRASTATE-5 reproduced by photocopy or otherwise plus any additional supplemental information called for by the Department of Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.6 Offerings to sophisticated investors

In lieu of the prospectus called for by the New York Intrastate Financing Act, an issuer proposing an offering to a group of persons whose net worth, financial background and experience would be such as to enable them to evaluate a prospective investment solely on the basis of original documentation, without other offering literature, may submit to the Department of Law an application for exemption from the prospectus requirements and the Attorney-General may grant said application on finding that such action is not inconsistent with the public interest or the protection of investors.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.7 Offerings to a promoter group

In lieu of the prospectus called for by the New York Intrastate Financing Act, an issuer proposing an offering to a promoter group, as same is defined in these regulations, or the spouses or sons and daughters of the promoters, for front money or otherwise, may submit to the Department of Law an application for exemption from the prospectus requirements and the Attorney-General may grant said application on finding that such action is not inconsistent with the public interest or the protection of investors.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.8 Specialized offerings

In the case of a specialized offering such as a community offering, rights offering, employees' stock purchase plan, investment club or other special type of offering, upon application by the issuer to the Department of Law for exemption from or modification of the prospectus requirements, the Attorney-General may grant said application on finding that such action is not inconsistent with the public interest or the protection of investors.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.9 Exempted offerings

Pursuant to section 359-ff, subdivision 3, of the General Business Law of the State of New York, small offerings to a promoter group, small offerings to a related group, as defined in these regulations, offers and sales of any interest or participation in a collective trust fund maintained by a bank which interest or participation is issued in connection with a stock bonus, pension, or profit-sharing plan which meets the requirements for qualification under section 401 of the Internal Revenue Code of 1954, and offerings made to fewer than 10 persons are hereby exempted from the provisions of section 359-ff of the General Business Law. Offerings within the scope of this section are automatically exempted without application.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.10 Exemption procedure

The following procedure should be followed in applying for an exemption from the prospectus or accounting provisions of the New York Intrastate Financing Act under regulations 80.6, 80.7, 80.8, 80.15(b) or 80.15(d). The issuer should submit an application verified by all of the officers, directors and promoters of the corporation, general partners, trustees, etc., as the case may be, containing the following information, where applicable:

(a) The name and address of the petitioning entity.

(b) The nature of the petitioning entity, the date of its organization and the nature of its business.

(c) The purpose of the offering, the dollar amount to be raised, the expenses of the offering, whether or not the funds will be held in a special account in trust for specific purposes and the order of priority and usage of the net proceeds. Set forth whether or not there will be minimum and maximum investment limits for any individual investor.

(d) The nature of the security to be offered and the rights and obligations of the purchasers thereof.

(e) The names, home addresses and business addresses of all officers, directors and principals of the issuer, their business background for the preceding five years, their annual compensation from the issuer, the percentage of time they intend to or do devote to the affairs of the issuer and their current or proposed personal investment in the securities of the issuer.

(f) Whether or not any of the officers, directors or principals has ever been convicted of a crime, adjudicated a bankrupt or made a general assignment for the benefit of creditors or been a principal of any company which was reorganized in bankruptcy, adjudicated a bankrupt or made a general assignment for the benefit of creditors.

(g) All anticipated profits of the promoters from this venture.

(h) The basis upon which the exemption is sought.

(i) If the exemption is on the basis of an offering to sophisticated investors indicate the class or categories of persons to be contacted, the nature of their financial and business background and their minimum net worth. Provide a representation that all investors will sign the following statement BEFORE ANY MONIES ARE RECEIVED FROM THEM, a copy of which will be provided to the Attorney-General upon completion of the offering:

I understand that I am purchasing this interest in

without being furnished any offering literature or prospectus and that this transaction has not been scrutinized by the Attorney-General of the State of New York as a full registration because of the representation made by the issuer that the offering is only being made to a group of sophisticated investors whose business and financial background and experience is such as to not require any offering literature. I warrant that this interest is being purchased for my own account and that no portion is for the interest of any other and not for resale to others. I further warrant that my personal net worth is in excess of $__

It is understood that all documents, records and books, pertaining to this investment have been made available to my attorney, my accountant and myself."

(j) If the exemption is on the basis of an offering to a promoter group, indicate that each of the petitioners warrants and represents that he is in truth a promoter of this venture and will or will not take an active part in the operation or management of this venture, knowing full well that he may lose all or part of his investment if the venture is not successful.

(k) If the exemption is sought on the basis of a specialized offering, attach copies of all documentation relating to the offering, including any proposed offering literature and advertising material, and set forth the way in which the offering is to be made.

(l) Set forth any facts showing why the grant of the exemption would not be inconsistent with the public interest or the protection of investors.

(m) A representation that all investors will be provided with annual financial statements containing all of the information required by the regulations issued pursuant to the New York Intrastate Financing Act.

(n) A statement that this application is in lieu of any previous application, if this affidavit supersedes a previous one.

(o) A concluding statement reading: "WHEREFORE, it is respectfully requested that the offering for sale of securities of __ be exempted from the __ provisions of the New York Intrastate Financing Act."

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.11 Filing fees

All filings and applications for exemption from the prospectus requirements should be accompanied by a filing fee equal to one-half of one percent of the offering (.005 times the offering). The minimum fee is $25 and the maximum fee is $1500. Checks should be made payable to the Department of Law and need not be certified. There are no filing fees for amendments (except where additional securities are added) or annual reports.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.12 Advertising

(a) No issuer of securities may advertise in a publication, on radio or television, by personal contact orally or in writing except by the use of an "authorized advertisement". An authorized advertisement is one which is consistent with any required prospectus and otherwise meets all of the requirements of subdivisions (b) and (c) hereof, except where specifically waived by the Department of Law, pursuant to statute.

(b) All written advertisements must contain a statement in easily readable print (followed by the identification number supplied by the Department of Law) that the securities are "Offered by prospectus only to residents of New York State. NY # "

(c) All advertisements must be consistent with the prospectus, and not contain information not in the prospectus or amendments thereto and be submitted to in copy form and accepted by the Department of Law 48 hours prior to the first use thereof.

(d) Copies of actual advertisements shall be submitted to the Department of Law within five days after each publication, except that where the publication is oral or on film or tape, the Attorney-General may, on application, waive such requirement.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.13 Prefiling procedure (optional)

(a) Prior to formal filing of an offering, an issuer may submit the proposed offering literature to the Department of Law and request a prefiling conference. Three copies of such prospectus and two copies of an unsigned form INTRASTATE 1 (Filing of Intrastate Prospectus) should accompany such request together with draft copies of all supplemental information documents as set forth in section 80.3 hereof.

(b) Where an issuer proposes to use form INTRASTATE 5 (Short Form Prospectus) in lieu of a full prospectus, two unsigned copies of forms INTRASTATE 1 and 5 together with draft copies of all supplemental information documents as set forth in section 80.3 of this Part should be submitted to the Department of Law with a request for a prefiling conference.

(c) Where an issuer seeks an exemption from any requirement a single draft copy of an exemption application should be submitted to the Department of Law with a request for a prefiling conference.

(d) Issuers and their counsel who wish prefiling conferences at a Department of Law office other than the New York City office should so indicate in their conference request so that provision can be made to send personnel from the New York City office to the other office. The availability of conferences out of New York City will be dependent upon the number of requests and the availability of personnel.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.14 Books and records

Prior to the use of any funds obtained as a result of an offering of securities covered by the Intrastate Financing Act or the removal of any funds obtained as a result of such offering from any special trust account, the issuer shall have set up a system of books and records in accordance with generally accepted accounting principles. Such records shall be maintained at the principal office of the issuer. All books and records shall be posted and maintained in an orderly legible manner, in ink, by or under the direction and control of a person familiar with generally accepted bookkeeping and accounting practices. At a minimum such books and records shall consist of a cash receipts and disbursements book showing in detail all receipts and expenditures, a general ledger and general journal, a book showing the outstanding securities of the issuer and the names, addresses and holdings of each security holder and all contracts, checks, vouchers, receipts, bills and other documents pertaining to the transactions and operations of the issuer. All promoters of the issuer shall be responsible for such records. Notwithstanding anything contained herein to the contrary, the books and records of the issuer may be maintained pursuant to a system created or approved by an independent public accountant licensed and with an office in the State of New York upon certification in writing by such accountant to the Department of Law that he has set up the issuer's accounting system in accordance with generally accepted accounting principles, that he is independent of the issuer, that he has given instruction on maintenance of the system and that he verily believes that if his instructions are followed, the accounting system will be adequate. Where such a statement is provided the Department of Law the responsibility for the adequacy of the accounting system shall be preliminarily considered to have been met.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 80.16 Issuer statement and other requirements

Nothing contained in these regulations shall exempt any issuer from compliance with section 359-e of the General Business Law with respect to the filing of Issuer Statements, State Notices and Further State Notices or with respect to any other provision of article 23-A.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Chapter V CHARITABLE USES AND PURPOSES

Part 90 Definitions

N.Y. Comp. Codes R. & Regs. Tit. 13 § 90.1 Charitable

For the purposes of this Chapter, charitable shall mean:

(a) pursuant to article 8 of the Estates, Powers and Trusts Law (the "EPTL"), charitable, religious, educational, scientific, literary, cultural, testing for public safety, fostering national or international sports competition, benevolent, promoting social welfare, for a public benefit or for the prevention of cruelty to children or animals;

(b) pursuant to article 7A of the Executive Law (article 7-A), all purposes deemed charitable pursuant to the EPTL and also philanthropic, patriotic, eleemosynary or for law enforcement support and any other purpose included in the definition of "charitable organizations" in article 7-A, section 171-a.1, as it may be amended.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 90.2 Charitable organization

For the purposes of this Chapter, charitable organization shall mean an organization that is organized and/or operated for charitable purposes, whether or not exempt from Federal income taxation, that is required to register with the Attorney General pursuant to the EPTL and/or article 7-A.

(a) The term charitable organization includes any domestic or foreign corporation, unincorporated association or other legal entity, other than a trust or estate with a charitable interest (defined in section 90.3 of this Chapter), that is organized and/or operated for charitable purposes, including without limitation:

(1) type B New York not-for-profit corporations;

(2) type A, C and D New York not-for-profit corporations that are organized and/or operated for charitable purposes;

(3) organizations exempt from Federal income taxation pursuant to United States Internal Revenue Code (the code) section 501(c)(3), including wholly charitable trusts; and

(4) organizations exempt from Federal income taxation pursuant to another code section that are organized and/or operated for charitable purposes.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 90.3 Trust or estate with a charitable interest

For the purposes of this Chapter, trust or estate with a charitable interest (or, in the plural, trusts and estates with a charitable interest) shall mean any trust or estate holding or administering any personal or real property for charitable purposes that is required to register pursuant to the EPTL, other than a wholly charitable trust exempt from Federal income taxation pursuant to code section 501(c).

(a) Estates. The term trust or estate with a charitable interest includes estates with a charitable interest.

(1) The term estate with a charitable interest includes any estate with a charitable bequest that is either to an unnamed charity or is an unspecified amount (including without limitation a bequest of all or part of the residuary estate) or indefinite property.

(b) Trusts. The term trust or estate with a charitable interest also includes charitable remainder trusts and charitable lead trusts.

(1) The term charitable remainder trust includes any trust for which a charitable beneficiary has a remainder interest, including without limitation charitable remainder annuity trusts and charitable remainder unitrusts.

(2) The term charitable lead trust includes any trust for which a charitable beneficiary has a lead interest, including without limitation charitable lead annuity trusts and charitable lead unitrusts.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 90.4 Fund raising professional

For purposes of this Chapter, fund raising professional includes professional fund raisers, fund raising counsel, professional solicitors and commercial co-venturers, as such terms are defined in article 7-A section 171-a.

Part 91 CHARITABLE ORGANIZATIONS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.1 To whom this Part applies

This Part applies to charitable organizations as defined in section 90.2 of this Chapter. The following sections of this Part contain the registration and reporting requirements applicable to charitable organizations.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.2 Registration types

Article 7-A requires registration of charitable and other nonprofit organizations that solicit contributions from New York State (including residents, foundations, corporations, government agencies and other entities). Section 8-1.4 of the EPTL requires registration of charitable organizations that are incorporated, are formed or otherwise conduct activity in New York State. Based on these two registration statutes, there are three registration types for charitable organizations registered with the Charities Bureau.

(a) Article 7-A.

Organizations registered pursuant to article 7-A only and not registered under the EPTL.

(b) EPTL.

Organizations registered pursuant to the EPTL only and not registered under article 7-A.

Organizations registered pursuant to both article 7-A and the EPTL.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.3 Registration exemption

Certain organizations are exempt from registration with the Attorney General. Unregistered organizations that are exempt from registration are not required to submit an exemption request to the Attorney General, except that an organization that receives a failure to register notice from the Attorney General but believes it is exempt from registration must claim an exemption from registration. Organizations that wish to request exemption from registration under article 7-A or the EPTL or both, shall claim such exemption by completing the appropriate registration, amended registration or re-registration statement form, defined in sections 91.4, 91.8 and 91.9, respectively, of this Part, or a successor form, including the exemption request section of such form, and attaching schedule E (request for exemption for charitable organizations) or a successor form along with all required attachments listed in both the registration and exemption request forms.

(a) EPTL registration exemption claims.

An organization is exempt from registration under the EPTL if it fits any of the following definitions:

(1) Organization is not charitable (EPTL section 8-1.4[a]).

(2) Organization does not conduct activity in NY State (EPTL section 8-1.4[a] ).

(3) Organization is a government agency or is controlled by a government agency (EPTL section 8-1.4[b][1] ).

(4) Organization reports annually to either the U.S. Congress or the NY State Legislature (EPTL section 8-1.4[b][2]).

(5) Organization is incorporated under the religious corporations law or is another type of organization with a religious purpose or is operated, supervised or controlled by or in connection with a religious organization (EPTL section 8-1.4[b][3] ).

(6) Organization is an educational institution, museum or library incorporated under the NY State Education Law or by special act (EPTL section 8-1.4[b][4]).

(7) Organization is a hospital, skilled nursing facility or diagnostic/treatment center (EPTL section 8-1.4[b][5] ).

(8) Organization is a membership organization (fraternal, patriotic, social, student, alumni, veterans) (EPTL section 8-1.4[b][6]).

(9) Organization is a volunteer firefighters or volunteer ambulance service organization (EPTL section 8-1.4[b][6]).

(10) Organization is a historical society chartered by the Board of Regents of the State University of New York (EPTL section 8-1.4[b][6]).

(11) Organization is a cemetery corporation subject to the provisions of article 15 of the NY State Not-for-Profit Corporation Law (EPTL section 8-1.4[b][10] ).

(12) Organization is the NY State parent teachers association (PTA) or any PTA affiliated with an educational institution subject to the jurisdiction of the NY State Education Department (EPTL section 8-1.4[b][11]).

(13) Organization is incorporated under article 43 of the NY State Insurance Law (EPTL section 8-1.4[b][12] ).

(b) Article 7-A registration exemption claims.

An organization is exempt from registration under article 7-A if it fits any of the following definitions:

(1) Organization does not solicit or receive any contributions from NY State (including residents, foundations, corporations, government agencies, etc.) (article 7-A section 172.1 ).

(2) Organization solicits and receives gross contributions from NY State (including residents, foundations, corporations, government agencies, etc.), but organization's gross contributions from NY State are less than and will continue to be less than $25,000 per year from State of New York and organization does not and will not use the services of a professional fund raiser or fund raising counsel (article 7-A section 172-a.2[d]).

(3) Organization receives all or substantially all of its contributions from a single government agency to which it submits annual financial reports similar to those required by article 7-A, and organization's gross contributions from all other NY State sources, including other government agencies, do not and will not exceed $25,000 per year (article 7-A section 172- a.2[h]).

(4) Organization receives an allocation from a federated fund, United Way or incorporated community appeal and organization's gross contributions from all other sources do not and will not exceed $25,000 per year and organization does not and will not use the services of a professional fund raiser or fund raising counsel (article 7-A section 172-a.2[e]).

(6) Organization is an educational institution that confines its solicitation to its student body, alumni, faculty and trustees and their families (article 7-A section 172-a.2[a]).

(7) Organization is an educational institution or museum that files annual financial reports with the Board of Regents of the State University of New York as required by the NY State Education Law or with an agency having similar jurisdiction in another state (article 7-A section 172-a.2[g]).

(8) Organization is a library that files annual financial reports as required by the NY State Education Department (article 7-A section 172-a.2[g]).

(9) Organization is a membership organization (fraternal, patriotic, social or alumni) that confines its solicitation of contributions to its membership (article 7-A section 172-a.2[b]).

(10) Organization is a law enforcement support organization that confines its solicitation of contributions to its membership (article 7-A section 172-a.2[b]).

(11) Organization is a historical society chartered by the Board of Regents of the State University of New York that confines its solicitation of contributions to its membership (article 7-A section 172- a.2[b]).

(13) Organization is a chartered local post, camp, chapter or county unit of a bona fide veterans' organization, a bona fide organization of volunteer firefighters, a volunteer ambulance service organization, or a bona fide auxiliary or affiliate of such an organization and organization's fund raising is done by its members without direct or indirect compensation (article 7-A section 172-a.2[f]).

(14) Organization is a police department, sheriff's department or other governmental law enforcement agency (article 7-A section 172-a.2[i]).

(15) Organization is a government agency or is controlled by a government agency (article 7-A section 172-a.2[i]).

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.4 Initial registration

Unregistered charitable organizations subject to registration requirements of either or both article 7-A and the EPTL must register with the Attorney General.

(a) What documents to submit.

The following documents constitute a complete initial registration for a charitable organization:

(1) CHAR410 (registration statement for charitable organizations) or a successor form. This form is for unregistered organizations required to register with the Charities Bureau and shall include identifying, organization structure, activities and Federal tax-exempt status information;

(2) a copy of the certificate of incorporation, trust agreement or other organizing document, and any amendments; and

(3) a copy of the bylaws or other organizational rules, and any amendments; and

(4) a copy of the United State Internal Revenue Service (IRS) form 1023 or 1024 Application for Recognition of Exemption, if applicable; and

(5) a copy of the IRS tax exemption determination letter, if applicable.

(b) What fees to submit.

Organizations registering to solicit contributions in New York State must pay a $25 article 7-A registration fee or any other fee mandated by article 7-A as amended. Organizations requesting exemption from registration under article 7-A should not submit any fee.

The initial registration must be submitted by whichever of the following deadlines is applicable. If both are applicable, the submission is due by the earlier of the two deadlines. All submissions must be mailed, postmarked by the deadline. If the regular due date falls on a Saturday, Sunday or legal holiday, the deadline is on the next business day. A business day is any day that is not a Saturday, Sunday or legal holiday:

(1) for organizations registering under article 7-A, prior to solicitation of contributions from New York State (including residents, foundations, corporations, government agencies and other entities); or

(2) for organizations registering under the EPTL, within six months after receiving any property or income that is required to be applied to charitable purposes within New York State.

(d) Certification.

Each registration statement shall be signed as follows, and each signature shall be accompanied by the signatory's printed name and title and the date signed:

(1) Certification by a banking institution. Certifications must be signed by a vice president.

(2) Certification on behalf of a trust. Certification must be signed by at least one trustee.

(3) Certification by all others. Certifications must be signed by both the president or another authorized officer and the chief financial officer or treasurer.

(e) Request for registration exemption.

Organizations that wish to request exemption from registration under article 7-A or the EPTL or both, as described in section 91.3 of this Part, shall claim such exemption by completing the CHAR410 or a successor form, including the exemption request section of such form, and attaching schedule E (request for exemption for charitable organizations) or a successor form along with all required attachments listed in both the CHAR410 and schedule E.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.7 Combined annual financial report

(a) Authorization to file a combined annual financial report.

Upon prior written authorization by the Attorney General, a parent charitable organization which has one or more affiliates may file a combined annual financial report for itself and its affiliates. Affiliates that do not have a parent-subsidiary relationship cannot file a combined report. For this purpose affiliate shall include any chapter, branch, auxiliary or other subordinate unit of any registered charitable organization, however designated, whose policies, fund-raising activities and expenditures are supervised or controlled by the parent charitable organization. The Charities Bureau, in its discretion, may deny a request to file a combined report by the parent organization if any of the following facts are present:

(1) The parent organization does not file a group return IRS form 990 for its subordinate organizations with the IRS.

(2) The parent organization and its affiliates do not consolidate their audited financial statements.

(3) The parent organization has one or more affiliates that are not included in the group return and/or consolidated financial statements.

(4) The parent organization has one or more affiliates that are registered and file separately with the Attorney General and, therefore, would not be included in the combined report.

(5) The parent organization and its affiliates have different fiscal years.

(b) What documents to submit.

The following documents constitute a complete combined annual financial report for a charitable organization:

(1) CHAR500-C (combined annual financial report) or a successor form, which shall include identifying and contact information, annual report exemption claim information, information regarding the submission of schedules required under article 7-A and a list affiliate organizations.

(2) Schedules.

(i) Schedule 4a (professional fund raisers [PFR], fund raising counsels [FRC], commercial co-venturers [CCV]) or a successor form schedule is required for either the parent or any of its affiliate organizations that contracted with or used the services of a PFR, FRC or CCV for fund raising activity in New York State during the reporting period and shall indicate the type of fund raising professional, as defined in article 7-A, section 171-a, and include contact information and information regarding the services provided, terms of the contract and fees paid.

(ii) Schedule 4b (government contributions [grants]) or a successor form schedule is required for the parent or any of its affiliate organizations that received a contribution or grant from a government agency during the reporting period and shall include the name of each agency from which contributions were received and the amount of each contribution.

(iii) Schedule 6a (individual affiliate summary) or a successor form schedule is required for each affiliate organization that is part of the combined report and shall include annual report exemption information, a financial summary (if the affiliate is registered under article 7-A and does not claim the article 7-A annual report exemption) and fee information.

(iv) Schedule EDS (Electioneering Disclosure Schedule) or a successor form is required for covered organizations that must file such form pursuant to section 91.6 of this Part.

(3) A consolidated financial statement, including an independent accountant's audit report with accompanying notes prepared in accordance with GAAP.

(4) A copy of the letter from the Attorney General authorizing use of CHAR500-C, its predecessor form or its successor form.

(5) A copy of the parent organization IRS form 990 and schedules.

(6) A copy of the IRS form 990 group return and schedules.

(1) Parent organization article 7-A filing fee. The parent organization article 7-A filing fee is $25.

(2) Affiliate organizations combined article 7-A filing fee. The article 7-A fee for each individual affiliate included in the combined annual financial report with a registration type of article 7-A or dual, as defined in section 91.2 of this Part, that does not claim the affiliate article 7-A annual report exemption is $10, up to a maximum of $475 in the aggregate for all individual affiliates included in the combined annual financial report.

(3) Parent organization EPTL filing fee. Parent organization with registration type article 7-A, as defined in section 91.2 of this Part, and parent organizations with registration type dual that claim the parent organization EPTL annual report exemption do not owe any parent organization EPTL filing fee. Otherwise, the parent organization EPTL filing fee is based on the net worth of the parent organization at the end of the reporting period, as indicated in the following schedule:

(i) $25, or any other fee mandated by the EPTL as amended, if the organization's total fund balance at the end of the reporting period is less than $50,000;

(ii) $50, or any other fee mandated by EPTL as amended, if the organization's total fund balance at the end of the reporting period is $50,000 or more but less than $250,000;

(iii) $100, or any other fee mandated by the EPTL as amended, if the organization's total fund balance at the end of the reporting period is $250,000 or more but less than $1 million;

(iv) $250, or any other fee mandated by the EPTL as amended, if the organization's total fund balance at the end of the reporting period is $1 million or more but less than $10 million;

(v) $750, or any other fee mandated by the EPTL as amended, if the organization's total fund balance at the end of the reporting period is $10 million or more but less than $50 million; or

(iv) $1,500, or any other fee mandated by the EPTL as amended, if the organization's total fund balance at the end of the reporting period is $50 million.

(4) Affiliate organizations combined EPTL filing fee. The EPTL fee for each individual affiliate included in the combined annual financial report with a registration type of EPTL or dual, as defined in section 91.2 of this Part, that does not claim the affiliate EPTL annual report exemption is based on the individual affiliate's net worth at the end of the reporting period, as indicated in paragraph (3) of this subdivision.

(5) Total filing fee. The total filing fee is the sum of all of the filings fees in paragraphs (1) through (4) of this subdivision.

(d) When to file.

(1) All combined annual financial reports must be mailed, postmarked by the 15th day of the 5th month after the organization's accounting period ends. For example, a report for the fiscal year ended December 31, 2004 is due by May 15, 2005. If the regular due date falls on a Saturday, Sunday or legal holiday, file on the next business day. A business day is any day that is not a Saturday, Sunday or legal holiday.

(2) Extension of time to submit an annual filing. Organizations filing a combined annual financial report may request an extension of time to submit an annual filing according to the procedures described in section 91.5(f)(3) of this Part.

(e) Certification.

Each consolidated annual financial report shall be signed as follows, and each signature shall be accompanied by the signatory's printed name and title and the date signed. Certifications must be signed by both the president or another authorized officer and the chief financial officer or treasurer.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.9 Cancellation of article 7-A registration and re-registration

(a) Cancellation of article 7-A registration.

If an article 7-A or dual registrant fails to file a complete annual filing on time, as described in section 91.5 of this Part, its article 7-A registration to solicit contributions shall be deemed no longer in effect.

(b) The organization must then re-register pursuant to article 7-A, regardless of its registration status pursuant to section 8-1.4 of the EPTL.

(1) What documents to submit. The following documents constitute a complete re-registration for a charitable organization:

(i) CHAR410-R (re-registration statement for charitable organizations) or a successor form. This form is for organizations whose registration to solicit contributions is no longer in effect as the result of a violation of registration or reporting requirements and shall include identifying, organization structure, activities and federal tax-exempt status information.

(ii) a copy of the certificate of incorporation, trust agreement or other organizing document, and any amendments; and

(iii) a copy of the bylaws or other organizational rules, and any amendments; and

(iv) a copy of the IRS form 1023 or 1024 application for recognition of exemption, if applicable; and

(v) a copy of the IRS tax exemption determination letter, if applicable; and

(vi) all delinquent annual filings (annual reports or claims of annual report exemption), as described in section 91.5 of this Part, for all years for which the organization is delinquent, up to a maximum of six years. All delinquent filings must be sent in a single submission along with the re-registration. Any fees for delinquent filings shall be combined with the re-registration fee in a single payment.

(2) What fees to submit. The fee to accompany the re-registration is $150. Additional fees may be due with any delinquent annual filings that are being submitted, as described in section 91.5 of this Part.

(3) When to re-register. The re-registration must be submitted immediately after the failure of an article 7-A or dual registrant to file CHAR500 (annual filing for charitable organizations) or a successor form by the annual filing deadline, as described in section 91.5 of this Part, and in no event later than the deadline imposed in any delinquency notice sent to the organization by the Attorney General. All submissions must be mailed, postmarked by the deadline. If the regular due date falls on a Saturday, Sunday or legal holiday, the deadline is on the next business day. A business day is any day that is not a Saturday, Sunday or legal holiday.

(4) Certification. Each re-registration statement shall be signed by both the president or another authorized officer and the chief financial officer or treasurer, and each signature shall be accompanied by the signatory's printed name and title and the date signed.

Delinquent article 7-A or dual registrants that wish to request exemption from registration under article 7-A or the EPTL or both, as described in section 91.3 of this Part, shall claim such exemption by completing the CHAR410-R or a successor form, including the exemption request section of such form, and attaching schedule E (request for exemption for charitable organizations) or a successor form along with all required attachments listed in both the CHAR410-R and schedule E.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.10 Closing registration and dissolutions

(a) Charitable organizations.

The registration of a charitable organization will only be closed if the organization demonstrates that it has dissolved or otherwise formally ceased operations.

(1) Corporations.

(i) If the organization was incorporated, it must be dissolved before the Attorney General can close its registration. If the organization has a certificate of dissolution from the New York Department of State, or from a similar government agency in a different state, it must be submitted along with the CHAR500 or a successor form marked "final filing," with all required attachments to that form.

(ii) If the organization was incorporated and does not have a certificate of dissolution but does have a court-approved plan of dissolution, the organization must complete the dissolution process and then submit to the Attorney General a copy of that certificate of dissolution. New York corporations obtain the certificate of dissolution from the New York State Department of State, Division of Corporations.

(iii) If the organization was incorporated and has ceased operations but does not have a certificate of dissolution and does not have a court-approved dissolution plan, the organization must start and complete the dissolution process.

(b) Wholly charitable trusts.

If the organization was formed as a wholly charitable trust, it may request that the Attorney General close its registration by submitting:

(1) a cover letter explaining the reasons for closure; and

(2) a copy of the CHAR500 or a successor form marked "final filing"; and

(3) a copy of IRS Form 990, 990-EZ or 990-PF marked "final return," if applicable; and

if the assets were transferred to another organization, proof that the other organization received the assets (for example, a letter from the recipient organization, signed by an officer, stating that it received the transfer); and

(4) a judicial or informal final accounting containing sufficient information for the purposes of the Attorney General's review.

If the organization was never incorporated, it may request that the Attorney General close the registration by submitting:

(1) a cover letter explaining the reasons for closure; and

(2) a copy of the CHAR500 or a successor form marked "final filing"; and

(3) a copy of IRS form 990, 990-EZ or 990-PF marked "final return," if applicable; and if the assets were transferred to another organization, proof that the other organization received the assets (for example, a letter from the recipient organization, signed by an officer, stating that it received the transfer).

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.11 Where to submit registrations, annual filings and other submissions

Charitable organizations must submit their annual filing to the New York City Office of the Attorney General's Charities Bureau, Registration Section, 28 Liberty Street, New York, NY 10005, or such other place as the Attorney General may designate or electronically in the manner prescribed by statute or by the Attorney General.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.12 Incomplete material

The Attorney General will not accept any registration and/or filing unless all of the documents and fees required by law and these regulations have been submitted and paid. The organization shall not be in compliance with the law and these regulations until the registration and/or filing material has been accepted by the Attorney General and may be subject to appropriate sanctions pursuant to article 7-A and/or the EPTL.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 91.13 Attorney General authority to require additional information or documentation

In addition to any documents the Attorney General requires of a charitable organization as part of its registration, exemption request, annual filing or request to close registration, the Attorney General may require a charitable organization to submit any information or documentation relevant to the Attorney General's review of such organization, including without limitation a judicial or informal periodic or final accounting for a wholly charitable trust.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 92 Trusts And Estates With A Charitable Interest

N.Y. Comp. Codes R. & Regs. Tit. 13 § 92.1 To whom the part applies

This Part applies to trusts and estates with a charitable interest as defined in section 90.3 of this Chapter. The following sections of this Part contain the registration and reporting requirements applicable to trusts and estates with a charitable interest.

(a) Registration types. Trusts and estates with a charitable interest are required to register pursuant to EPTL section 8-1.4, but are not required to register pursuant to article 7-A.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 92.2 Estates

(a) Registration. Estates with a charitable interest as defined in section 90.3(a)(1) of this Chapter are required to register pursuant to EPTL section 8-1.4. Estates in which the only charitable interest is a specific gift (either a specific amount of money or specific property) to one or more named charities exempt from Federal taxation pursuant to Internal Revenue Code section 501(c)(3) are not required to register pursuant to the EPTL.

(1) What registration documents to submit. To register with the Attorney General, an estate with a charitable interest shall submit all of the following documents:

(i) a copy of the notice of probate; and

(ii) a copy of the last will and testament and any codicils.

(2) What registration fees to submit. Estates with a charitable interest are not required to pay a registration fee pursuant to the EPTL. However, an EPTL filing fee is required when the estate submits a final report pursuant to subdivision (c) of this section.

(3) When to register. Estates with a charitable interest shall register within six months after the earlier of the date letters testamentary or preliminary letters testamentary are issued. Nothing in this Chapter shall be interpreted to waive any requirement to submit any estate-related documents to the Attorney General in a timely manner pursuant to any other provision of the laws of the State of New York, such as the requirement to submit the notice of probate pursuant to section 1409 of the Surrogate's Court Procedure Act.

(4) Where to register. Estates with a charitable interest shall submit their registration documents to the New York City office of the Attorney General's Charities Bureau, the Albany office of the Attorney General's Charities Bureau or the applicable Attorney General's Regional Office, in accordance with instructions issued by the Attorney General, or such other place as the Attorney General may designate.

(b) Periodic reports. Estates with a charitable interest are not required to file periodic reports, but shall comply with any request made by the Attorney General for additional information or documentation pursuant to section 92.5 of this Part.

(1) What final report documents to submit. A judicial or informal final accounting containing sufficient information for the purposes of the Attorney General's review shall constitute a complete final report for an estate with a charitable interest.

(2) What final report fees to submit. With the submission of a final report, estates with a charitable interest shall pay a filing fee based on the total value of all assets distributed or proposed to be distributed to charitable beneficiaries, including distributions resulting from specific and residuary gifts paid from principal or income, according to the following schedule:

(i) $25, if the total value of all such charitable assets is less than $50,000;

(ii) $50, if the total value of all such charitable assets is $50,000 or more but less than $250,000;

(iii) $100, if the total value of such charitable assets is $250,000 or more but less than $1 million;

(iv) $250, if the total value of such charitable assets is $1 million or more but less than $10 million;

(v) $750, if the total value of such charitable assets is $10 million or more but less than $50 million; or

(vi) $1,500, if the total value of such charitable assets is $50 million or more.

The EPTL filing fee is due at the time the final report is submitted to the Attorney General and is required for all estates with a charitable interest that are required to register with the Attorney General.

(3) Where to file final report. An estate with a charitable interest shall submit its final report to the New York City office of the Attorney General's Charities Bureau, the Albany office of the Attorney General's Charities Bureau or the applicable Attorney General's Regional Office, in accordance with instructions issued by the Attorney General, or such other place as the Attorney General may designate.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 92.3 Charitable remainder trusts

(a) Registration with notice of termination. Charitable remainder trusts as defined in section 90.3(b)(1) of this Title are required to register pursuant to EPTL section 8-1.4. Pursuant to EPTL section 8-1.4(f)(1), such registration shall contain a notice of the termination of the interest of any party in a trust that would cause all or part of the trust assets or income to be applied to charitable purposes. Charitable remainder trusts are not required to submit to the Attorney General a separate notice of termination.

(1) What registration with notice of termination documents to submit. To register, a charitable remainder trust shall submit all of the following registration with notice of termination documents to the Attorney General and mail a copy to each identified current charitable beneficiary:

(i) CHAR001-RT (registration statement for charitable remainder trusts with notice of termination of intervening trust interest) or a successor form issued by the Attorney General, which shall include:

(a) identifying information, including the identity of the terminating interest (and, if applicable, the date of death of the individual whose interest terminated) and the identity of each charitable beneficiary;

(b) contact information for each trustee and attorney for the trust; and

(c) a statement that the trust has complied with the requirement to mail a copy of the notice of termination to each identified current charitable beneficiary; and

(ii) a copy of the trust instrument and any amendments.

(2) What registration and notice of termination fees to submit. Charitable remainder trusts are not required to pay a registration or notice of termination fee pursuant to the EPTL. However, an EPTL filing fee is required when the trust submits a final report pursuant to subdivision (c) of this section.

(3) When to submit and mail registration with notice of termination. Charitable remainder trusts shall submit their registration with notice of termination to the Attorney General and mail a copy of such registration with notice of termination to each identified current charitable beneficiary within six months after the date when, pursuant to the terms of the applicable trust instrument, all or part of the trust assets or income is required to be applied to charitable purposes.

(4) Where to submit and mail registration with notice of termination. Charitable remainder trusts shall submit their registration with notice of termination to the New York City office of the Attorney General's Charities Bureau, the Albany office of the Attorney General's Charities Bureau or the applicable Attorney General's Regional Office, in accordance with instructions issued by the Attorney General, or such other place as the Attorney General may designate. Charitable remainder trusts shall also mail a copy of such registration with notice of termination to each identified current charitable beneficiary at the last known address of such beneficiary or such other address for such beneficiary as may be determined from a diligent search.

(b) Periodic reports. Charitable remainder trusts are not required to file periodic reports, but shall comply with any request made by the Attorney General for additional information or documentation pursuant to section 92.5 of this Part.

(2) What final report fees to submit. With the submission of a final report, charitable remainder trusts shall pay a filing fee based on the total value of all assets distributed or proposed to be distributed to charitable beneficiaries, including distributions resulting from specific and residuary gifts paid from principal or income, according to the following schedule:

(i) $25, if the total value of all such charitable assets is less than $50,000;

(ii) $50, if the total value of all such charitable assets is $50,000 or more but less than $250,000;

(iii) $100, if the total value of such charitable assets is $250,000 or more but less than $1 million;

(iv) $250, if the total value of such charitable assets is $1 million or more but less than $10 million;

(v) $750, if the total value of such charitable assets is $10 million or more but less than $50 million; or

(vi) $1,500, if the total value of such charitable assets is $50 million or more.

The EPTL filing fee is due at the time the final report is submitted to the Attorney General and is required for all charitable remainder trusts that are required to register with the Attorney General.

(3) Where to file final report. A charitable remainder trust shall submit its final report to the New York City office of the Attorney General's Charities Bureau, the Albany office of the Attorney General's Charities Bureau or the applicable Attorney General's Regional Office, in accordance with instructions issued by the Attorney General, or such other place as the Attorney General may designate.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 92.4 Charitable lead trusts

(a) Registration. Charitable lead trusts as defined in section 90.3(b)(2) of this Chapter are required to register pursuant to EPTL section 8-1.4.

(1) What registration documents to submit. To register with the Attorney General, a charitable lead trust shall submit all of the following documents:

(i) CHAR001-LT (registration statement for charitable lead trusts) or a successor form issued by the Attorney General, which shall include:

(a) identifying information, including the identity of each charitable beneficiary; and

(b) contact information for each trustee and attorney for the trust; and

(ii) a copy of the trust instrument and any amendments.

(2) What registration fees to submit. Charitable lead trusts are not required to pay a registration fee pursuant to the EPTL. However, an EPTL filing fee is required when the charitable lead trust submits each periodic report and its final report pursuant to subdivisions (b) and (c) of this section.

(3) When to register. Charitable lead trusts shall register within six months after the trust is funded.

(4) Where to register. Charitable lead trusts shall submit their registration documents to the New York City office of the Attorney General's Charities Bureau or such other place as the Attorney General may designate.

(b) Periodic reports. Charitable lead trusts are required to file annual reports with the Attorney General.

(1) What annual report documents to submit. The following documents constitute a complete annual filing for a charitable lead trust:

(i) CHAR004 (annual filing for charitable lead trust) or a successor form issued by the Attorney General, which shall include:

(a) identifying information, including the identity of each charitable beneficiary and the fiscal year end of the annual report;

(b) contact information for each trustee and attorney for the trust and each financial institution where trust assets are held; and

(c) principal, income and total financial information for the trust, including charges; administration expenses, distributions to beneficiaries and other credits; liabilities; and fund balances; and

(ii) a copy of the trust's IRS form 5227 (split-interest trust information return) or a successor form.

(2) What annual report fees to submit. Charitable lead trusts shall pay an annual EPTL filing fee according to the following schedule:

(i) $25, if the total amount distributed to charity by the trust during the fiscal year is less than $50,000;

(ii) $50, if the total amount distributed to charity by the trust during the fiscal year is $50,000 or more but less than $250,000;

(iii) $100, if the total amount distributed to charity by the trust during the fiscal year is $250,000 or more but less than $1 million;

(iv) $250, if the total amount distributed to charity by the trust during the fiscal year is $1 million or more but less than $10 million;

(v) $750, if the total amount distributed to charity by the trust during the fiscal year is $10 million or more but less than $50 million; or

(vi) $1,500, if the total amount distributed to charity by the trust during the fiscal year is $50 million or more.

(3) When to file annual reports. A charitable lead trust shall file an annual report within six months after the end of its fiscal year. The extension request provisions for charitable organizations contained in section 91.5(f)(3) of this Chapter apply to annual reports of charitable lead trusts.

(4) Where to file annual reports. A charitable lead trust shall submit its annual reports to the New York City office of the Attorney General's Charities Bureau or such other place as the Attorney General may designate.

(1) What final report documents to submit. The following documents shall constitute a complete final annual report for a charitable lead trust:

(i) CHAR004 (annual filing for charitable lead trust) or a successor form issued by the Attorney General, which shall include:

(a) identifying information, including the identity of each charitable beneficiary and the end date of the annual report;

(b) contact information for each trustee and attorney for the trust and each financial institution where trust assets are held; and

(c) principal, income and total financial information for the trust, including charges; administration expenses, distributions to beneficiaries and other credits; liabilities; and fund balances; and

(ii) a copy of the trust's IRS form 5227 (split-interest trust information return) or a successor form for the year during which the charitable lead interest terminates.

(2) What final report fees to submit. Charitable lead trusts shall pay a final EPTL annual filing fee of $25, if the total amount distributed to charity by the trust during the fiscal year is $25,000 or more.

(3) When to file final report. A charitable lead trust shall file its final report within six months after the end of its fiscal year during which the lead charitable interest terminated. The extension request provisions for charitable organizations contained in section 91.5(f)(3) of this Chapter apply to final reports of charitable lead trusts.

(4) Where to file final report. A charitable lead trust shall submit its final report to the New York City office of the Attorney General's Charities Bureau or such other place as the Attorney General may designate.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 92.5 Attorney general authority to require additional information or documentation

In addition to any documents the Attorney General requires of a trust or estate with a charitable interest as part of its registration, periodic report, final report or notice of termination, the Attorney General may require a trust or estate with a charitable interest to submit any information or documentation relevant to the Attorney General's review of such entity, including without limitation a periodic accounting, a detailed securities schedule, IRS form 706 (United States estate [and generation-skipping transfer] tax return), IRS form 1041 (U.S. income tax return for estates and trusts) and New York State Department of Taxation and Finance ET-90 (New York State estate tax return) or successor forms.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 92.6 Certification requirement

For each registration, periodic report, final report or notice of termination required to be submitted by a trust or estate with a charitable interest pursuant to this Part, a trustee, executor or other authorized individual shall certify under penalties for perjury that, to the best of his or her knowledge and belief, such submission is true, correct and complete in accordance with the laws of the State of New York applicable to such submission.

Part 93 Fund Raising Professionals

N.Y. Comp. Codes R. & Regs. Tit. 13 § 93.1 To whom this part applies

This Part applies to professional fund raisers, fund raising counsel, professional solicitors and commercial co-venturers, as defined in article 7-A, section 171-a; provided, however, that this Part shall not apply to any individual or entity that prints, prepares for mailing and/or mails solicitation material but does not otherwise provide advice to or solicit on behalf of a charitable organization.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 93.2 Registration

(a) When to register. Professional fund raisers, fund raising counsel and professional solicitors shall register with the Attorney General prior to engaging in any fund raising activities in the State of New York and/or solicitation of persons in New York State.

(b) Registration forms.

(1) Professional fund raisers. Professional fund raisers shall file with the Attorney General a professional fund raiser's registration form signed under penalties for perjury and all documents required to be annexed thereto. Such form shall include the following information:

(i) the full legal name of the professional fund raiser and all other legally authorized names under which it operates in any capacity;

(ii) organizational type (corporation, partnership, unincorporated association, proprietorship, etc.);

(iii) the date, state and county in which organized;

(iv) the principal New York State address of the professional fund raiser and all addresses from which it solicits contributions from New York State residents and the telephone number at each address;

(v) the names, primary residence or business address where each can be regularly located, and title or relationship to the professional fund raiser of:

(a) individual owners of unincorporated associations and proprietorships;

(b) partners;

(d) comparable managers of the legal entities;

(vi) the names and primary residence or business address where each can be regularly located of any individual or entity that owns 10 percent or more of the professional fund raiser;

(vii) as required by section 5 of the New York State Tax Law, the Federal tax identification number or individual social security number for each entity or individual listed pursuant to subparagraph (v) of this paragraph. Tax identification numbers and social security numbers are exempt from disclosure to the public, except as may be required by compulsory or other legal process, but must be provided to the Attorney General pursuant to the Tax Law;

(viii) the names and addresses of each charitable organization with which the professional fund raiser has contracts or has contracted within the prior 12 months to act as a professional fund raiser or fund raising counsel in New York and the dates and a description of activities to be or that have been conducted pursuant to such contracts;

(ix) a statement as to whether any individual listed pursuant to subparagraph (v) of this paragraph is or has been an officer, director or employee of any other professional fund raiser or fund raising counsel that has engaged in fund raising activities in New York and/or is or has been an officer, director or employee of any charitable organization that has engaged in fund raising activities in New York and, if so, the names and primary residence or business addresses of such individuals where they can be regularly located and the entities with which they are or have been associated and the titles of all such individuals;

(x) a statement as to whether the professional fund raiser is registered with any other State or local governmental agency and, if so, the names of such governmental agencies;

(xi) a statement as to whether the professional fund raiser has ever had any license, registration or permit to engage in fund raising activities denied, canceled, suspended or revoked and, if so, a detailed description of such circumstances;

(xii) a statement as to whether any disciplinary or legal action in connection with fund raising activities has been taken or is pending against the professional fund raiser and, if so, a detailed description of such action; and

(xiii) a statement as to whether the professional fund raiser employs any professional solicitors.

(2) Fund raising counsel. Fund raising counsel shall file with the Attorney General a fund raising counsel registration form, signed under penalties for perjury, and all documents required to be annexed thereto. Such form shall include the following information:

(i) the full legal name of the fund raising counsel and all other legally authorized names under which it operates in any capacity;

(ii) organizational type (corporation, partnership, unincorporated association, proprietorship, etc.);

(iii) the date, state and county in which organized;

(iv) the principal address of the fund raising counsel, the principal New York State address and the telephone number at each address;

(v) the names, primary residence or business address where each can be regularly located, and title or relationship to the fund raising counsel of:

(a) individual owners of unincorporated associations and proprietorships;

(b) partners;

(d) comparable managers of the legal entities;

(vi) the names and primary residence or business address where each can be regularly located of any individual or entity that owns 10 percent or more of the fund raising counsel;

(viii) the names and addresses of charitable organizations with which the fund raising counsel has contracts or has contracted within the prior 12 months to act as a fund raising counsel for organizations soliciting contributions in New York and the dates and a description of activities to be or that have been conducted pursuant to such contracts;

(ix) a statement as to whether any individual listed pursuant to subparagraph (v) of this paragraph has been or is associated with any professional fund raiser, fund raising counsel and/or charitable organization and, if so, the names and primary residence or business address where each can be regularly located and the entities and the titles of all such individuals;

(x) a statement as to whether the fund raising counsel is registered with any other state or local governmental agency and, if so, the names of such governmental agencies;

(xi) a statement as to whether the fund raising counsel has ever had any license, registration or permit denied, canceled, suspended or revoked and, if so, a detailed description of such circumstances;

(xii) a statement as to whether any disciplinary or legal action has been taken or is pending against the fund raising counsel and, if so, a detailed description of such action;

(xiii) a statement as to whether the fund raising counsel or any of its representatives is authorized to solicit contributions;

(xiv) a statement as to whether the fund raising counsel or any of its representatives is authorized to pay expenses associated with a solicitation;

(xv) a statement as to whether the fund raising counsel or any representatives has access to contributions or other receipts from a solicitation. For purposes of this Chapter, access to contributions shall mean the physical control, handling or possession of any cash or legal instrument, regardless of to whom payable, if such cash or legal instrument constitutes a contribution or donation. Access to contributions occurs when there is any signature authority over an escrow account or bank account in which contributions or donations have been or will be deposited and/or authorization to approve or pay expenses; and

(xvi) a statement as to whether the fund raising counsel employs any professional solicitors.

(3) Professional solicitors. Professional solicitors shall file with the Attorney General a professional solicitor registration form, signed under penalties for perjury, and all documents required to be annexed thereto. Such form shall include the following information:

(i) the full legal name of the professional solicitor by which he or she shall solicit contributions and any other names by which the solicitor is known;

(ii) the primary residence or business address where the solicitor can be regularly located and the solicitor's telephone numbers;

(iii) with regard to all past and present employment as a professional fund raiser, fund raising counsel and/or professional solicitor, the names and addresses of all such employers, the dates of employment and the terms of remuneration;

(iv) the social security number of the solicitor. Social security numbers are exempt from disclosure to the public, except as may be required by compulsory or other legal process, but must be provided to the Attorney General pursuant to the Tax Law;

(v) a statement as to whether the solicitor is registered with any other state or local governmental agency and, if so, the names of such governmental agencies;

(vi) a statement as to whether the solicitor has ever had any license, registration or permit to solicit contributions denied, canceled, suspended or revoked and, if so, a detailed description of such circumstances; and

(vii) a statement as to whether any disciplinary or legal action has been taken or is pending against the solicitor and, if so, a detailed description of such action.

(c) Incomplete registration material. The Attorney General will not accept any registration of any professional fund raiser, fund raising counsel or professional solicitor unless all of the documents and fees required by law and this Chapter have been submitted and paid, respectively. Incomplete registration material shall be returned by the Attorney General and the professional fund raiser, fund raising counsel or professional solicitor may be subject to sanctions pursuant to article 7-A. The professional fund raiser, fund raising counsel or professional solicitor shall not be in compliance with the law and this Chapter until the registration material has been accepted by the Attorney General.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 93.3 Registration fees and bonds required of professional fund raisers, fund raising counsel and professional solicitors

(a) Each professional fund raiser registration form, fund raising counsel registration form and professional solicitor registration form must be accompanied by the fees mandated by article 7-A, sections 173.1 and 173-b.

(b) Each professional fund raiser registration form must be accompanied by a bond as mandated by article 7-A, section 173.1.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 93.4 Contracts with professional fund raisers, fund raising counsel and commercial co-venturers

(a) Content of contracts.

(1) In addition to any information required by article 7-A, including section 174-a, all contracts filed with the Attorney General must include the following:

(i) the names, addresses and New York State registration numbers of both parties to the contract;

(ii) the signatures and dates of signature of the parties to the contract;

(iii) the beginning and expiration dates of the contract;

(iv) the terms of the contract, including a clear description of the services to be performed by the professional fund raiser or fund raising counsel; and

(v) a clear statement of the financial arrangement between the parties which shall include, if applicable, a statement of:

(a) the percentage or dollar amount of the total funds collected on behalf of the charitable organization which shall be retained by or paid to the professional fund raiser for purposes other than the exclusive benefit of the charitable organization's charitable purposes;

(b) the fixed fee if any to be received by the professional fund raiser or fund raising counsel;

(c) all contractual expenses to be incurred by the professional fund raiser or fund raising counsel but charged to the charitable organization or subsequently deducted from the gross receipts. Such list shall contain specific dollar amounts or projected estimates of these costs; and

(d) the costs per unit for the services to be provided and the projected number of units to be provided; and

(vi) a renewal or extension of a contract must comply with the provisions of this section.

(b) Contract approval, filing and cancellation.

(1) No contract will be accepted for filing by the Attorney General, unless the contract complies with this subdivision and article 7-A, and no services shall be performed pursuant to such contract if the Attorney General notifies the professional fund raiser or fund raising counsel and the charitable organization of any deficiencies in the contract and/or compliance with the registration and filing requirements of article 7-A or EPTL section 8-1.4 and this Chapter.

(2) Whenever a charitable organization contracts with a professional fund raiser, fund raising counsel or commercial co-venturer, the charitable organization shall have the right to cancel the contract without cost, penalty or liability for a period of 15 days following the date on which said contract was executed. Any provision in the contract that is intended to waive this right of cancellation shall be void and unenforceable.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 93.5 Interim statements and closing statements of professional fund raisers

Professional fund raisers shall file interim and closing statements as required by article 7-A, section 173-a. Such statements shall be signed under penalties for perjury by the professional fund raiser, any subcontractor and the charity on forms prescribed by the Attorney General. Closing statements shall be filed within 90 days after the termination of a fund raising contract, provided that in the case of a fund raising contract that covers a period of more than one year, a professional fund raiser shall file with the Attorney General, within 15 months of the execution of the contract and annually thereafter, an interim statement signed under penalties for perjury by the professional fund raiser, any subcontractor and the charity on forms prescribed by the Attorney General. Closing and interim statements must be prepared for all activities conducted pursuant to each contract and shall include the following:

(a) the names of the professional fund raiser(s) and charity(s) that are party to the contract;

(b) the effective and termination dates of the contract as stated in the contract;

(d) the beginning and ending dates of the campaign within the specified contract period or contract year covered by the statement;

(e) if services were provided at any other time during the contract period, a statement of the period during which such services were provided;

(f) a description of the type of fund raising campaign conducted, including without limitation telemarketing, direct mail, door-to-door, electronic media (television, radio, internet, etc.), special event, publication, ticket or product sale or donation of used or new goods;

(g) a statement as to whether the campaign was directed at persons in New York State only or persons in New York State and other states;

(h) a statement as to whether all contributions received from fund raising activity under the contract were deposited within five days of receipt in a bank account under exclusive control of the charity;

(i) the names, addresses and account numbers of the banking or other financial institution(s) in which contributions received from solicitation activity pursuant to the contract were deposited;

(j) a statement as to whether during the specified contract period or contract year the professional fund raiser contracted with any sub-contractor to perform any services covered by the contract and, if so, the name, address and telephone number of any such sub-contractor;

(k) a statement as to whether contractual services have been provided and whether the charitable organization has received all contractual monetary guarantees (if any). If all services have not been completed, an explanation of what remains to be completed;

(l) a breakdown of all revenue received during the reporting period;

(m) a breakdown of all expenses incurred by the professional fund raiser and charitable organization in connection with the campaign, including without limitation:

(1) the professional fund raiser's remuneration or other fees;

(2) salaries and benefits for professional solicitors, office managers and other professional fund raiser employees;

(3) permit, license and registration fees;

(4) sub-contractors' remuneration or other fees;

(5) postage and shipping;

(6) telephone;

(7) office rent, office utilities and office insurance;

(8) office supplies and other office expenses;

(9) list rentals;

(10) printing;

(11) advertising;

(12) show and other event fees;

(13) show and other event facilities rental fees and insurance;

(14) computer and data-processing fees;

(15) cost of merchandise for re-sale;

(16) total expenses;

(17) net amount retained by or paid to the charitable organization;

(18) additional amounts paid to the charitable organization as a contractual guarantee;

(19) professional fund raiser's profit or loss;

(20) uncollected pledges;

(21) in-kind donations; and

(22) the dated signature of the parties to the contract under the penalties for perjury.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 93.6 Where to file

All registrations, interim and closing statements, contracts, fees and any other documents or instruments required to be filed by fund raising professionals and all correspondence relating thereto shall be directed to the New York State Attorney General, Charities Bureau, The Capitol, Albany, NY 12224 or to any other address that the Attorney General may designate.

Part 94 AVAILABILITY OF FORMS AND INSTRUCTIONS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 94.1 Availability of forms and instructions

Forms and instructions for registration and filing may be downloaded from the Attorney General's website at www.oag.state.ny.us/charities/charities.html or by writing to New York State Attorney General, Charities Bureau, 28 Liberty Street, New York, NY 10005 or at any other website or address designated by the Attorney General.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 95 Identification Of Filings

N.Y. Comp. Codes R. & Regs. Tit. 13 § 95.1 Identification of filings

Identifying information, including the organization or entity name and, if applicable, the regulation number must be placed on all correspondence and other documents, including payments, submitted to the Charities Bureau.

Part 96 DOCUMENTS FILED WITH THE ATTORNEY GENERAL ARE SUBJECT TO PUBLIC INSPECTION

N.Y. Comp. Codes R. & Regs. Tit. 13 § 96.1 Public documents

Unless otherwise exempt from disclosure pursuant to State or Federal law, registrations, filings and other documents required to be filed pursuant to EPTL section 8-1.4 and/or article 7-A become public records of the Attorney General.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 96.2 Inspection of public documents

Copies of all registrations, filings and other documents filed with the Attorney General and not exempt from disclosure pursuant to State or Federal law shall be open to public inspection subject to the following requirements:

(a) a request for inspection shall indicate the name and address of the person seeking the inspection and shall be submitted in writing on form CHAR007 (Freedom of Information Law [FOIL] request form) to the New York State Attorney General, Charities Bureau, Attn: FOIL Officer, 28 Liberty Street, New York, NY 10005 or by e-mail to Charities. Via email portal as directed at https://ag.ny.gov/bureau/foil or such other address or e-mail address as the Attorney General may designate;

(b) such inspection shall be subject to the applicable provisions of article 6 of the Public Officers Law;

(c) such inspection shall at all times be subject to the supervision and control of the Attorney General or the Attorney General's assistants;

(d) the Attorney General is authorized to charge a reasonable fee for copying and postage; and

(e) filings may be inspected, by prior appointment, at the offices of the Charities Bureau during regular business hours or will be mailed or e-mailed to the requestor upon payment of all copying and postage fees.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 97 Administrative Enforcement By The Attorney General

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.1 Procedures applicable to administrative proceedings commenced by the attorney general pursuant to article 7-a section 177

(a) Violations under the Attorney General's administrative jurisdiction. Upon a finding by the Attorney General that any person has committed or is committing a violation of article 7-A, by engaging in activities prohibited under section 172-d that are subject to the administrative remedies of section 177, or by failing to comply with the reporting requirements set forth in section 172-b, the Attorney General may impose the administrative remedies listed in section 97.2 of this Part.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.2 Remedies in attorney general's administrative proceeding

(a) Upon a finding of a violation of article 7-A, the Attorney General may:

(1) revoke, suspend or deny a registration of a charitable organization, professional fund raiser, professional solicitor or fund raising counsel or issue an order directing a charitable organization, professional fund raiser, professional solicitor or fund raising counsel to cease and desist specified fund raising activities; and

(2) assess a civil penalty in an amount authorized by article 7-A section 177.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.3 Notice of violation

(a) The Attorney General shall, before revoking, suspending or denying any registration or exemption, or issuing a cease and desist order, or assessing a civil penalty, notify the respondent in writing and provide an opportunity for a hearing in accordance with article 7-A section 177 and this Chapter.

(b) The notice shall consist of a statement of the charges and shall be served by personal delivery or by registered or certified mail to the last known business address of the respondent.

(c) If, within 30 days of the date of mailing of the notice of violation, the violation is cured, the respondent may be entitled to waiver of any civil penalty, as provided under article 7-A section 177.2(b).

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.4 Requests for hearings

(a) Hearings shall be conducted in accordance with articles three and five of the New York State Administrative Procedure Act (SAPA) and in accordance with 19 NYCRR Part 400.

(b) A hearing must be requested within 20 days after receipt of notice from the Attorney General.

(d) Should the respondent not request a hearing, the Attorney General may impose the administrative remedies described in section 97.2 of this Part.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.5 Notice of hearing

(a) A hearing shall be held at a time and place designated by the Attorney General.

(b) The Attorney General shall notify the respondent in writing of the time and place of the hearing. The notice may be served by personal delivery or by registered or certified mail to its last known business address.

(c) Every notice of hearing shall be served with a copy of articles three and five of SAPA, 19 NYCRR Part 400 and this Chapter.

(d) The notice shall include:

(1) a statement of the time, place and nature of the hearing;

(2) a statement of the legal authority and jurisdiction for the hearing;

(3) the sections of the statutes or rules and regulations involved;

(4) a statement of the facts asserted; and

(5) a statement that free interpreter services will be made available.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.6 Administrative hearing officers

All hearings shall be conducted by administrative law judges (hearing officers) appointed by the Attorney General or the Attorney General's designee. The hearing officer shall be an attorney who has not worked on or otherwise become familiar with the facts of the matter in issue, and shall exercise his or her judgment independently and impartially.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.7 Adjournments

(a) Adjournments must be requested by written affidavit sent to the hearing officer no later than three business days before the scheduled date of the hearing. The affidavit should contain sufficient details to explain the reason for the request.

(b) Adjournments will be granted only for good cause.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.8 Subpoenas

(a) Subpoenas may be issued by the hearing officer, the Attorney General or any attorney for a party who is a member of the New York Bar.

(b) Subpoenas shall be served in accordance with the Civil Practice Law and Rules.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.9 Conduct of the hearing

(a) A hearing officer designated by the Attorney General shall conduct the hearing.

(b) The hearing officer may regulate the conduct of the hearing, require witnesses to attend the hearings, take proof and make relevant factual determinations.

(c) The respondent may appear at the hearing, cross examine witnesses and produce evidence on his or her own behalf. Should the applicant fail to appear at the hearing, the hearing officer shall hear the evidence given by the Attorney General and make his or her findings and recommendations on the basis of that evidence.

(d) The proceeding may be resolved by stipulation, consent order or default of any respondent.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.10 Representation

Any respondent who requests a hearing or is compelled to appear before the Attorney General has the right to be represented by counsel or a non-lawyer representative.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.11 Evidence

(a) Strict rules of evidence do not apply.

(b) In order to expedite the hearing, the hearing officer may permit all or part of the evidence to be submitted in written form.

(d) A party has the right to cross examine witnesses.

(e) Objections to evidence may be made and shall be noted in the record.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.12 Record

(a) The hearing officer shall make a complete record of the proceeding by whatever means he or she deems appropriate, including but not limited to, stenographic transcription or recording devices.

(b) The record shall include:

(1) records and documents in the Attorney General's possession relevant to the initial findings under article 7-A;

(2) notices, pleadings, motions and all rulings by the hearing officer;

(3) evidence presented;

(4) questions, offers of proof and objections;

(5) findings of fact and conclusions of law; and

(6) the decision or determination.

(c) If requested, the Attorney General shall prepare the record and any transcript of the proceedings within a reasonable time after the decision, but before the commencement of time for judicial review, and provide a copy to any party.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.13 Costs

The Attorney General may charge for the costs incurred in preparing and providing copies of the record.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.14 Motions

(a) A motion to dismiss the statement of charges for failure of proof may be made at the conclusion of the Attorney General's case.

(b) The hearing officer may:

(1) grant the motion;

(2) deny the motion and continue the hearing; or

(3) reserve making a decision on the motion and continue the hearing.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.15 Findings of fact

(a) Any party may submit written proposed findings of fact to the hearing officer within the time frames set by the hearing officer. The hearing officer will rule on each finding of fact.

(b) Findings of fact must be based on the evidence.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.16 Time periods

(a) Every adjudicatory proceeding must be completed within 150 days of the date of the hearing stated in the notice of hearing. A request for an adjournment extends the time period by the length of time the adjournment is granted.

(b) Prior to the expiration date, the Attorney General or the hearing officer may extend the time period for no longer than an additional 120 days by a written determination mailed to all parties that the proceeding cannot be completed within 150 days and the reasons for the extension.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.17 Final determinations and orders

(a) The hearing officer shall make a final determination within 10 days of the conclusion of the hearing.

(b) The hearing officer shall make his or her determination or order in writing after consideration of the entire record and as supported by substantial evidence. Substantial evidence means such proof as a reasonable person may accept as adequate to support a decision and constitutes a rational basis for the decision.

(d) The Attorney General shall serve a copy of such determination or order upon the respondent personally or by registered or certified mail to the last known business address, or to the attorney of record.

(e) The Attorney General shall maintain an index of all final written decisions by name and subject area.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.18 Stay of the decision or order

(a) After the decision and before filing an appeal from the decision, any party may immediately apply to the Attorney General for a stay pending a decision on an appeal.

(b) The application must be in writing, based on evidence in the record and served on opposing parties, who can rebut the application in writing within two business days of receipt.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.19 Administrative appeal from the decision or order

(a) Within 30 calendar days of receipt, any of the parties may appeal from the decision or order revoking, suspending or denying any registration or exemption, or issuing a cease and desist order or assessing a civil penalty, by filing with the individual designated by the Attorney General to hear administrative appeals, and serving on the other party or parties, a written memorandum stating the appellant's arguments.

(b) The memorandum should identify the part or parts of the decision to which the appellant is objecting, state the grounds for the objection and identify the portions of the record supporting the objection.

(c) The party served with the appeal may file and serve a memorandum in opposition and a cross-appeal within 30 days after service of the appeal. A response to a cross-appeal may be filed and served within 15 days after service of the cross-appeal.

(d) The record on appeal shall consist of the transcript of the hearing, the evidence admitted at the hearing and the memoranda.

(e) The individual designated by the Attorney General to hear and decide administrative appeals may make a final written determination:

(1) confirming the decision;

(2) vacating the decision with an explanation of the basis for vacating the decision; or

(3) sending the matter back to the hearing officer for further proceedings.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 97.20 Judicial appeal from the final administrative determination

Within 120 days after the final determination, a party may appeal from the final determination by commencing a proceeding for judicial review under article 78 of the New York State Civil Practice Law and Rules.

Part 98 Civil Enforcement By The Attorney General

N.Y. Comp. Codes R. & Regs. Tit. 13 § 98.1 Civil enforcement by the attorney general

This Chapter shall not prohibit the Attorney General from initiating any civil action or proceeding authorized by law for failure to register and/or file reports pursuant to, and/or comply with, any provision of EPTL article 8 or article 7-A, any other law or the common law.

Part 99 Criminal Enforcement By The Attorney General

N.Y. Comp. Codes R. & Regs. Tit. 13 § 99.1 Criminal enforcement by the attorney general

(a) This Chapter shall not prohibit the Attorney General from initiating any criminal action authorized by law for failure to register and/or file reports pursuant to, and/or comply with, any provision of EPTL article 8 or article 7-A, any other law or the common law.

(b) Any person who swears falsely to any document required by this Chapter to be signed under penalties for perjury may be guilty of a crime under the New York Penal Code.

(c) Any provision of article 7-A, violation of which is designated a misdemeanor without specification of classification, is a class A misdemeanor. See Penal Law section 55.10.2(b).

Chapter VI PUBLIC ACCESS TO DEPARTMENTAL RECORDS

Part 120 PUBLIC ACCESS TO DEPARTMENTAL RECORDS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 120.1 Purpose

This Part contains the procedures to be followed by the Department of Law in compliance with chapter 933 of the Laws of 1977 entitled "Freedom of Information Law".

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 120.5 Locations and hours for public access

(a) The following locations and/or offices of the Department of Law are hereby designated to receive requests for information under the Freedom of Information Law:

RECORDS ACCESS LOCATIONS

| Albany: | State of New York | | --- | --- | | Department of Law | | | Administrative Bureau | | | Platform Level, Justice Building | | | Empire State Plaza | | | Albany, New York 12223 | | | New York City: | State of New York | | Department of Law | | | Administrative Office | | | 28 Liberty Street | | | New York, New York 10005 | | | Auburn: | State of New York | | Department of Law | | | 10 Lower Metcalf Plaza | | | Auburn, New York 13021 | | | Binghamton: | State of New York | | Department of Law | | | Binghamton State Office Bldg. | | | 44 Hawley Street | | | Binghamton, New York 13901 | | | Buffalo: | State of New York | | Department of Law | | | 65 Court Street | | | Buffalo, New York 14202 | | | Hauppauge: | State of New York | | Department of Law | | | Suffolk State Office Building | | | Veteran's Highway | | | Hauppauge, New York 11787 | | | Plattsburgh: | State of New York | | Department of Law | | | 48 Cornelia Street | | | Plattsburgh, New York 12901 | | | Poughkeepsie: | State of New York | | Department of Law | | | 40 Garden Street | | | Poughkeepsie, New York 14614 | | | Rochester: | State of New York | | Department of Law | | | 65 Broad Street | | | Rochester, New York 14614 | | | Syracuse: | State of New York | | Department of Law | | | 333 E. Washington Street | | | Syracuse, New York 13202 | | | Utica: | State of New York | | Department of Law | | | Utica State Office Bldg. | | | 207 Genesee Street | | | Box 528 | | | Utica, New York 13501 | | | Watertown: | State of New York | | Department of Law | | | Watertown State Office Building | | | 317 Washington Street | | | Watertown, New York 13601 | | | Special Investigation of the | State of New York | | New York City Criminal Justice System: | Office of the Special Prosecutor | | 28 Liberty Street | | | New York, New York 10005 | | | Special Investigation for | State of New York | | Nursing Homes, Health and Social Services: | Special Prosecutor for Nursing Homes, Health and Social Services | | 270 Broadway | | | New York, New York 10007 | | | Statewide Organized Crime | State of New York | | Task Force: | Statewide Organized Crime Task Force | | Empire State Plaza | | | Agency Building #1, 9th Floor | | | Albany, New York 12223 | | | Special Investigation | State of New York | | Onondaga County | Office of the Special Prosecutor for Onondaga County | | Suite 101 | | | 360 South Warren Street | | | Syracuse, New York 13201 | |

(b) The records access officers shall be:

(1) the first assistant Attorney General;

(2) the administrative director, New York State Department of Law;

(3) a special assistant Attorney General designated for each special investigation established pursuant to statute; and

(4) an assistant Attorney General for the Statewide Organized Crime Task Force established pursuant to section 70-a of the Executive Law. Requests for records pursuant to this Part received in the New York City and metropolitan area shall be referred to the first assistant Attorney General for disposition. Requests from the upstate area shall be referred to the administrative director of the Department of Law for disposition. Requests for records of Special Investigations, including the Statewide Organized Crime Task Force, established pursuant to statute, shall be referred to the Office of the Investigation, Attention Records Access Officer.

(c) Requests for information will be received and inspections permitted between the hours of 10 a.m. and 3 p.m., at each location on all days when such location is open for business.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 120.15 Responses to requests

(a) The records access officer shall within five business days:

(1) approve the request and authorize inspection of and copying of the record and certification of correctness of such copy; or

(2) deny the request and state the reason therefor on the application form; or

(3) if the request does not clearly identify the records sought, seek additional information from the requestor; or

(4) acknowledge receipt of the request and provide a statement of the approximate date when the request will be granted or denied.

(b) The records access officer shall, in authorizing issuance of copies, direct such omissions as may be required to protect the personal privacy of individuals in accordance with the requirements of the Freedom of Information Law, or any other applicable law, or regulation.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 120.20 Fees

(a) No charge will be made for the first five or fewer pages of photocopy of pages not larger than 8 1/2 inches by 14 inches. No charge will be made to certify a record or to certify a denial of a request for a record and the reason therefor.

(b) A charge will be made of 25 cents per page of photocopy of pages not larger than 8-1/2 inches by 14 inches apart from the aforementioned five pages furnished without charge.

(c) Charges for materials or services not specified by statute or regulation shall be based on the actual cost thereof to the department.

(d) Payment for information services should be made by check or money order payable to "New York State Department of Law".

(e) Where it is anticipated that the fees chargeable for records on a single request will amount to more than $25 and the requestor has not indicated in advance his willingness to pay fees in such amount, the requestor shall be notified of the amount of the anticipated fee or such portion thereof as can readily be estimated. Such notice shall offer to the requestor an opportunity to confer with department personnel in order to revise the request if he so desires.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 120.25 Departmental finding list

The department shall develop a record finding list for use at departmental access locations in conformity with the requirements of the Freedom of Information Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 120.30 Appeals

(a) The head of the department to whom the appeals from denial of access may be made is the Attorney General, except that for special investigations established pursuant to statute, appeals will be made to the Special Deputy Attorney General in charge or his designee, or in the case of the Statewide Organized Crime Task Force, the Deputy Attorney General or his designee. The Attorney General or the Special Deputy Attorney General or the Deputy Attorney General for the Organized Crime Task Force may designate a representative to determine such appeals and to exercise their powers and duties under subdivision 4 of section 89 of the Freedom of Information Law.

(b) When a records access officer has denied a request for records in whole or in part, the requestor may, within 30 days of its receipt, appeal the denial to the Attorney General's designated representative or to the Attorney General if he has made no such designation, or in the case of a Special Investigation established pursuant to statute to the Special Deputy Attorney General or his designee, or in the case of the Statewide Organized Crime Task Force to the Deputy Attorney General or his designee.

(c) The Attorney General or his authorized representative, or the Special Deputy Attorney General for each special investigation or his designee, or the Deputy Attorney General for the Statewide Organized Crime Task Force or his designee, will act upon the appeal within seven business days of its receipt. A denial in whole or in part of a request on appeal shall set forth the reason therefor in writing.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 120.35 Posted notice

The department shall cause to be conspicuously displayed at each access location, a notice clearly indicating:

(a) the head of the department;

(b) the records access locations, times and officers designated by the department;

(d) the right of a request or to appeal a denial of access and an outline of the procedure to be followed.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 121 ACCESS TO PERSONAL INFORMATION

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.1 Purpose and scope

(a) It is the responsibility and the intent of the Department of Law (hereinafter department) to fully comply with the provisions of article 6-A of the Public Officers Law, the Personal Privacy Protection Law.

(b) The department shall maintain in its records only such personal information that is relevant and necessary to accomplish a purpose of the department authorized by law.

(c) Personal information will be collected, whenever practicable, directly from the person to whom the information pertains, except when collected for the purpose of making quasi-judicial determinations.

(d) The department seeks to ensure that all records pertaining to or used with respect to individuals are accurate, relevant, timely and complete.

(e) These regulations provide information regarding the procedures by which members of the public may assert rights granted by the Personal Privacy Protection Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.2 Designation of privacy compliance officer

(a) The department's privacy compliance officer is responsible for ensuring compliance with the provisions of the Personal Privacy Protection Law and the regulations herein and for coordinating department's response to requests for records or amendments of records. Responsibility for compliance by all special investigation units and the Statewide Organized Crime Task Force established pursuant to statute shall rest with the deputy attorney general in charge of the investigation unit or the deputy attorney general in charge of the Organized Crime Task Force.

(b) Deleted.

(1) assisting a data subject in identifying and requesting personal information, if necessary;

(2) describing the contents of systems of records orally or in writing in order to enable a data subject to learn if a system of records includes a record or personal information identifiable to a data subject requesting such record or personal information;

(3) taking one of the following actions upon locating the record sought:

(i) make the record available for inspection, in a printed form without codes or symbols, unless an accompanying document explaining such codes or symbols is also provided;

(ii) permit the data subject to copy the record; or

(iii) deny access to the record in whole or in part and explain in writing the reasons therefor;

(4) making a copy available, upon request, upon payment of or offer to pay established fees, if any, or permitting the data subject to copy the records;

(5) upon request, certifying that a copy of a record is a true copy; or

(6) certifying, upon request, that:

(i) the department does not have possession of the record sought;

(ii) the department cannot locate the record sought after having made a diligent search; or

(iii) the information sought cannot be retreived by use of the description thereof, or by use of the name or other identifier of the data subject without extraordinary search methods being employed by the department.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.3 Proof of identity

(a) When a request is made in person, or when records are made available in person following a request by mail, the department may require appropriate identification, such as a driver's license, an identifier assigned to the data subject by the department, a photograph or similar information that confirms that the record sought pertains to the data subject.

(b) When a request is made by mail, the department may require verification of a signature or inclusion of an identifier generally known only by a data subject, or similar appropriate identification.

(c) Proof of identity shall not be required regarding a request for a record accessible to the public pursuant to article 6 of the Public Officers Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.4 Location

(a) Records shall be made available at the offices of the agency. Requests for information and records may be directed to the department's offices which are currently at the following locations:

Albany:

State of New York

Department of Law

Administration Bureau

Justice Building

Empire State Plaza

Albany, NY 12223

New York City:

State of New York

Department of Law

Administration Office

28 Liberty Street

New York, NY 10005

Binghamton:

State of New York

Department of Law

Key Bank Building

59-61 Court Street, 7th Floor

Binghamton, NY 13901

Buffalo:

State of New York

Department of Law

65 Court Street, 3rd Floor

Buffalo, NY 14202

Hauppauge:

State of New York

Department of Law

Suffolk State Office Building

Veterans Highway

Hauppauge, NY 11787

Mineola:

State of New York

Department of Law

Nassau Regional Office

190 Willis Avenue

Mineola, NY 11501

Plattsburgh:

State of New York

Department of Law

70 Clinton Street

Plattsburgh, NY 12901

Poughkeepsie:

State of New York

Department of Law

235 Main Street

Poughkeepsie, NY 12601

Rochester:

State of New York

Department of Law

Reynolds Arcade Building, Suite 900

16 Main Street East

Rochester, NY 14614

Syracuse:

State of New York

Department of Law

333 East Washington Street

Syracuse, NY 13202

Utica:

State of New York

Department of Law

Utica State Office Building

207 Genesee Street

Box 528

Utica, NY 13501

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.5 Hours and places for public inspection and copying

Records shall be available for inspection and copying by members of the public on each and every day that the offices of the department are open for the transaction of business, during all regular business hours. Records shall be inspected at the location for the inspection of records designated by the department.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.6 Requests for records

(a) All requests shall be made in writing, except that the department, in its discretion, may make records available upon an oral request made in person after the applicant has demonstrated proof of identity, if proof of identity is required.

(b) A request shall reasonably describe the record sought. To the extent possible, the data subject shall supply identifying information that assists the agency in locating the record sought.

(c) Requests based upon categories of information described in a notice of a system of records or a privacy impact statement shall be deemed to reasonably describe the record sought.

(d) Within five business days of the receipt of a request, the department shall provide access to the record, deny access in writing explaining the reasons therefor, or acknowledge the receipt of the request in writing, stating the approximate date when the request will be granted or denied, which date shall not exceed 30 days from the date of the acknowledgment.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.7 Amendment of records

Within 30 business days of a request from a data subject for correction or amendment of a record or personal information that is reasonably described and that pertains to the data subject, the department shall:

(a) make the amendment or correction in whole or in part and inform the data subject that, on request, such correction or amendment will be provided to any person or governmental unit to which the record or personal information has been or is disclosed pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law; or

(b) inform the data subject in writing of its refusal to correct or amend the record, including the reasons therefor.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.8 Denial of request for a record or amendment or correction of a record or personal information

(a) Denial of a request for records or amendment or correction of a record or personal information shall:

(1) be in writing, explaining the reasons therefor; and

(2) identify the person to whom an appeal may be directed.

(b) A failure to grant or deny access to records within five business days of the receipt of a request or within 30 days of an acknowledgment of the receipt of a request, or a failure to respond to a request for amendment or correction of a record within 30 business days of receipt of such a request, shall be construed as a denial that may be appealed.

(c) Any such denial may be appealed to: FOIL Appeals Officer, State of New York, Office of the Attorney General, Division of Appeals and Opinions, The Capitol, Albany, NY 12224.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.9 Appeal

(a) Any person denied access to a record or denied a request to amend or correct a record or personal information pursuant to section 121.8 of this Part may, within 30 business days of such denial, appeal to FOIL Appeals Officer, State of New York, Office of the Attorney General, Division of Appeals and Opinions, The Capitol, Albany, NY 12224.

(b) The time for deciding an appeal shall commence upon receipt of an appeal that identifies:

(1) the date and location of a request for a record or amendment or correction of a record or personal information;

(2) the record that is the subject of the appeal; and

(3) the name and return address of the appellant.

(c) Within seven business days of an appeal of a denial of access, or within 30 business days of an appeal concerning a denial of a request for correction or amendment, the person determining such appeals shall:

(1) provide access to or correct or amend the record or personal information; or

(2) fully explain in writing the factual and statutory reasons for further denial and inform the data subject of the right to seek judicial review of such determination pursuant to article 78 of the Civil Practice Law and Rules.

(d) If, on appeal, a record or personal information is corrected or amended, the data subject shall be informed that, on request, the correction or amendment will be provided to any person or governmental unit to which the record or personal information has been or is disclosed pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law.

(e) The department shall immediately forward to the Committee on Open Government a copy of any appeal made pursuant to this Part upon receipt, the determination thereof and the reasons therefor at the time of such determination.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.10 Statement of disagreement by data subject

(a) If correction or amendment of a record or personal information is denied in whole or in part upon appeal, the determination rendered pursuant to the appeal shall inform the data subject of the right to:

(1) file with the department a statement of reasonable length setting forth the data subject's reasons for disagreement with the determination;

(2) request that such a statement of disagreement be provided to any person or governmental unit to which the record has been or is disclosed pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law.

(b) Upon receipt of a statement of disagreement by a data subject, the department shall:

(1) clearly note any portions of the record that are disputed; and

(2) attach the data subject's statement of disagreement to a person or governmental unit in conjunction with a disclosure made pursuant to paragraph (d), (i) or (l) of subdivision 1 of section 96 of the Public Officers Law; the department may also include a concise statement of its reasons for not making the requested amendment or correction.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.11 Fees

(a) Unless otherwise prescribed by statute, there shall be no fee charged for:

(1) inspection of records;

(2) search for records; or

(3) any certification pursuant to this Part.

(b) Unless otherwise prescribed by statute, copies of records shall be provided upon payment of fees as set forth in section 120.20 of this Title.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 121.12 Severability

If any provision of this Part or the application thereof to any person or circumstance is adjudged invalid by a court of competent jurisdiction, such judgment shall not affect or impair the validity of the other provisions of this Part or the application thereof to other persons and circumstances.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Chapter VII FRANCHISE OFFERINGS

Part 200 FRANCHISE OFFERINGS

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.3 Franchise prospectus registration application

(a) Completion of application.

An application for registration of the prospectus shall include the following:

(1) facing page, employing form (UFRA-A);

(2) supplemental information page(s) which shall contain a statement as to each franchise salesman employed by the franchisor containing the information as to his identity and litigation history called for by section 200.4(c)(2) and (3) of this Part;

(3) certification of application (UFRA-C);

(4) sales agent disclosure form (UFRA-E); and

(5) two copies of the proposed offering prospectus or offering circular.

The following shall be attached to the application:

(6) one copy of the proposed offering prospectus or offering circular;

(7) two copies of any advertising to be used in connection with the offer or sale of franchises;

(8) a consent to service of process (UFRA-D); and

(9) form of guarantee of performance (UFRA-F).

(b) Disclosure.

Each disclosure item should be commented upon by use of a statement which fully incorporates the information required by the item, or which states why such information is not or cannot be furnished.

When the person filing the application for registration is a subfranchisor, the application shall also include the same information concerning the subfranchisor as is required from the franchisor; the franchisor, as well as the subfranchisor, shall execute a signature page.

(d) Signing of application.

The application shall be signed by the chief executive officer or a general partner of the applicant; however, it may be signed by another person holding a power of attorney for such purposes so long as the agent has a personal knowledge of the information contained in the application and prospectus. If signed on behalf of the applicant pursuant to a power of attorney, the application shall include as an exhibit a copy of an authorizing corporate or partnership resolution. The applicant or agent shall attest that: the information contained in the application and the prospectus or offering circular is true; that there are no material omissions or misrepresentations contained therein; and that material information which shall thereafter emerge shall be promptly disclosed by amendment, pursuant to section 200.5 of this Part.

(e) Manually signed consent of accountant.

All applications shall be accompanied by a manually signed consent, or a photocopy of the consent, of the independent public accountant to the use of his audited financial statements as such statements appear in the offering prospectus.

(f) Application to amend the registration.

An amendment to an application filed after the effective date of registration shall consist of the following:

(1) facing page employing form (UFRA-A) and containing the number of the amendment;

(2) certification of application (UFRA-C); and

(3) two copies of the prospectus, as amended, one copy red-lined to show the amendment being made.

(g) [Reserved]

(h) Applications and forms shall be filed with, and documents, correspondence and other materials shall be mailed or delivered to, the Bureau of Investor Protection and Securities, New York State Department of Law, 28 Liberty Street, New York, NY 10005.

(i) Department action.

(1) The department shall, not later than 30 days after the submission for filing of a franchise prospectus or not later than 15 days after the submission for filing of an amendment to the prospectus, issue a letter stating that the prospectus or amendment has been accepted for filing, or in the alternative indicating the respect in which the application for registration, the proposed offering prospectus or the amendment, is deficient or otherwise fails to make adequate disclosure. In the event that the franchisor resubmits its application, prospectus or amendment following the issuance of a deficiency letter, the department shall, not later than 30 days following the resubmission of the amendment, issue a letter accepting the prospectus for filing or issue a further deficiency letter. This procedure shall be followed until the prospectus or amendment has been accepted for filing or the franchisor has withdrawn or abandoned its application for registration or amendment.

(2) A franchisor may offer or sell interests in franchises or advertise the same notwithstanding the occurrence of an event which would require an amendment to its prospectus, so long as an application to amend is made as required by law and the regulations, and may continue to offer, sell or advertise during the time that the department is acting upon its application unless otherwise advised by the department.

(3) A franchisor making an offer, selling or advertising following the occurrence of an event requiring an amendment shall advise its offeree, in writing, at the time it supplies the offeree with its registered prospectus, that an event requiring amendment has occurred and that an amendment application has been submitted, or will be submitted to the department within 10 business days of such event, and shall supply its offeree with a copy of its amended prospectus when it has been accepted for filing and registered by the department. Any funds paid by the offeree to the franchisor shall, upon their receipt, be held in trust in a separate bank account and shall remain in trust from that time until 10 business days following the date on which the offeree is supplied a copy of the registered amended prospectus. Prior to receipt by the offeree of the registered amended prospectus or within 10 business days following its receipt of the registered amended prospectus, the offeree may rescind the sale and if it does, the franchisor shall pay the trust funds to the offeree forthwith. If the offeree does not rescind either prior to receipt of the registered amended prospectus, or during the 10-day period following receipt of registered amended prospectus, then its acceptance shall remain in force and the funds shall be released from trust and their disposition shall be subject to the agreement made between the franchisor and offeree. If the department refuses to register the amended prospectus, then the franchisor shall, upon such refusal, immediately pay the trust funds to the offeree.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.4 Rules concerning denial, suspension or revocation of franchise sales agent registrations

(a) The department may deny, suspend or revoke a franchise sales agent's registration upon a finding by the department that the agent has:

(1) made an untrue statement of a material fact in any application, notice, prospectus or report or statement filed with the department under article 33 of the General Business Law;

(2) willfully omitted to state, in any such application, notice, statement, prospectus or report, any material fact which is required to be stated herein, or failed to notify the department of any material change required by article 33 of the General Business Law;

(3) employed any device, scheme or artifice to defraud in the offer or sale of franchises;

(4) made any untrue statement of material fact or omitted to state a material fact necessary in order to have made the statement made, in the light of the circumstances under which they were made, not misleading in the offer or sale of franchises;

(5) engaged in any act, practice or course of business which operates or would operate as a fraud or deceit upon any person in the offer or sale of franchises;

(6) violated any provision of article 33 of the General Business Law or any condition of the effectiveness of the registration of an offering prospectus or of any exemption from the registration provisions of article 33 of the General Business Law; or

(7) required a franchisee to assent to a release, assignment, vacation, waiver or estoppel which would relieve a person from any duty or liability imposed by this Part.

(b) The department may deny, suspend or revoke a franchise sales agent's registration if any court or regulatory body has made a final decision or judgment that the registrant has been guilty of fraudulent conduct.

(c) No finding shall be made hereunder except after a hearing pursuant to the procedures set forth in State Administrative Procedure Act article 3.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.5 Amendments to franchise offering prospectus

(a) In compliance with section 683.9 of the General Business Law, a franchisor shall promptly notify the Department of Law, by application to amend its offering, of any material changes in the information contained in the prospectus as originally submitted or amended.

(b) Material change, as used in section 683.9 of the General Business Law, includes but is not limited to:

(1) the termination, closing, or failure to renew, during a three-month period, of the lesser of 10, or 10 percent, of the franchises of a franchisor, regardless of location;

(2) a purchase by the franchisor in excess of five percent of its existing franchises during six consecutive months;

(3) a change in the franchise fees charged by the franchisor; and

(4) any significant adverse change in the business condition of the franchisor or in any of the following:

(i) the obligations of the franchisee to purchase items from the franchisor or its designated sources;

(ii) limitations or restrictions on the goods or services which the franchisee may offer to its customers;

(iii) the obligations to be performed by the franchisor;

(iv) the franchise contract or agreements, including amendments thereto;

(v) the franchisor's accounting system resulting in a five percent or greater change in its net profit or loss in any six-month period; or

(vi) the service, product or model line.

(5) audited financial statements of the preceding fiscal year.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.6 Impoundment of funds

(a) If the Department of Law finds that the franchisor has failed to make adequate financial arrangements to fulfill its obligation to provide real estate, improvements, equipment, inventory, training, or other items included in its offering, the department may impose an escrow of up to the full amount of the franchise fees and other funds paid by the franchisee or subfranchisor until the franchisor's obligations are fulfilled.

(b) When an escrow is imposed, the franchisor shall be the holder of the escrow funds. It shall place these funds in an escrow account established in a national bank located in New York or a New York bank or trust company. This account shall contain only escrow funds and shall be separate and apart from the franchisor's other accounts.

(c) All proceeds so deposited shall remain the property of the franchisee and shall not be subject to any liens or charges by the franchisor, or judgments, garnishments or creditor's claims.

(d) The franchisor and the bank or trust company shall, in establishing the franchisor's escrow account, make an agreement which shall authorize the department to inspect the records of the bank or trust company relating to the escrow account and permitting the bank to furnish to the department, at the department's request, a statement of the condition of the escrow account.

(e) When an escrow is imposed, the franchisor shall deliver to each franchisee or subfranchisor a purchase receipt evidencing the receipt of funds from the franchisee on account of the payment of franchise fees, as that term is defined in section 681 of the General Business Law, and stating that the funds are to be held in escrow by the franchisor and deposited in an escrow account, setting forth the name of the bank or trust company in which the account is established, the address of the bank or trust company, the name of the account and the account number. Purchase receipts shall be consecutively numbered and prepared in quadruplicate, the original given to the franchisee or subfranchisor, the first copy to the bank or trust company, together with the payment received, the second copy retained by the franchisor, and the third copy sent to the department.

(f) The department shall authorize the franchisor to release those amounts of the escrowed funds applicable to specified franchisee or subfranchisor upon a showing satisfactory to the department that the franchisor has fulfilled its obligations under the franchise agreement to establish the franchise.

(g) An application for an order of the department authorizing the release of escrowed funds to the franchisor shall be verified and shall contain:

(1) a statement of the franchisor that required proceeds from the sale of franchises have been placed with the bank or trust company in accordance with the terms and conditions of the escrow agreement;

(2) a franchisee's verified statement of completion of franchisor's obligations for release of funds from escrow;

(3) a statement of the bank or trust company signed by an appropriate officer setting forth the aggregate amount of escrow funds placed with the depository, when required by the administrator;

(4) the name of each franchisee or subfranchisor and the amount held in escrow for the account of the franchisee or subfranchisor;

(5) a showing that the franchisor, with respect to a franchise, the funds for which are sought to be released, has completely performed its obligations, cited by reference to the franchise agreement and its provisions, to provide real estate, improvements, equipment, inventory, training or other items; and

(6) other information the department may reasonably require.

(h) If the department finds that any conditions of this agreement have not been satisfied or that any provisions of the New York franchise law or regulations have not been complied with, or the registration of the franchises has been revoked, then the department may withhold such authorization for release of funds by the franchisor and may direct the full return of funds by the franchisor to the franchisees.

(i) Surety bond in lieu of escrow.

(1) In lieu of the imposition of an escrow, a franchisor at this option may post a surety bond of a surety company in the amount required by the department as protection of the franchisees requires.

(2) The surety company must be authorized to transact business in New York.

(3) The department shall take into consideration the amount of the franchise fees and other fees to be charged as well as the number of franchises to be offered, granted or sold in determining the initial amount of the surety bond and will amend the amount as public interest requires, using the same factors.

(4) Should the department so determine that the franchisor failed to complete its obligations under the franchise contract to provide real estate, improvements, equipment, inventory, training or other items included in the offering, the surety company shall pay the amount of the bond to the department, as obligee, for the benefit of all franchisees in accordance with their contribution of franchise fees.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.7 Rules concerning exemptions

In compliance with section 684.2(c)(4) of the General Business Law, an applicant for an exemption shall supply such information concerning the identity and business experience of persons affiliated with the franchisor as is required to be set forth in an offering prospectus under paragraphs (c)(2)-(4) of section 200.4 of this Part.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.8 Annual report requirements

The franchisor shall, within 120 days of the close of its fiscal year, submit a report to the Department of Law of its activities during the said fiscal year containing the following items:

(a) the name and address of each franchise sold, the date of the sale and the name, address and telephone number of the person purchasing the franchise;

(b) the price paid and credit terms upon the sale of each franchise listed in subdivision (a) of this section; and

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.9 Filing of sales literature

(a) No pamphlet, circular, form letter, advertisement, sales literature, or advertising communication (hereafter sales literature) addressed to or intended for distribution or communication to prospective franchisees, shall be distributed unless it has been filed with the department prior to distribution.

(b) Sales literature shall be submitted to the department not less than seven days prior to its intended use, and shall be submitted in the form and containing the language and subject matter which will appear in the sales literature addressed or intended for distribution to prospective franchisees.

(c) No sales literature shall include any representation or statement inconsistent with the prospectus on file with the department, and the franchisor shall verify in a writing, submitted with the sales literature, that it is not inconsistent with the filed prospectus.

(d) All sales literature in connection with franchise offerings shall contain the following statement in easily readable print, except as provided herein: "This advertisement is not an offering. An offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the Department of Law."

(e) The statement required under the foregoing subdivision shall similarly be contained on the cover page of all circulars, flyers, cards, letters and other literature employed in connection with soliciting interests in the franchise offering.

(f) Irrespective of subdivision (d) of this section, in all classified type advertisements not more than five inches long and not more than one column of print wide, and in all broadcast advertising 30 seconds or less in duration, the following statement may be used, in lieu of the statement required in subdivision (d) of this section:

"This offering is made by prospectus only."

(g) Sales literature, as to franchisors registered in this State, but making offers of their franchises from places other than this State, shall not include such literature contained in a bona fide newspaper or other publication of general, regular and paid circulation whose circulation area does not include this State.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.10 Exemptions from registration

(a) A sale to an existing franchisee form shall be filed with the Department of Law along with the appropriate fee as fixed by subdivision (c) of this section pursuant to, General Business Law, section 684.3(d).

(b) Any offer or sale of a franchise, if the franchise involves the adding of a new product or service line to the existing business of a prospective franchisee, is exempt from registration provided all of the following are met:

(1) For at least the last 24 months prior to the date of sale of the franchise, the prospective franchisee, or if the prospective franchisee is not a natural person, an existing officer, director, or managing agent of the prospective franchisee who has held that position with the prospective franchisee for at least the last 24 months, has been engaged in a business offering products or services substantially similar or related to those to be offered by the franchised business.

(2) The new product or service is substantially similar or related to the product or service being offered by the prospective franchisee's existing business.

(3) The franchised business is to be operated from the same business location as the prospective franchisee's existing business.

(4) The parties anticipated, in good faith, at the time the agreement establishing the franchise relationship was reached, that sales resulting from the franchised business will not represent more than 20 percent of the total sales in dollar volume of the franchisee on an annual basis.

(5) The prospective franchisee is not controlled by the franchisor.

(6) The franchisor notifies in writing the Department of Law of the specific circumstances surrounding the fractional franchise exemption and pays the statutory fee for an amendment as prescribed in section 694.1(b) of the General Business Law.

(c) The Department of Law shall charge and collect a fee equivalent to that of filing an amendment under General Business Law, section 694.1(b) for any exemption granted pursuant to General Business Law, section 684.1 and 684.2.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.11 Registration of franchise sales agents

(a) In compliance with section 683.13 of the General Business Law, all persons acting as franchise sales agents as defined in General Business Law, section 681.8 in the offer for sale or sale of a franchise shall file a sales agent disclosure form (UFRA-E) with the Department of Law. The department shall issue an order of registration upon the receipt of a properly executed application and no offer for sale or sale of a franchise shall be made by a franchise sales agent until said registration order has been issued.

(b) In compliance with section 683.13 of the General Business Law, every person acting as a franchise sales agent who shall have filed a sales agent disclosure form (UFRA-E) with the Department of Law shall file an updated sales agent disclosure form (UFRA-E) whenever any of the following changes have taken place, to indicate the change of information originally filed.

(1) Name. The change in name of registrant (in the event the registrant incorporates, an entirely new registration statement must be filed).

(2) Address. Change of business address and addresses of new branch offices in New York.

(3) Management. Changes in the officers, directors, general partners or other principals of the registrant, giving the new names and addresses involved in such changes.

(4) Litigation. Upon each occasion when the registrant becomes the subject of any criminal action, or is convicted of any misdemeanor or felony, is the subject of any injunction or cease and desist order relating to the offer or sale of securities or franchises or is the subject of a money judgment or injunction in a civil action involving fraud, embezzlement, fraudulent conversion or misappropriation of property.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.12 Exemption from filing requirements of franchise advertising on the Internet

(a) Any communication about a franchise offering posted on a website on the Internet is exempt from the requirements for filing advertising with the Department of Law and paying a fee if:

(1) the franchisor discloses to the Department of Law the uniform resource locator (URL) address or similar address or device identifying the location of the Internet advertising;

(i) on the cover page of a franchise offering circular included with an application for registration that is effective in New York State;

(ii) on the cover page of a franchise offering circular included with an application for exemption from registration that is on file with the Department of Law; or

(iii) on a notice filed with the Department of Law; and

(2) the Internet advertising is not directed to any person in the State of New York by or on behalf of the franchisor or anyone acting with the franchisor's knowledge.

(b) Nothing in this regulation shall be construed to affect the Department of Law's ability to bring an action against any person for violating any antifraud provision of the Franchise Law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 200.13 Unregistered franchise offers over the Internet

Any communication made through the Internet, the World Wide Web, or any other similar proprietary or common carrier electronic delivery system, of an offer to sell a franchise that is not registered in New York, ("Internet offer") is exempt from registration provisions, if:

(a) the Internet offer indicates, directly or indirectly, that the franchise is not being offered to residents of this State;

(b) the Internet offer is not otherwise directed to any person in this State by or on behalf of the franchisor or anyone acting with the franchisor's knowledge; and

(c) no franchise is old in this State by or on behalf of the franchisor until the offering has been registered and declared effective and the Uniform Franchise Offering Circular has been delivered to the offeree before the sale in compliance with article 33 of the General Business Law, the New York Franchise Act.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Part 201 Procedural Regulations Governing Hearings Held Under The New York Franchise Sales Act

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.1 Scope of part

This Part shall govern the conduct of hearings held by the Bureau of Investor Protection and Securities of the Department of Law pursuant to chapter 730, Laws of 1980, the New York Franchise Sales Act, and as amended from time to time.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.2 Opportunity to be heard

(a) The Attorney General shall not refuse to register an offering prospectus pursuant to General Business Law section 684.7, without giving the applicant an opportunity to be heard in any case required by law.

(b) In any case in which the Bureau of Investor Protection and Securities determines that an offering prospectus should be denied registration and in which the applicant would be entitled to a hearing as required by law, it shall notify the applicant that the registration is denied. The notice shall include the statutory authority for the denial and a statement that the applicant is entitled to a hearing. The applicant, within five days of such notice, may then demand a hearing and the bureau shall thereafter commence an adjudicatory proceeding pursuant to the provisions of the State Administrative Procedure Act within the time limited for the issuing of a registration or deficiency letter pursuant to General Business Law, section 683.7. T he commencement of such a proceeding tolls the time within which an application and prospectus is required to be accepted for filing and registered, or refused registration and filing.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.3 Notice of hearing

The notice of hearing shall be in writing and shall state:

(a) the date, time, place and nature of the hearing;

(b) the particular law or laws and rule or rules involved;

(d) a short and plain statement of the matter asserted.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.4 Service of notice of hearing, orders and other communications

(a) The notice of hearing from the Attorney General shall be duly served if enclosed in a properly postpaid wrapper, addressed to the applicant at the address last given in the franchise prospectus registration application facing page filed by him with the Attorney General, as ordinary mail or if such notice addressed to such person is delivered to such address by an employee or agent of the Attorney General. An affidavit by an employee or agent of the Department of Law that such notice has in the regular course of business of the Department of Law been duly dispatched or delivered, in a manner authorized by this section, shall be presumptive evidence of proper service. For the purpose of calculating time of notice, service shall be deemed effective upon the date of delivery to such address. The notice of hearing shall be served upon the registrant at least 10 days prior to the date of the hearing.

(b) Notices, orders and communications from the Attorney General, other than the notice of hearing, shall be duly served if enclosed in a properly postpaid wrapper addressed to the applicant to be notified or communicated with, at the address last given in the franchise prospectus registration application facing page filed with the Attorney General, and deposited, as ordinary mail, in a post office, post office box or mail chute maintained by the United States Government, or if delivered as provided in subdivision (a) of this section. An affidavit by an employee or agent of the Department of Law that such notice, order or communication has, in the regular course of the business of the Department of Law, been duly dispatched or delivered, in a manner authorized by this section, shall be presumptive evidence of proper service. For the purpose of calculating the time of notice, service shall be considered effected upon the date of delivery to such address, provided that, where service is by ordinary mail, service shall be considered effected three days after mailing.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.5 Personal appearance; representation by attorney

(a) Any applicant who intends to avail himself of the opportunity to be heard shall personally appear on the date set forth in the notice of hearing, or any adjourned date, and shall be prepared to proceed. Any applicant may be represented at the hearing by an attorney. Such attorney shall notify the Attorney General in writing of his appearance on behalf of the applicant. Thereafter, all further notices, orders and communications from the Department of Law may be served upon such attorney, and such service shall be deemed to be service upon the applicant.

(b) Should the applicant fail to appear at the hearing or, having appeared, fail to make his defense, the hearing officer shall hear the evidence given by the Attorney General and shall make his findings and recommendations on the basis of the aforesaid evidence.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.6 Hearing officers; assignment of hearings

The hearing shall be conducted by a hearing officer appointed by the Attorney General or his designee. Hearings shall be assigned to a particular hearing officer by the Attorney General or his designee. The hearing officer shall be an attorney who has not worked on or otherwise become familiar with the facts of the matter in issue, and shall exercise his or her judgment independently and impartially.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.7 Hearings to be public; stenographic record of hearings

Unless otherwise ordered by the Attorney General in the public interest, hearings held by the Attorney General to refuse registration shall be open to the public. Stenographic records of hearings shall be made and transcripts thereof may be furnished to any party upon payment to the stenographer of the reasonable cost thereof, as established by the Department of Law.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.8 Application for adjournment

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.9 Amendment of notice of hearing

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.10 Conduct of hearing; powers of hearing officer

The hearing officer shall not be bound by common law or statutory rules of evidence or by technical or formal rules of procedure in the conduct of hearings. He shall have authority to administer oaths, issue subpoenas, rule upon offers of evidence, and otherwise so regulate the course of the hearings as to preserve fundamental concepts of fairness and to effectuate the purposes and provisions of the act.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.11 Opportunity to testify and cross-examine; issuance of subpoenas

An applicant shall be afforded reasonable opportunity to present testimony under oath, or other evidence relevant and material to the subject matter of the hearing, and to cross-examine any witnesses who testify at such hearing. At reasonable request of an applicant, the hearing officer shall issue subpoenas to compel the attendance of witnesses and the giving of testimony or production of other evidence. The applicant shall effect his own service.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.12 Interrogatories

(a) Where it has been determined that a witness who is outside the State of New York will voluntarily answer interrogatories, the trial examiner may prepare interrogatories to be answered by such witness and the applicant shall have the opportunity to prepare cross-interrogatories as prescribed in this section.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.13 Oral argument; briefs

Oral arguments shall be made only before the hearing officer and shall be included in the record of the hearing. Such oral arguments may, in the discretion of the hearing officer, be curtailed, provided that a party shall be given an opportunity to submit his argument in writing. Briefs as to facts or law shall be received and may be requested to be submitted. The hearing officer may fix the time within which briefs shall be filed. Briefs received subsequent to such time need not be considered.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.14 Hearing officer's report; exceptions to report

Upon the conclusion of a hearing, the hearing officer shall by written memorandum set forth his findings and orders.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.15 Petition to reopen hearing

After the conclusion of a hearing but prior to the making of an order, a hearing may, upon petition and in the discretion of the hearing officer, be reopen for the presentation of new evidence. Such petition to reopen the hearing shall state in detail the nature of the new evidence, together with the reasons for the failure to submit such evidence prior to the conclusion of the hearing. The hearing officer may, upon his or her own motion and upon reasonable notice to the parties, reopen a hearing for the presentation of additional evidence.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 201.16 Orders of the attorney general

All orders of the hearing officer shall be in writing and shall be filed with the Department of Law, which shall cause certified copies thereof to be served upon the applicant.

Chapter VIII NEW YORK LEMON LAW ARBITRATION PROGRAM

Part 300 New York New And Used Car Lemon Law Arbitration Program

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.1 Purpose

(a) These regulations are promulgated pursuant to the "New York Lemon Law," General Business Law ("GBL") section 198-a, as amended by chapter 799 of the Laws of 1986, and section 198-b, as amended by chapter 609 of the Laws of 1989. They set forth the procedures for the operation of an alternative arbitration mechanism (the "Programs") as required by GBL section 198-a(k) and GBL section 198-b(f)(3).

(b) These regulations are designed to promote the independent, speedy, efficient and fair disposition of disputes concerning defective new and used motor vehicles.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.2 Definitions

(a) Unless otherwise stated, terms used in these regulations are as defined in GBL section 198-a or 198-b.

(b) The term administrator shall mean a professional arbitration firm or individual appointed by the Attorney General to administer the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.3 Appointment of administrator

(a) The Attorney General shall appoint an Administrator or Administrators to a definite term not to exceed two years. The term shall be renewable.

(b) The following criteria shall be considered in the selection of the administrator: capability, objectivity, nonaffiliation with a manufacturer's arbitration program, reliability, experience, financial stability, extent of geographic coverage, and fee structure.

(c) The Attorney General shall give appropriate public notice at least 60 days prior to the expiration of the administrator's term inviting any interested qualified party to apply in writing for the position of administrator within 30 days from the date of the public notice.

(d) Upon a vacancy occurring prior to the expiration of the administrator's term, the time periods in subdivision (c) of this section shall not apply and the Attorney General shall take appropriate steps to assure the continued administration of the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.4 Consumer's request for arbitration

(a) The Attorney General shall prescribe and make available "Request for Arbitration" forms for both GBL section 198-a and GBL section 198-b claims. To apply for arbitration under the Program, a consumer shall obtain, complete and submit the appropriate form to the Attorney General.

(b) Those consumers wishing a hearing on documents only shall so indicate on the form.

(c) For a GBL section 198-a claim, the consumer shall indicate on the form his/her choice of remedy (i.e., either refund or comparable replacement vehicle), in the event the arbitrator rules in favor of the consumer. Such choice shall be followed by the arbitrator unless the consumer advises the Administrator in writing of a change in his/her choice of remedy prior to the arbitrator's rendering of a decision.

(d) Upon receipt, the Attorney General shall date-stamp and assign a case number to the form.

(e) The Attorney General shall review the submitted form for completeness and eligibility and shall either accept it or reject it.

(f) If the form is rejected by the Attorney General, the Attorney General shall promptly return the form, notifying the consumer in writing of the reasons for the rejection and, where possible, inviting the consumer to correct the deficiencies.

(g) If the form is accepted by the Attorney General, he shall refer it to the administrator for processing. The Attorney General shall promptly notify the consumer in writing of the acceptance of the form and of its referral to the administrator. Such notice shall also advise the consumer to pay the prescribed filing fee directly to the administrator.

(h) If, after 30 days from the date of the notice of acceptance, the administrator fails to receive the prescribed filing fee, the administrator shall promptly advise the consumer in writing that unless such fee is received within 60 days from the date of the first notice, the form will be returned and the case marked closed. After such time, if the consumer wishes to pursue a claim under the program, (s)he must submit a new form to the Attorney General.

(i) Participation in any informal dispute resolution mechanism that is not binding on the consumer shall not affect the eligibility of a consumer to participate in either program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.5 Filing date

On the day the administrator receives the prescribed filing fee, the administrator shall date-stamp the request for arbitration form. Such date shall be considered the filing date.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.6 Assignment of arbitrator

(a) After the filing date, the administrator shall assign an arbitrator to hear and decide the case. Notice of assignment shall be mailed to the arbitrator and the parties along with a copy of these regulations and GBL section 198-a or GBL section 198-b, whichever is applicable.

(b) The arbitrator assigned shall not have any bias, any financial or personal interest in the outcome of the hearing, or any current connection to the sale or manufacture of motor vehicles.

(c) Upon a finding by the administrator, at any stage of the process, of grounds to disqualify the arbitrator, the administrator shall dismiss the arbitrator and assign another arbitrator to the case.

(d) If any arbitrator should resign, die, withdraw or be unable to perform the duties of his/her position, the administrator shall assign another arbitrator to the case and the period to render a decision shall be extended accordingly.

(e) Arbitrators shall undergo training established by the administrator and the Attorney General. This training shall include procedural techniques, the duties and responsibilities or arbitrators under the Programs, and the substantive provisions of GBL section 198-a for those arbitrators hearing GBL section 198-a claims, and the substantive provisions of GBL section 198-b for those arbitrators hearing GBL section 198-b claims.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.7 Scheduling of arbitration hearings

(a) Each manufacturer of cars sold in New York shall notify the Attorney General in writing, within 10 days after the effective date [January 26, 1987] of these regulations, of the name, address and telephone number of the person designated to receive notices under the GBL, section 198-a program. Such information shall be presumed correct unless updated by the manufacturer.

(b) The arbitration shall be conducted as an oral hearing unless the consumer has requested, on the "Request for Arbitration" form, a hearing on documents only and both parties agree to a documents only hearing; provided, however, that the parties may mutually agree in writing to change the mode of hearing. Upon such change, the parties shall notify the administrator who shall comply with the request and, where necessary, such request shall waive the 40-day limit in which a decision must be rendered.

(c) Within five days of the filing date, the administrator shall send the manufacturer's designee or the dealer, as appropriate, a copy of the consumer's completed form along with a notice that it may respond in writing. Such response shall be sent in triplicate, within 15 days of the filing date, to the administrator, who shall promptly forward one copy to the consumer.

(d) The consumer may respond in writing to the manufacturer's or dealer's submission within 25 days of the filing date. Such response shall be sent in triplicate to the administrator, who shall promptly forward a copy to the manufacturer or the dealer.

(e) An oral hearing, where appropriate, shall be scheduled no later than 35 days from the filing date, unless a later date is agreed to by both parties. The administrator shall notify both parties of the date, time and place of the hearing at least eight days prior to its scheduled date.

(f) Hearings shall be scheduled to accommodate, where possible, time-of-day needs of the consumer and the manufacturer or the dealer, including evening and weekend hours.

(g) Hearings shall also be scheduled to accommodate geographic needs of the consumer. Regular hearing sites shall be established at locations designated by the administrator, including in the following areas: Albany, Binghamton, Buffalo, Nassau County, New York City, Plattsburgh, Poughkeepsie, Rochester, Suffolk County, Syracuse, Utica, Watertown, and Westchester. No hearing site established by the Administrator shall be discontinued without the approval of the Attorney General. In addition, where a regular site is more than 100 miles from the consumer's residence, a hearing must be scheduled at the request of the consumer at a location designated by the Administrator within 100 miles of the consumer's residence.

(h) In unusual circumstances, a party may present its case by telephone, provided that adequate advance notice is given to the administrator and to the other party. In such cases, the arbitrator and both parties shall be included and the party requesting the telephonic hearing shall pay all costs associated therewith.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.8 Adjournments

Either party may make a request to reschedule the hearing. Except in unusual circumstances, such request shall be made to the administrator orally or in writing at least two business days prior to the hearing date. Upon a finding of good cause, the arbitrator may reschedule the hearing. In unusual circumstances, the arbitrator may reschedule the hearing at any time prior to its commencement.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.9 Request for additional information or documents

(a) A party, by application in writing to the administrator, may request the arbitrator to direct the other party to produce any documents or information. The arbitrator shall, upon receiving such request, or on his/her own initiative, direct the production of documents or information which (s)he believes will reasonably assist a party in presenting his/her case or assist the arbitrator in deciding the case. The arbitrator's direction for the production of documents and information shall allow a reasonable time for the gathering and production of such documents and information.

(b) All documents and information forwarded in compliance with the arbitrator's direction shall be legible and received no later than three business days prior to the date of the hearing. Each party shall bear its own photocopying costs.

(c) Upon failure of a party to comply with the arbitrator's direction to produce documents and/or information, the arbitrator may draw a negative inference concerning any issue involving such documents or information.

(d) The term documents in this section shall include, but not be limited to, relevant manufacturer's service bulletins, dealer work orders, diagnoses, bills, and all communications relating to the consumer's claim.

(e) At the request of either party or on his/her own initiative, the arbitrator, when (s)he believes it appropriate, may subpoena any witnesses to appear or documents to be presented at the hearing.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.10 Representation by counsel or third party

Any party may be represented by counsel or assisted by any third party.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.11 Interpreters

Any party wishing an interpreter shall make the necessary arrangements and assume the costs for such service.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.12 Hearing procedure

(a) The conduct of the hearing shall afford each party a full and equal opportunity to present his/her case.

(b) The arbitrator shall administer an oath or affirmation to each individual who testifies.

(d) The arbitrator shall receive in evidence a decision rendered in a previous arbitration which was not binding on the consumer and give it such weight as the arbitrator deems appropriate.

(e) The arbitrator shall receive relevant evidence of witnesses by affidavit, and such affidavits shall be given such weight as the arbitrator deems appropriate.

(f) The arbitrator shall have discretion to examine or ride in the consumer's vehicle. Both parties shall be afforded the opportunity to be present and accompany the arbitrator on any such examination or ride.

(g) The consumer shall first present evidence in support of his/her claim, and the manufacturer or the dealer, as applicable, shall then present its evidence. Each party may question the witnesses called by the other. The arbitrator may question any party or witness at any time during the hearing.

(h) The arbitrator shall maintain decorum at the hearing.

(i) The arbitrator may request additional evidence after the closing of the hearing. All such evidence shall be submitted to the administrator for transmission to the arbitrator and the parties.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.13 Hearing on documents only

If the hearing is on documents only, all documents shall be submitted to the administrator no later than 30 days from the filing date. The arbitrator shall render a timely decision based on all documents submitted.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.14 Defaults

(a) Upon the failure of a party to appear at an oral hearing, the arbitrator shall nevertheless conduct the hearing and render a timely decision based on the evidence presented and documents contained in the file.

(b) If neither party appears at the hearing, the arbitrator shall return the case to the Administrator who shall close it and so notify the parties.

(c) In a documents-only hearing, where the manufacturer or the dealer, fails to respond to the claim, the arbitrator shall render a decision based upon the documents contained in the file.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.15 Withdrawal or settlement prior to decision

(a) A consumer may withdraw his/her request for arbitration at any time prior to decision. If the administrator is notified by the consumer of his/her request to withdraw the claim within seven business days of the filing date, the administrator shall refund the filing fee.

(b) If the parties agree to a settlement more than seven business days after the filing date but prior to the issuance of a decision, they shall notify the administrator in writing of the terms of the settlement. Upon the request of the parties, the arbitrator shall issue a decision reflecting the settlement.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.16 The decision

(a) The arbitrator shall render a decision within 40 days of the filing date which shall be in writing on a form prescribed by the administrator and approved by the Attorney General. The decision shall be dated and signed by the arbitrator.

(b) In his/her decision, the arbitrator shall determine whether the consumer qualifies for relief pursuant to GBL section 198-a or GBL section 198-b, as appropriate. If the arbitrator finds that the consumer qualifies, (s)he shall award the specific remedies prescribed by the applicable statute.

(c) The decision shall specify the monetary award where applicable. A calculation of the amount, in accordance with GBL section 198-a or GBL section 198-b, as applicable, shall be included in the decision. The decision shall also award the prescribed filing fee to a successful consumer.

(d) The decision shall, where applicable, require that any action required by the manufacturer or the dealer, be completed within 30 days from the date the administrator notifies the manufacturer or the dealer, of the decision.

(e) The administrator shall review the decision for technical completeness and accuracy and advise the arbitrator of any suggested technical corrections, such as computational, typographical or other minor corrections. Such changes shall be made only with the consent of the arbitrator.

(f) After review, the administrator shall, within 45 days of the filing date, mail a copy of the final decision to both parties, the arbitrator, and the Attorney General. The date of mailing to the parties shall be date-stamped by the administrator on the decision as the date of issuance.

(g) Failure to mail the decision to the parties within the specified time period or failure to hold the hearing within the prescribed time shall not invalidate the decision.

(h) The arbitrator's decision is binding on both parties and is final, subject only to judicial review pursuant to CPLR, article 75. The decision shall include a statement to this effect.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.17 Recordkeeping

(a) The administrator shall keep all records pertaining to each arbitration for a period of at least two years and shall make the records of a particular arbitration available for inspection upon written request by a party to that arbitration, and shall make records of all arbitrations available to the Attorney General upon written request.

(b) The administrator shall maintain such records and statistics for both Programs as are required by GBL section 198-a(m)(3).

N.Y. Comp. Codes R. & Regs. Tit. 13 § 300.18 Miscellaneous provisions

(a) All communications between the parties and the arbitrator, other than at oral hearings, shall be directed to the administrator.

(b) If any provision of these regulations or the application of such provision to any persons or circumstances shall be held invalid, the validity of the remainder of these regulations and the applicability of such provision to other persons or circumstances shall not be affected thereby.

Part 301 New York Motorized Wheelchair Arbitration Program Regulations

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.1 Purpose

(a) These regulations are promulgated pursuant to General Business Law ("GBL") article 32, as added by Chapter 532 of the Laws of 1993. They set forth the procedures for the operation of an alternative arbitration mechanism (the "program") as required by GBL section 670(4).

(b) These regulations are designed to promote the independent, speedy, efficient and fair disposition of disputes concerning defective motorized wheelchairs.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.2 Definitions

(a) Unless otherwise stated, terms used in these regulations are as defined in GBL section 670.

(b) The term Administrator shall mean a professional arbitration firm or individual appointed by the Attorney General to administer the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.3 Appointment of administrator

(a) The Attorney General shall appoint an administrator or administrators to a definite term not to exceed two years. The term shall be renewable.

(b) The following criteria shall be considered in the selection of an administrator: capability, objectivity, nonaffiliation with a wheelchair manufacturer or vendor, reliability, experience, financial stability, extent of geographic coverage, and fee structure.

(c) The Attorney General shall give appropriate public notice at least 60 days prior to the expiration of an administrator's term inviting any interested qualified party to apply in writing for the position of administrator within 30 days from the date of the public notice.

(d) Upon a vacancy occurring prior to the expiration of an administrator's term, the time periods in subdivision (c) of this section shall not apply and the Attorney General shall take appropriate steps to assure the continued administration of the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.4 Consumer's request for arbitration

(a) The Attorney General shall prescribe and make available "Request for Arbitration" forms for GBL section 670 claims. To apply for arbitration under the program, a consumer shall obtain, complete and submit the appropriate form to the Attorney General.

(b) Those consumers wishing a hearing on documents only shall so indicate on the form.

(c) For a GBL section 670 claim, the consumer shall indicate on the form his/her choice of remedy (i.e., either refund or comparable new replacement motorized wheelchair), in the event the arbitrator rules in favor of the consumer. Such choice shall be followed by the arbitrator unless the consumer advises the administrator in writing of a change in his/her choice of remedy prior to the arbitrator's rendering of a decision.

(d) Upon receipt, the Attorney General shall assign a case number to the form.

(e) The Attorney General shall review the submitted form for completeness and eligibility and shall either accept it or reject it.

(h) If, after 30 days from the date of the notice of acceptance, the administrator fails to receive the prescribed filing fee from the consumer, the administrator shall promptly advise the consumer in writing that unless such fee is received within 60 days from the date of the first notice, the form will be returned and the case marked closed. After such time, if the consumer wishes to pursue a claim under the program, (s)he must submit a new form to the Attorney General.

(i) Participation in any informal dispute resolution mechanism that is not binding on the consumer shall not affect the eligibility of a consumer to participate in the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.5 Filing date

On the day the administrator receives the prescribed filing fee, the administrator shall date stamp the "Request for Arbitration" form. Such date shall be considered the "filing date".

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.6 Assignment of arbitrator

(b) The arbitrator assigned shall not have any bias, any financial or personal interest in the outcome of the hearing, or any current connection to the sale or manufacture of motorized wheelchairs.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.7 Scheduling of arbitration hearings

(a) Each manufacturer of motorized wheelchairs sold in New York shall furnish to the Attorney General a copy of its warranty and notify him, in writing within 10 days after the effective date of these regulations [November 10, 1993], of the name, address and telephone number of the person designated to receive notices under this program. Such information shall be presumed correct unless updated by the manufacturer.

(c) Within five days of the filing date, the administrator shall send the manufacturer's designee a copy of the consumer's completed form along with a notice that it may respond in writing. Such response shall be sent in triplicate, within 15 days of the filing date, to the administrator, who shall promptly forward one copy to the consumer.

(d) The consumer may respond in writing to the manufacturer's submission within 25 days of the filing date. Such response shall be sent in triplicate to the administrator, who shall promptly forward a copy to the manufacturer.

(f) Hearings shall be scheduled to accommodate, where possible, time-of-day needs of the consumer and the manufacturer, including evening and weekend hours.

(g) Hearings shall also be scheduled to accommodate geographic needs of the consumer. Regular hearing sites shall be established at locations designated by the administrator, including in the following areas: Albany, Binghamton, Buffalo, Nassau County, New York City, Plattsburgh, Poughkeepsie, Rochester, Suffolk County, Syracuse, Utica, Watertown, and Westchester. No hearing site established by the administrator shall be discontinued without the approval of the Attorney General. In addition, where a regular site is more than 100 miles from the consumer's residence, a hearing must be scheduled at the request of the consumer at a location designated by the administrator within 100 miles of the consumer's residence.

(h) A party may present its case by telephone, provided that adequate advance notice is given to the administrator and to the other party. In such cases, the arbitrator and both parties shall be included.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.8 Adjournments

Either party may make a request to adjourn and reschedule the hearing. Except in unusual circumstances, such request shall be made to the administrator, orally or in writing, at least two business days prior to the hearing date. Upon a finding of good cause, the arbitrator may reschedule the hearing. In unusual circumstances, the arbitrator may reschedule the hearing at any time prior to its commencement.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.9 Request for additional information or documents

(a) A party, by application in writing to the administrator, may request the arbitrator to direct the other party to produce any documents or information. The arbitrator shall, upon receiving such request, or on his or her own initiative, direct the production of documents or information which she or he believes will reasonably assist a party in presenting his or her case or assist the arbitrator in deciding the case. The arbitrator's direction for the production of documents and information shall allow a reasonable time for the gathering and production of such documents and information.

(e) At the request of either party or on his or her own initiative, the arbitrator, when she or he believes it appropriate, may subpoena any witnesses to appear or documents to be presented at the hearing.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.10 Representation by counsel or third party

Any party may be represented by counsel or assisted by any third party.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.11 Interpreters

Any party wishing a foreign language interpreter shall make the necessary arrangements and assume the costs for such service.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.12 Hearing procedure

(a) The conduct of the hearing shall afford each party a full and equal opportunity to present his/her case.

(b) The arbitrator shall administer an oath or affirmation to each individual who testifies.

(d) The arbitrator shall receive in evidence a decision rendered in a previous arbitration which was not binding on the consumer and give it such weight as the arbitrator deems appropriate.

(e) The arbitrator shall receive relevant evidence of witnesses by affidavit and such affidavits shall be given such weight as the arbitrator deems appropriate.

(f) The arbitrator shall have discretion to examine the consumer's motorized wheelchair. Both parties shall be afforded the opportunity to be present and accompany the arbitrator on any such examination.

(g) The consumer shall first present evidence in support of his/her claim, and the manufacturer shall then present its evidence. Each party may question the witnesses called by the other. The arbitrator may question any party or witness at any time during the hearing.

(h) The arbitrator shall maintain decorum at the hearing.

(i) The arbitrator may request additional evidence after the closing of the hearing. All such evidence shall be submitted to the administrator for transmission to the arbitrator and the parties.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.13 Hearing on documents only

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.14 Defaults

(b) If neither party appears at a scheduled oral hearing, the arbitrator shall return the case to the administrator who shall close it without a decision and so notify the parties.

(c) In a documents-only hearing, where the manufacturer fails to respond to the claim, the arbitrator shall render a decision based upon the documents contained in the file.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.15 Withdrawal or settlement prior to decision

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.16 The decision

(b) In his/her decision, the arbitrator shall determine whether the consumer qualifies for relief pursuant to GBL section 670. If the arbitrator finds that the consumer qualifies, (s)he shall award the specific remedies prescribed by the applicable statute.

(c) The decision shall specify the monetary award where applicable. A calculation of the amount, in accordance with GBL section 670, shall be included in the decision. The decision shall also award the prescribed filing fee and any telephone costs incurred pursuant to section 301.7(h) of this Part to a successful consumer.

(d) The decision shall, where applicable, require that any action required by the manufacturer, be completed within 30 days from the date the administrator notifies the manufacturer of the decision.

(g) Failure to mail the decision to the parties within the specified time period or failure to hold the hearing within the prescribed time shall not invalidate the decision.

(h) The arbitrator's decision is binding on both parties and is final, subject only to judicial review pursuant to CPLR, article 75. The decision shall include a statement to this effect.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.17 Recordkeeping

(b) The administrator shall maintain such records and statistics for the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.18 Accommodations for the disabled

(a) Any party may make a request for reasonable accommodations, including access and auxiliary aids and services, in accordance with the Americans with Disabilities Act (42 USC 12101, et seq.) and the regulations thereunder ( 28 CFR part 35) as such act and regulations may, from time to time, be amended.

(b) The Attorney General shall prescribe and make available "Request for Reasonable Accommodations" forms for GBL section 670 claims. To apply for reasonable accommodations under the program, a consumer shall obtain, complete and submit the appropriate form at the same time and together with the "Request for Arbitration" form to the Attorney General.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 301.19 Miscellaneous provisions

(a) All communications between the parties and the arbitrator, other than at oral hearings, shall be directed to the administrator.

Part 302 Auto Leasing Arbitration Program Regulations

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.1 Purpose

(a) These regulations are promulgated pursuant to section 343 (5)(b) of the Personal Property Law ("PPL") and set forth the procedures for the operation of an alternative arbitration mechanism (the "Program").

(b) These regulations are designed to promote the independent, speedy, efficient and fair disposition of disputes concerning the assessment of excess wear and/or damage to leased vehicles.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.2 Definitions

(a) Unless otherwise stated, terms used in these regulations are as defined in PPL article 9-A.

(b) The term administrator shall mean a professional arbitration firm or individual appointed by the Attorney General to administer the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.3 Appointment of administrator

(a) The Attorney General shall appoint an administrator initially to a term not to exceed two years. The term shall be renewable.

(b) The following criteria shall be considered in the selection of an administrator: capability, objectivity, nonaffiliation with a holder or a holder's arbitration program, reliability, experience, financial stability, extent of geographic coverage, and fee structure.

(d) Upon a vacancy occurring prior to the expiration of an administrator's term, the time periods in subdivision (c) shall not apply and the Attorney General shall take appropriate steps to assure the continued administration of the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.4 Lessee's request for arbitration

(a) The Attorney General shall prescribe and make available a "Request for Arbitration" form. To apply for arbitration under the program, a lessee shall complete and submit the prescribed form to the Attorney General.

(b) Those lessees wishing a hearing on documents only shall so indicate on the form.

(c) Upon receipt of the submitted form, the Attorney General shall assign a case number and review it for completeness and eligibility and shall accept or reject it.

(d) If the form is rejected, the Attorney General shall promptly return the form to the lessee, indicating in writing the reasons for the rejection and, where possible, inviting the lessee to correct the deficiencies.

(e) If the form is accepted, it shall be referred to the administrator for processing. The Attorney General shall promptly notify the lessee in writing of the acceptance of the form and of its referral to the administrator. Upon receipt of the accepted form, the administrator shall notify the lessee to submit the required filing fee. Upon receipt of the prescribed filing fee, the administrator shall date stamp the "Request for Arbitration" form. Such date shall be considered the filing date.

(f) If, after 30 days from the date of the notice of acceptance, the administrator fails to receive the prescribed filing fee, the administrator shall promptly advise the lessee in writing that unless such fee is received within 60 days from the date of the notice of acceptance, the form will be returned and the case marked closed. After such time, if the lessee wishes to submit a dispute to the program, (s)he must submit another "Request for Arbitration" form to the Attorney General.

(g) Participation in any informal dispute resolution mechanism that is not binding on the lessee shall not affect the eligibility of a lessee to participate in the program.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.5 Assignment of arbitrator

(b) The arbitrator assigned shall not have any bias, financial or personal interest in the outcome of the hearing, or current connection to the manufacture, sale, lease, repair or appraisal of motor vehicles.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.6 Scheduling of arbitration hearings

(a) The arbitration shall be conducted as an oral hearing unless either party has requested a hearing on documents only and both parties agree to a documents only hearing; provided, however, that the parties may mutually agree in writing to change the mode of hearing. Upon such change, the parties shall notify the administrator who shall comply with the request and, where necessary, such request shall waive the 40 day limit in which a decision must be rendered.

(b) Within five days of the filing date, the administrator shall send the holder a copy of the lessee's completed "Request for Arbitration" form together with a notice that it may respond in writing. Such response shall be sent in triplicate, within 15 days of the filing date, to the administrator, who shall promptly forward a copy to the lessee and to the arbitrator.

(c) The lessee may respond in writing to the holder's submission within 25 days of the filing date. Such response shall be sent in triplicate to the administrator, who shall promptly forward a copy to the holder and to the arbitrator.

(d) An oral hearing, where appropriate, shall be scheduled no later than 35 days from the filing date, unless a later date is agreed to by both parties. The administrator shall notify both parties of the date, time and place of the hearing at least eight days prior to its scheduled date.

(e) Hearings shall be scheduled to accommodate, where possible, time-of-day needs of the lessee and the holder, including evening and weekend hours.

(f) Hearings shall also be scheduled to accommodate geographic needs of the lessee and the lessor. Regular hearing sites shall be established at locations designated by the administrator, including in the following areas: Albany, Binghamton, Buffalo, Nassau County, New York City, Plattsburgh, Poughkeepsie, Rochester, Suffolk County, Syracuse, Utica, Watertown and Westchester. No hearing site established by the administrator shall be discontinued without the approval of the Attorney General. In addition, where a regular site is more than 100 miles from the lessee's residence, a hearing must be scheduled at the request of the lessee at a location designated by the administrator within 100 miles of the lessee's residence.

(g) A party may present its case by telephone, provided that adequate advance notice is given to the administrator and the consent of the other party is obtained. In such cases, the arbitrator and both parties shall be included and the party requesting the telephonic hearing shall pay all costs associated therewith.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.7 Adjournments

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.8 Request for additional information or documents

(a) A party, by application in writing to the administrator, may request the arbitrator to direct the other party to produce any documents or information. The arbitrator shall, upon receiving such request, or on his or her own initiative, direct the production of documents or information which she or he believes will reasonably assist a party in presenting his or her case or assist the arbitrator in deciding the case. The arbitrator's direction for the production of documents and information shall allow a reasonable time for the gathering and production of such documents and information.

(d) The term documents in this section shall include, but not be limited to, relevant manufacturer's service bulletins, dealer work orders, diagnoses, repair bills, damage appraisals and all communications relating to the issue of excessive wear or damage.

(e) At the request of either party or on his or her own initiative, the arbitrator, may subpoena any witnesses to appear or documents to be presented at the hearing.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.9 Representation by counsel or third party

Any party may be represented by counsel or assisted by any third party.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.10 Interpreters

Any party wishing an interpreter shall make the necessary arrangements and assume the costs for such service.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.11 Hearing procedure

(a) The conduct of the hearing shall afford each party a full and equal opportunity to present his/her case.

(b) The arbitrator shall administer an oath or affirmation to each individual who testifies.

(c) Formal rules of evidence shall not apply; the parties may introduce any evidence which the arbitrator agrees is relevant.

(d) The arbitrator shall receive in evidence a decision rendered in a previous arbitration which was not binding on the lessee and give it such weight as the arbitrator deems appropriate.

(e) The arbitrator shall receive relevant evidence of witnesses by affidavit, and such affidavits shall be given such weight as the arbitrator deems appropriate.

(f) The arbitrator shall have discretion to examine or ride in the lessee's vehicle, if available. Both parties shall be afforded the opportunity to be present and accompany the arbitrator on any such examination or ride.

(g) The lessee shall first present his/her evidence and the holder shall then present its evidence. Each party may question the witnesses called by the other. The arbitrator may question any party or witness at any time during the hearing.

(h) A party has the right to make a record of the hearing. The arbitrator shall maintain decorum at the hearing.

(i) The arbitrator may request additional evidence after the closing of the hearing. All such evidence shall be submitted to the administrator for transmission to the arbitrator and the parties.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.12 Hearing on documents only

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.13 Defaults

(b) If neither party appears at the hearing, the arbitrator shall return the case to the administrator who shall close it and so notify the parties.

(c) In a documents-only hearing, where the holder fails to respond, the arbitrator shall render a decision based upon the documents contained in the file.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.14 Withdrawal or settlement prior to decision

(a) A lessee may withdraw his/her request for arbitration at any time prior to decision. If the administrator is notified by the lessee of his/her request to withdraw within seven business days of the filing date, the administrator shall refund the filing fee.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.15 The decision

(a) The arbitrator shall render a decision within 40 days of the filing date which shall be in writing on a form prescribed by the Attorney General. The decision shall be dated and signed by the arbitrator.

(b) The decision shall indicate whether there was any excess wear and/or damage to the vehicle for which the lessee is responsible and, where applicable, specify the amount of such excess wear and/or damage. A basis for the arbitrator's findings and calculations shall be included in the decision. The decision shall also award the prescribed filing fee to a successful lessee.

(c) The decision shall, where applicable, require that any action or payment be completed within 30 days from the date the administrator notifies the holder in writing of the decision, unless the parties agree to an extended time.

(d) The administrator shall review the decision for technical completeness and accuracy and advise the arbitrator of any suggested technical corrections, such as computational, typographical or other minor corrections. Such changes shall be made only with the consent of the arbitrator.

(e) After review, the administrator shall, within 45 days of the filing date, mail a copy of the final decision to both parties, the arbitrator, and the Attorney General. The date of mailing to the parties shall be date-stamped by the administrator on the decision as the date of issuance.

(f) Failure to mail the decision to the parties within the specified time period or failure to hold the hearing within the prescribed time shall not invalidate the decision.

(g) The arbitrator's decision is binding on both parties and is final, subject only to judicial review pursuant to CPLR, article 75. The decision shall include a statement to this effect.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.16 Recordkeeping

The administrator shall keep all records pertaining to each arbitration for a period of at least two years and shall make the records of a particular arbitration available for inspection upon written request by a party to that arbitration, and shall make records of all arbitrations available to the Attorney General upon written request.

N.Y. Comp. Codes R. & Regs. Tit. 13 § 302.17 Miscellaneous provisions

(a) All communications between the parties and the arbitrator, other than at oral hearings, shall be directed to the administrator.

Part 303 Consumer Warranty on Farm Equipment - Arbitration Program Regulations

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.1 Purpose

(a) These regulations are promulgated pursuant to General Business Law (GBL), article 33-B, section 697-a, added by chapter 662 of the Laws of 2005 as amended by chapter 706 of the Laws of 2006. They set forth the procedures for the operation of an alternative arbitration mechanism (the program) as required by GBL section 697-a(c).

(b) These regulations are designed to promote the independent, speedy, efficient and fair disposition of disputes concerning defective farm equipment.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.2 Definitions

(a) Unless otherwise stated, terms used in these regulations are as defined in GBL section 697.

(b) The term administrator shall mean a professional arbitration firm or individual appointed by the Attorney General to administer the program.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.3 Appointment of administrator

(a) The Attorney General shall appoint an administrator or administrators to a definite term not to exceed two years. The term shall be renewable.

(b) The following criteria shall be considered in the selection of an administrator: capability, objectivity, non-affiliation with a supplier's arbitration program, reliability, experience, financial stability, extent of geographic coverage, and fee structure.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.5 Filing date

On the day the Administrator receives the prescribed filing fee, the Administrator shall date stamp the request for arbitration form. Such date shall be considered the filing date.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.6 Notice to the supplier

(a) Each supplier of farm equipment sold to a New York consumer shall notify the Attorney General in writing, within 10 days after the effective date of these regulations, of the name, address and telephone number of the person designated to receive notices under the GBL article 33-B program. Such information shall be presumed correct unless updated by the supplier.

(b) Within five days of the filing date, the administrator shall send the supplier's designee a notice that a request for arbitration has been filed by the consumer and that the supplier must remit the prescribed arbitration fee to the administrator within 10 days from the date of mailing by the administrator. The date the prescribed arbitration fee is received by the administrator is considered the commencement date.

(c) Within five days of the commencement date, the administrator shall send the supplier's designee a copy of the consumer's completed request for arbitration form along with a notice that it may respond in writing. Such response shall be sent in triplicate, within 15 days of the commencement date, to the administrator, who shall promptly forward one copy to the consumer.

(d) If, after 10 days from the date of mailing of the first notice to the supplier requesting payment of the prescribed arbitration fee, the administrator fails to receive such prescribed fee, the administrator shall promptly advise the supplier in writing that unless such fee is received within 20 days from the date of the first notice, the Attorney General's office will be notified of the supplier's non-compliance. In the event that the administrator fails to receive the prescribed arbitration fee from the supplier within 20 days of the first notice, it shall promptly notify the Attorney General's office in writing of such non-compliance.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.7 Assignment of arbitrator

(a) After the commencement date, the administrator shall assign an arbitrator to hear and decide the case. Notice of assignment shall be mailed to the arbitrator and the parties along with a copy of these regulations and GBL article 33-B.

(b) The arbitrator assigned shall not have any bias, any financial or personal interest in the outcome of the hearing, or any current connection to the sale, distribution or manufacture of farm equipment.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.8 Scheduling of arbitration hearings

(a) The arbitration shall be conducted as an oral hearing unless the consumer has requested, on the request for arbitration form, a hearing on documents only and both parties agree to a documents only hearing; provided, however, that the parties may mutually agree in writing to change the mode of hearing. Upon such change, the parties shall notify the administrator who shall comply with the request and, where necessary, such request shall waive the 40 day limit in which a decision must be rendered.

(b) The consumer may respond in writing to the supplier's submission within 25 days of the commencement date. Such response shall be sent in triplicate to the administrator, who shall promptly forward a copy to the supplier.

(c) An oral hearing, where appropriate, shall be scheduled no later than 35 days from the commencement date, unless a later date is agreed to by both parties. The administrator shall notify both parties of the date, time and place of the hearing at least eight days prior to its scheduled date.

(d) Hearings shall be scheduled to accommodate, where possible, time-of-day needs of the consumer and the supplier, including evening and weekend hours.

(e) Hearings shall also be scheduled to accommodate geographic needs of the consumer. Regular hearing sites shall be established at locations designated by the administrator. No hearing site established by the administrator shall be discontinued without the approval of the Attorney General. In addition, where a regular site is more than 100 miles from the consumer's residence, a hearing must be scheduled at the request of the consumer at a location designated by the administrator within 100 miles of the consumer's residence.

(f) In unusual circumstances, a party may present its case by telephone, provided that adequate advance notice is given to the administrator and to the other party. In such cases, the arbitrator and both parties shall be included and the party requesting the telephonic hearing shall pay all costs associated therewith.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.9 Adjournments

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.10 Request for additional information or documents

(a) A party, by application in writing to the administrator, may request the arbitrator to direct the other party to produce any documents or information. The arbitrator shall, upon receiving such request, or on his or her own initiative, direct the production of documents or information which she or he believes will reasonably assist a party in presenting his or her case or assist the arbitrator in deciding the case. The arbitrator's direction for the production of documents and information shall allow a reasonable time for the gathering and production of such documents and information.

(d) The term documents in this section shall include, but not be limited to, relevant supplier's service bulletins, dealer work orders, diagnoses, bills, and all communications relating to the consumer's claim.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.11 Representation by counsel or third party

Any party may be represented by counsel or assisted by any third party.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.12 Interpreters

Any party wishing an interpreter shall make the necessary arrangements and assume the costs for such service.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.13 Hearing procedure

(a) The conduct of the hearing shall afford each party a full an equal opportunity to present his/her case.

(b) The arbitrator shall administer an oath or affirmation to each individual who testifies.

(d) The arbitrator shall receive in evidence a decision rendered in a previous arbitration which was not binding on the consumer and give it such weight as the arbitrator deems appropriate.

(e) The arbitrator shall receive relevant evidence of witnesses by affidavit, and such affidavits shall be given such weight as the arbitrator deems appropriate.

(f) The arbitrator shall have discretion to examine or ride in the consumer's equipment. Both parties shall be afforded the opportunity to be present and accompany the arbitrator on any such examination or ride.

(g) The consumer shall first present evidence in support of his/her claim, and the supplier shall then present its evidence. Each party may question the witnesses called by the other. The arbitrator may question any party or witness at any time during the hearing.

(h) The arbitrator shall maintain decorum at the hearing.

(i) The arbitrator may request additional evidence after the closing the hearing. All such evidence shall be submitted to the administrator for transmission to the arbitrator and the parties.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.14 Hearing on documents only

If the hearing is on documents only, all documents shall be submitted to the administrator no later than 30 days from the commencement date. The arbitrator shall render a timely decision based on all documents submitted.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.15 Defaults

(b) If neither party appears at the hearing, the arbitrator shall return the case to the administrator who shall close it and so notify the parties.

(c) In a documents-only hearing, where the supplier fails to respond to the claim, the arbitrator shall render a decision based upon the documents contained in the file.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.16 Withdrawal or settlement prior to decision

(a) A consumer may withdraw his/her request for arbitration at any time prior to decision. If the administrator is notified by the consumer of his/her request to withdraw the claim within seven business days of the commencement date, the administrator shall refund the filing fee to the consumer and the arbitration fee to the supplier.

(b) If the parties agree to a settlement more than seven business days after the commencement date but prior to the issuance of a decision, they shall notify the administrator in writing of the terms of the settlement. Upon the request of the parties, the arbitrator shall issue a decision reflecting the settlement.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.17 The decision

(a) The arbitrator shall render a decision within 40 days from the commencement date which shall be in writing on a form prescribed by the administrator and approved by the Attorney General. The decision shall be dated and signed by the arbitrator. An electronic signature authorized by the arbitrator shall be deemed a valid signature.

(b) In his/her decision, the arbitrator shall determine whether the consumer qualifies for relief pursuant to GBL section 697-a. If the arbitrator finds that the consumer qualifies, (s)he shall award the specific remedies prescribed by the statute.

(c) The decision shall specify the monetary award where applicable. A calculation of the amount, in accordance with GBL section 697-a shall be included in the decision. The decision shall also award the prescribed filing fee to a successful consumer.

(d) The decision shall, where applicable, require that any action required by the supplier be completed within 30 days from the date the administrator notifies the supplier of the decision.

(f) After review, the administrator shall, within 45 days of the commencement date, mail a copy of the final decision to both parties, the arbitrator, and the Attorney General. The date of mailing to the parties shall be date-stamped by the administrator on the decision as the date of issuance.

(g) Failure to mail the decision to the parties within the specified time period or failure to hold the hearing within the prescribed time shall not invalidate the decision.

(h) The arbitrator's decision is binding on both parties and is final, subject only to judicial review pursuant to CPLR, article 75. The decision shall include a statement to this effect.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.18 Recordkeeping

(b) The administrator shall maintain records and statistics for the program.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

N.Y. Comp. Codes R. & Regs. Tit. 13 § 303.19 Miscellaneous provisions

(a) All communications between the parties and the arbitrator, other than at oral hearings, shall be directed to the administrator.

History

Adopted New York State Register July 31, 2019/Volume XLI, Issue 31, eff. 7/31/2019

Chapter IX FALSE OR FRAUDULENT CLAIMS INVOLVING GOVERNMENT FUNDS OR PROPERTY

Part 400 PROCEDURAL REGULATIONS OF THE FALSE CLAIMS ACT

N.Y. Comp. Codes R. & Regs. Tit. 13 § 400.2 Civil enforcement by the Attorney General

(a) Whenever it shall appear to the Attorney General that any person has engaged or is engaging in conduct that might amount to a violation of the False Claims Act, the Attorney General is authorized to investigate such violations by taking proof and making a determination of the relevant facts and issuing subpoenas in accordance with the Civil Practice Law and Rules. Such authorization shall not abate or terminate by reason of any action or proceeding brought under the False Claims Act by the Attorney General, a local government, or any person, including a qui tam plaintiff.

(b) If a person subpoenaed to attend an inquiry related to a violation of the False Claims Act fails to obey the command of a subpoena without reasonable cause, or if a person in attendance upon such inquiry shall without reasonable cause refuse to be sworn or to be examined or to answer a question or to produce a book or paper or data when ordered so to do by the officer conducting such inquiry, or if a person fails to perform any act required to be performed, the Attorney General may institute civil contempt proceedings under section 2308 (b) of the Civil Practice Law and Rules or make a motion to compel pursuant to that section or take any other action authorized by law.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 400.3 Civil enforcement by local governments

(a) A local government shall consult with the Attorney General prior to filing any action under section 190(1) of the False Claims Act related to the Medicaid Program.

(b) A local government filing an action under section 190(1) of the False Claims Act shall provide the Attorney General with a copy of the complaint on or about the date such complaint is filed.

(c) Under no circumstances shall the State be bound by the act of a local government that files an action involving damages to the State.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 400.4 Qui tam actions

(a) All qui tam actions shall be served on the Attorney General by the personal delivery of the qui tam complaint and accompanying evidence to a person designated to receive service at the Managing Clerk's Office at 28 Liberty Street, New York, NY 10005, unless otherwise authorized by the Attorney General.

(b) A local government, having been authorized by the Attorney General to supersede or intervene in a qui tam action on its own behalf pursuant to section 190(2) of the False Claims Act, shall cooperate with the Attorney General in any subsequent investigation related to the action.

(c) If the State or a local government does not intervene or supersede after the 60 day time period or any extensions obtained under section 190(2)(b) of the False Claims Act, then the qui tam plaintiff has 30 days after such time period or extensions expire to decide whether to proceed with the action.

(1) If the qui tam plaintiff elects to proceed with the action, the qui tam plaintiff shall so advise the court, the State, and applicable local governments, and cause the complaint to be unsealed. After the complaint is unsealed, the qui tam plaintiff shall serve the complaint on any defendant pursuant to the provisions of the Civil Practice Law and Rules and other applicable law.

(2) If the qui tam plaintiff elects not to proceed with the action, the qui tam plaintiff shall either:

(i) voluntarily discontinue the action, without an order and without unsealing the action, by filing with the court a notice of discontinuance and serving a copy of this notice on the Attorney General, who may in the Attorney General's discretion make an in camera motion to unseal the complaint; or

(ii) seek to voluntarily discontinue the action by order of court by making an in camera motion to unseal the complaint and dismiss the action.

(d) If the State or a local government decides not to intervene or supersede in a qui tam action, the qui tam plaintiff may not pursue the qui tam action on a pro se basis unless the qui tam plaintiff is an attorney eligible to represent a party before the court in which the qui tam action is proceeding.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 400.5 Public disclosure bar motions

The State shall not seek to dismiss, and shall oppose the dismissal, of a qui tam action pursuant to paragraph (b) of subdivision nine of section 190 of the New York False Claims Act in the event that:

(a) any cause of action in the qui tam plaintiff's complaint would be dismissed other than a cause of action alleging substantially the same allegations or transactions that have been publicly disclosed in a manner set forth in such paragraph (b); or

(b) any cause of action in the qui tam plaintiff's complaint would be dismissed pursuant to subparagraph (ii) of such paragraph (b) solely because of an alleged public disclosure in a Federal report, hearing, audit, or investigation.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 400.6 Application of the damage multiplier

The State or a local government's damages shall be trebled or doubled pursuant to section 189 of the New York False Claims Act before any subtractions are made for compensatory payments received by the government from any source, including but not limited to the defendant, or before any subtractions are otherwise made because of any offset or credit received by the government from any source, including but not limited to the defendant.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 400.7 Obligations

(a) For purposes of paragraph (g) of subdivision one of section 189 of the New York False Claims Act, an "obligation" can be an obligation of any person and does not have to be an obligation of the person who knowingly makes, uses, or causes to be made or used, a false record or statement material to such obligation to pay or transmit money or property to the State or a local government.

(b) For purposes of paragraph (h) of subdivision one of section 189 of the New York False Claims Act, an "obligation" can be an obligation of any person and does not have to be an obligation of the person who knowingly conceals or who knowingly and improperly avoids or decreases such obligation to pay or transmit money or property to the State or a local government, or who conspires to do the same.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

N.Y. Comp. Codes R. & Regs. Tit. 13 § 400.8 Payment of costs and attorneys' fees

A person who violates section 189 of the New York False Claims Act shall be liable for the costs, including attorneys' fees, of a civil action brought to recover penalties or damages. Such person shall pay all costs borne by the State, a local government, a qui tam plaintiff, or counsel, as may be applicable. All such costs shall be awarded directly against the defendant and shall not be charged from the proceeds, but shall only be awarded if the State, local government or a qui tam plaintiff prevails in the action.

History

Amended New York State Register July 3, 2018/Volume XL, Issue 27, eff. 7/3/2018

Chapter X REGULATIONS OF THE NEW YORK VOTING RIGHTS ACT

Part 500 General provisions

N.Y. Comp. Codes R. & Regs. Tit. 13 § 500.1

The Election Law, sections 17-200 et seq., shall be referred to herein as the "New York Voting Rights Act" or the "Act."

History

Adopted New York State Register September 11, 2024/Volume XLVI, Issue 37, eff. 9/22/2024

N.Y. Comp. Codes R. & Regs. Tit. 13 § 500.2

The Civil Rights Bureau of the Office of the New York State Attorney General shall be referred to herein as the "civil rights bureau" or "CRB."

History

Adopted New York State Register September 11, 2024/Volume XLVI, Issue 37, eff. 9/22/2024

N.Y. Comp. Codes R. & Regs. Tit. 13 § 500.3

"Protected class" as used herein shall mean "protected class" as defined in section 17-204 of the Election Law.

History

Adopted New York State Register September 11, 2024/Volume XLVI, Issue 37, eff. 9/22/2024

N.Y. Comp. Codes R. & Regs. Tit. 13 § 500.4 Severability

The provisions of this Part shall be severable, and if any item, subclause, clause, sentence, subparagraph, paragraph, subdivision, section, or subpart of this Part, or the applicability thereof to any person or circumstances, shall be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair or invalidate the remainder thereof, nor the application thereof, but shall be confined in its operation to the item, subclause, clause, sentence, subparagraph, paragraph, subdivision, section, or subpart thereof, or to the person or circumstance directly involved in the controversy in which such judgment shall have been rendered.

History

Adopted New York State Register September 11, 2024/Volume XLVI, Issue 37, eff. 9/22/2024

Part 501 Preclearance

N.Y. Comp. Codes R. & Regs. Tit. 13 § 501.1 Submission and review procedures

(a) Content of submissions

(1) General

(i) A submission must identify the source of any information contained therein.

(ii) Where an estimate is provided in lieu of more precise statistics, the submission must identify the name, position, and qualifications of the person responsible for the estimate and must briefly describe the basis for the estimate.

(iii) Submissions must be no longer than is necessary for the presentation of the appropriate information and materials.

(iv) Where information requested pursuant to this section is relevant but not known or available, or is not applicable, the submission must so state and, except as to information that is not applicable, must demonstrate, in such form and manner as the CRB may require, that the submitting authority exercised due diligence and was unable to obtain the information.

(v) Data provided as part of a submission must consist of information provided by the United States Census Bureau or data of comparable quality.

(2) Each submission must be made in such form and manner as the CRB may require, and must contain the following information or documents to enable the CRB to make the required determination pursuant to section 17-210 of the Election Law with respect to the covered policy:

(i) A copy or written description of, as applicable:

(a) the new or modified voting qualification, prerequisite to voting, law, ordinance, standard, practice, procedure, regulation, or policy embodying the change for which preclearance is being requested; and

(b) the voting qualification, prerequisite to voting, law, ordinance, standard, practice, procedure, regulation, or policy that is proposed to be repealed, amended, or otherwise changed.

(ii) A statement that identifies with specificity each covered policy for which administrative preclearance is requested and that explains the difference between the current voting qualification, prerequisite to voting, law, ordinance, standard, practice, procedure, regulation, or policy that is in force or effect as of the time of submission, and the proposed covered policy.

(iii) The name, title, email address, telephone number, and mailing address of the person making the submission.

(iv) The name of the submitting authority and, if different:

(a) the name of the person or body responsible for enacting and implementing the covered policy; and

(b) any political subdivision whose elections are affected by the covered policy.

(v) If the submission is not from a county or a county board of elections, the name of the county in which the submitting authority is located.

(vi) A statement identifying the statutory or other authority under which the political subdivision undertakes the change and a description of the procedures the political subdivision was required to follow in deciding to undertake the change.

(vii) For covered entities with elections required by law to be administered on a bipartisan basis, a statement attesting that the proposed change has been approved by the authorized members of both political parties.

(viii) A statement, made by someone with authority to make such statement, that the change has not yet been enforced or administered, or an explanation of why such a statement cannot be made.

(ix) Where the change will affect less than the entire political subdivision, an explanation of the geographic scope of the change.

(x) A statement of the reasons for the change.

(xi) A statement of the anticipated effect of the change on members of protected classes, as determined according to the legal standards detailed in the Act and this title.

(xii) A statement identifying:

(a) any pending litigation to which the covered entity is a party concerning the change or related voting practices, and

(b) any past litigation to which the covered entity was a party concerning the change or related voting practices, if such litigation was initiated or resolved on or after the date from which the entity's current coverage status is measured pursuant to section 17-210(3) of the Election Law.

(xiii) A statement that both the prior practice and the procedure for the adoption of the change have been precleared, with the date of such preclearance, or that such prior practice and procedure were not subject to the preclearance requirement, or an explanation of why such statements cannot be made.

(xiv) A statement identifying any other proposed change to a practice or policy, regardless of whether that practice or policy constitutes a covered policy in its own right, that may interact with the submitted covered policy.

(xv) If the submitting authority is requesting that the CRB consider information that was supplied in connection with an earlier submission, the later submission must identify the earlier submission and the relevant information.

(xvi) Other information that the CRB determines is required for an evaluation of the change, which may include items listed in paragraph 501.1(a)(3) of this subdivision. When such information is required, but has not been provided, the CRB shall notify the submitting authority.

(xvii) A sworn attestation that all of the information included in the submission is true and accurate to the best of the submitter's knowledge, signed by an individual with authority to make preclearance submissions on behalf of the covered entity.

(a) In a submission made by a board of elections, the sworn attestation must be signed by the authorized representative of each political party.

(3) Supplemental contents. The CRB may require the following information, where relevant to a preclearance application, in addition to that required by paragraph 501.1(a)(2) of this subdivision. The information must be provided in such form and manner as the CRB may require.

(i) Demographic information for the affected area (including, if relevant, both before and after the proposed change), by race, color, and language-minority group. If such information is contained in publications of the United States Census Bureau, reference to the appropriate volume and table is sufficient.

(ii) Maps. For a change that revises the constituency that elects any office or affects the boundaries of any geographical area defined or employed for voting purposes, or that affects voting or elections, including but not limited to election district boundaries, polling place locations, or voter registration sites, maps of the area to be affected, containing the following information:

(a) The prior and new boundaries of the political subdivision;

(b) The prior and new boundaries of election districts;

(d) Any natural boundaries or geographical features that influenced the selection of boundaries of the prior or new political subdivision;

(e) The location of prior and new polling places; and

(f) The location of prior and new voter registration sites.

(iii) Election returns

(a) Returns of primary, general, and special elections conducted by or in the political subdivision, containing the following information:

(1) The name of each candidate;

(2) The race, color, or language-minority group of each candidate, if known;

(3) The position sought by each candidate,

(4) The number of votes received by each candidate, by election district;

(5) The outcome of each contest; and

(6) The number of registered voters, by race, color, and language-minority group, for each election district for which election returns are furnished.

(b) Election-related data that cannot be accurately presented in terms of statistical areas and statistical subdivisions produced by the United States Census Bureau (e.g., census blocks or census tracts) may be identified by county and by election district.

(iv) Racially polarized voting. Analysis indicating the extent to which voting in the political subdivision is racially polarized, as defined in section 17-204(6) of the Election Law, between and among relevant protected classes, or a statement of why such analysis is impossible or impracticable.

(v) Publicity and participation. If the political subdivision provided public notice that it intended to enact or implement a covered policy, conducted a public hearing concerning the covered policy, or otherwise provided the public with an opportunity to be heard regarding the covered policy, evidence of, as applicable:

(a) Such public notice(s).

(b) The opportunity for members of the public to participate in the decision to adopt the proposed change and an account of the extent to which such participation, especially by protected class members, in fact took place.

(1) Copies of newspaper articles or other media coverage discussing the proposed change;

(2) Copies of public notices that describe the proposed change and invite public comment or participation in hearings and statements regarding where such public notices appeared (e.g., newspaper, radio, or television, posted in public buildings, sent to identified individuals or entities);

(3) Minutes or accounts of public hearings concerning the proposed change;

(4) Statements, speeches, and other public communications concerning the proposed change; and

(5) Copies of public comments received.

(d) Where a political subdivision has provided the public with notice of the ability to inspect or copy a preclearance submission, or an invitation to provide public comments for consideration of the CRB in connection with its preclearance review, copies of the relevant public notices or invitations and statements regarding where such public notices or invitations appeared.

(e) Any other evidence demonstrating the extent to which protected class members were provided an opportunity to engage in the decision-making process and the extent to which any comments or concerns voiced in that process were considered.

(vi) For covered policies enacted by local law or resolution, legislative history materials, including, but not limited to:

(a) Hearing transcripts and minutes;

(b) Committee reports; and

(vii) Community group contacts. Where relevant, the names, email addresses, telephone numbers, and organizational affiliations of groups that do work in the political subdivision and serve the political subdivision's residents, who can be expected to be familiar with the proposed change or who have been active in the political process.

(b) Timing

(1) Computation of time

(i) Except where otherwise provided, time periods for submission and review shall be counted in calendar days, with the day of receipt of a submission not counted, and with the final day of a period ending at 11:59 p.m. Eastern Time of that day.

(ii) If the final day of a period should fall on a Saturday, Sunday, or any day designated as a holiday by the President or Congress of the United States or by the Governor or the State of New York, or any other day that is not a day of regular business for the office of the New York State Attorney General, the next full business day shall be counted as the final day of the period.

(iii) The date of a submission shall be the date on which it is received by the CRB. The CRB will confirm the date of receipt of a submission to the covered entity.

(iv) The date of the CRB's response shall be the date on which it is transmitted to the submitting authority by any reasonable means, including placing it in a postbox of the U.S. Postal Service or a private mail carrier, sending it by email or other electronic means, or delivering it in person to a representative of the submitting authority.

(2) Emergency review. In the event that a covered entity needs to enact or implement a covered policy after the thirty-fifth day prior to the first day of voting, as a result of a fire, earthquake, tornado, explosion, power failure, act of sabotage, enemy attack, other disaster, or other exigent circumstances, the time periods for public comment, CRB review, and the determination to grant or deny preclearance shall be as follows:

(i) For any covered policy concerning the designation or selection of poll sites or the assignment of election districts to poll sites, the CRB shall review the covered policy and make a determination to deny or grant preclearance within 48 hours following receipt of the covered policy, or as soon thereafter as is reasonably practicable.

(ii) For any other covered policy, the CRB shall review the covered policy and make a determination to deny or grant preclearance within 72 hours following receipt of the covered policy, or as soon thereafter as is reasonably practicable.

(iii) Preliminary determination

(a) Any preclearance granted on an emergency basis shall be designated preliminary, and the CRB may thereafter deny preclearance within 60 days following receipt of the covered policy.

(b) Any public comments received within 10 business days after a preliminary grant of preclearance shall be considered during this 60-day period.

(3) Extension of review period

(i) The time periods for public comment, CRB review, and the determination to grant or deny preclearance, as provided in section 17-210(4)(f) of the Election Law, shall recommence upon receipt of a resubmission or a related submission.

(a) Resubmission. When a submitting authority provides, or the CRB otherwise obtains, information during the review period that the CRB determines materially supplements a pending submission, either at its own instance or in response to a CRB request for additional information, this shall be deemed a resubmission of the preclearance request, and the time periods for public comment, CRB review, and the determination to grant or deny preclearance, as provided in section 17-210(4)(f) of the Election Law, will be recalculated from the CRB's receipt of the resubmission. In the event of a CRB request for additional information, such time periods will toll beginning on the date on which such request is issued.

(b) Related submissions. When the CRB receives multiple related submissions during the review period for a submission that cannot be independently considered, the time periods for public comment, CRB review, and the determination to grant or deny preclearance, as provided in section 17-210(4) of the Election Law, shall be recalculated from the CRB's receipt of the last related submission.

(1) A submission that cannot be independently considered is one for which the potential retrogressive impact can only be assessed in relation to the impact of another covered policy. Submissions that cannot be independently considered may include, but are not limited to, relocations of multiple poll sites in coterminous or neighboring districts.

(ii) The CRB will notify the submitting authority in writing when the time periods for public comment, CRB review, and the determination to grant or deny preclearance, as provided in section 17-210(4)(f) of the Election Law, are recalculated due to the CRB's receipt of a resubmission or a related submission.

(iii) Notice of the CRB's receipt of a resubmission or a related submission will be given to interested parties registered under subparagraph 501.1(c)(11)(i) of this section.

(4) Covered policies must be submitted for preclearance review as soon as possible after they become final; provided, however, that changes requiring approval by referendum, by a court, or by a State agency must be submitted prior to such approval if the change is not subject to alteration in the final approving action and if all other action necessary for approval has been taken.

(i) A local law or resolution is considered to have become final after it has been enacted, and such law or resolution shall not be implemented until such time as preclearance is granted.

(ii) A political subdivision conducting a referendum election to ratify a covered policy may submit the change to be voted on in the referendum at the same time that it submits any covered policies related to the conduct of the referendum election.

(1) Submissions must be in writing and in such form and manner as may be required by the CRB. The CRB shall provide an electronic option for submitting preclearance requests.

(2) The most current information on addresses for, and methods of making, preclearance submissions shall be available on the office of the New York State Attorney General's website.

(3) Submitting body

(i) Preclearance submissions must be made by the chief legal officer or other appropriate official of the submitting authority, or by another person authorized to act on behalf of the submitting authority.

(ii) A county, including its board of elections, has authority to submit a covered policy on behalf of any covered entities fully contained within the county's borders whose elections are administered by the county or the county board of elections, or where other circumstances may warrant submission by the county or its board of elections, provided that the submission must include an explanation of such circumstances.

(iii) A change to a covered policy that results from a court order, as provided in section 501.4(a)(5) of this Part, must be submitted by the jurisdiction or body that is to implement or administer the change.

(iv) Any individual or entity may send to the CRB public comment or other information concerning a covered policy in a covered entity within the public comment periods stated in section 17-210(4)(f) of the Election Law, as applicable.

(a) Communications may be in the form of a letter stating the name, email address, and telephone number of the individual or entity, describing the proposed change and setting forth information regarding whether the proposed change will or will not diminish the ability of protected class members to participate in the political process and to elect their preferred candidates to office.

(b) Comments must be sent to the Section Chief, Voting Rights, Civil Rights Bureau at the address or email address specified on the office of the New York State Attorney General's website. The first page and the envelope or email subject line should be marked: "Comment under section 17-210 of the New York Voting Rights Act." Where available, comments should include the name of the covered entity in the subject line.

(v) Any individual or entity may bring to the attention of the CRB the fact that a covered policy has been enacted or implemented without preclearance approval. If a preclearance submission concerning a covered policy that is subject to preclearance has not been received, the CRB shall advise the appropriate political subdivision of the preclearance requirement with respect to the change in question.

(4) Improper or incomplete submissions. A submission that is not eligible for preclearance review, does not include all required information, or is not submitted in the proper format may be deemed improper or incomplete.

(i) Improper submissions

(a) The CRB will not consider on the merits, among other things:

(1) Submissions concerning standards, practices, or procedures for which no change is being proposed;

(2) Submissions concerning changes that previously have received preclearance;

(3) Submissions concerning changes for which a determination is premature;

(4) Submissions by political subdivisions that are not covered entities as defined in section 17-210(3) of the Election Law and therefore not subject to the preclearance requirement;

(5) Submissions concerning changes that do not constitute a covered policy as defined in section 17-210(2) of the Election Law or this Part;

(6) Submissions concerning changes that were enacted and implemented prior to September 22, 2024;

(7) Submissions concerning changes submitted prior to final enactment or approval, except with respect to changes requiring approval by referendum, by a court, or by a State agency, as provided in paragraph 501.1(b)(4) of this section;

(8) Submissions directly related to another change that is subject to, but has not been submitted for, preclearance, if the CRB determines that the two changes cannot be substantively considered independently of each other;

(9) Submissions concerning changes whose enforcement has ceased and been superseded by a standard, practice, or procedure that has received preclearance or that is otherwise legally enforceable under section 17-210 of the Election Law; or

(10) Submissions that fail to describe the subject change in sufficient particularity to satisfy the minimum requirements of subparagraph 501.1(a)(2)(i) of this section.

(b) When the CRB determines that a response on the merits of a submitted change is improper, the CRB may waive the procedural requirements stated in section 17-210(4) of the Election Law and notify the submitter that the submission will not be considered on the merits. Such notification shall be given within the review period that would have commenced for a determination on the merits and shall include an explanation of the reason why a response is improper.

(c) If, following a notification by the CRB that a submission was improper for consideration on the merits, new information or a change in circumstances renders the covered policy appropriate for review on the merits, such covered policy must be submitted for preclearance review. Such submission must include a description of the new information or circumstances, such as a notification from the submitting authority that a covered policy previously determined to be premature has been formally adopted. Notice of the resubmission will be given to interested parties registered under subparagraph 501.1(c)(11)(i) of this section.

(ii) Incomplete submissions

(a) The CRB will deem incomplete and not review, among other things:

(1) Submissions that do not include all information required pursuant to subdivision 501.1(a) of this section or all information material to the CRB's review; and

(2) Submissions that are improperly formatted, illegible, or otherwise do not comply with the technical requirements set by the CRB.

(b) Requests for additional information

(1) If the CRB determines that a submission does not satisfy the requirements of subdivision 501.1(a) of this section, the CRB may request, orally or in writing, any omitted information necessary for the evaluation of the submission. The request shall advise the covered entity that preclearance may be denied if the information is not provided in a timely manner.

(2) The CRB shall notify the submitting authority that the review period for the submission is tolled as of the date of the request, and that a new review period will commence upon the CRB's receipt of a response from the submitting authority that provides the information requested or demonstrates, as determined at the sole discretion of the CRB, that the submitting authority exercised due diligence and was unable to obtain the information.

(3) An oral request for information shall not limit the authority of the CRB to make a written request for information.

(4) If the request was in writing, a copy of the request, and notice of the CRB's receipt of information pursuant to such request, will be given to any party who has commented on the submission, and to interested parties registered under subparagraph 501.1(c)(11)(i) of this section.

(5) Where the response from the submitting authority neither provides the information requested nor demonstrates, as determined at the sole discretion of the CRB, that the submitting authority exercised due diligence and was unable to obtain the information, such response will be deemed insufficient and shall not commence a new review period. The CRB shall notify the submitting authority that its response is insufficient. Such notification shall be provided as soon as possible within the review period that would have commenced had the response been sufficient.

(6) If, after a request for further information is made pursuant to this clause, the CRB receives the requested information from a source other than the submitting authority, the CRB shall promptly notify the submitting authority, and the new review period shall commence the day after the information is received by the CRB.

(7) If after 60 days the submitting authority has not provided a sufficient response to a request made pursuant to this section, the CRB, absent extenuating circumstances and consistent with the burden of proof under section 17-210 of the Election Law and as described in section 501.2(e) of this Part, may deny preclearance.

(iii) Other interested parties

(a) The CRB may at any time request relevant information from governmental jurisdictions and from interested individuals and entities and may conduct any independent analysis that it deems appropriate in its discretion in making a determination.

(b) The CRB shall have the discretion to call to the attention of the submitting authority or any interested individual or entity information or comments related to a submission.

(5) Preclearance report and determination

(i) The CRB shall, within the review period provided in section 17-210(4)(f) of the Election Law and as further provided in this title, issue a written report and determination as to whether preclearance of the covered policy should be granted or denied.

(ii) If preclearance is denied, the report and determination shall include an explanation of the basis for the denial and shall advise the submitting authority that it may institute a special proceeding in the Supreme Court of New York for the County of New York or Albany to appeal the denial, pursuant to Article 78 of the CPLR.

(iii) If preclearance is granted, the report and determination shall state that the CRB's grant of preclearance does not bar subsequent litigation by other parties to enjoin the enactment or implementation of the covered policy.

(iv) The decision of the CRB to grant preclearance is not reviewable.

(v) A copy of the report and determination shall be sent to any party who has commented on the submission, and to interested parties registered under subparagraph 501.1(c)(11)(i) of this section.

(6) Withdrawal

(i) A covered entity may withdraw a submission at any time prior to a final decision by the CRB. Notice of the withdrawal must be made in writing, addressed to the Section Chief, Voting Rights, Civil Rights Bureau. The submission shall be deemed withdrawn upon the CRB's receipt of the notice.

(ii) Notice of withdrawals will be given to interested parties registered under subparagraph 501.1(c)(11)(i) of this section.

(7) Failure to respond. Pursuant to section 17-210(3)(e)(iii) of the Election Law, the failure of the CRB to provide a report and determination within the prescribed review period constitutes preclearance of the submitted change, provided that such review period had commenced after receipt by the CRB of a complete submission that is appropriate for a response on the merits.

(8) File maintenance; record retention. The CRB shall maintain copies of preclearance submissions, reports, and determinations in compliance with applicable record retention requirements, including but not limited to the Freedom of Information Law, N.Y. Public officers Law § 84 et seq.

(9) Special elections

(i) As stated in section 17-210(2)(h) of the Election Law, any discretionary setting of the date for a special election is not subject to the preclearance requirement.

(ii) The conduct of a special election is subject to the preclearance requirement to the extent that the political subdivision makes changes in the practices or procedures to be followed during the conduct of such special election.

(10) Notification

(i) notification of litigation relevant to preclearance coverage must be made in such form and manner as the CRB may require.

(ii) Covered entities must notify the CRB of any change in the name or contact information of the individual responsible for making preclearance submissions, in such manner as may be required by the CRB, no later than 30 days after the date of the change.

(11) Notification registry

(i) The CRB shall establish and maintain a notification registry, which shall contain the name and mailing or email address of any individual or entity that wishes to receive notifications regarding preclearance.

(ii) Notice of administrative preclearance submissions, resubmissions, related submissions, requests for additional information, withdrawals, and reports and determinations will be given to the individuals and groups who have registered for this purpose under subparagraph (i) of this paragraph. Such notice will also be given when a request for judicial preclearance has been filed in the Supreme Court of New York, provided that the covered entity has complied with the requirement pursuant to section 17-210(5)(b) of the Election Law to contemporaneously provide the CRB with a copy of such request.

History

Adopted New York State Register September 11, 2024/Volume XLVI, Issue 37, eff. 9/22/2024

N.Y. Comp. Codes R. & Regs. Tit. 13 § 501.2 Legal standard

(a) Grant or denial of preclearance. The CRB shall grant preclearance to a covered policy only if the CRB is able to determine that the covered policy will not diminish the ability of members of a protected class to participate in the political process or to elect their preferred candidates to office. Absent such a determination, preclearance will be denied and the covered policy shall not be enacted or implemented.

(b) Basis for the CRB determination. The CRB shall base a preclearance determination on a review of material presented by the covered entity, relevant information provided by interested individuals and groups or otherwise obtained by the CRB, and the results of any independent analysis conducted by the CRB.

(c) Standard of review. A covered policy will be precleared only if it will not diminish the ability of members of any protected class to participate in the political process and to elect their preferred candidates to office.

(1) A covered policy will not diminish the ability of members of a protected class to participate in the political process and to elect their preferred candidates to office if it will not lead to a retrogression in the position of members of a protected class (i.e., it will not make members of such a group worse off than they had been before the change) with respect to their ability to participate in the political process and to elect their preferred candidates to office.

(2) A change will be deemed retrogressive as to a protected class's ability to participate in the political process where:

(i) the individuals who will be burdened by the change are disproportionately likely to be members of one or more protected classes; and

(ii) the change imposes a burden material enough that it will likely cause some members of such protected classes not to vote or otherwise participate in the political process.

(3) Retrogression is assessed with respect to all impacted protected classes.

(d) Benchmark

(1) In determining whether a covered policy submission is retrogressive, the CRB will compare the submitted change to the voting qualification, prerequisite to voting, law, ordinance, standard, practice procedure, regulation or policy (hereafter "policy") in force or effect at the time of the submission.

(2) If the existing policy at the time of the submission was not in force or effect on the covered entity's applicable date for coverage, it cannot serve as a benchmark, and the comparison shall be with the policy most recently in force or effect.

(3) In determining the appropriate benchmark, the CRB will evaluate the proposed change in light of all relevant conditions existing at the time of the submission, including whether an electoral contest other than the most recent one held provides a more appropriate benchmark. In making this determination, the CRB may consider, among other factors, the offices on the ballot and whether the proposed change involves a primary, general, or special election.

(4) The implementation and use of a covered policy that has not been precleared does not operate to make that practice a benchmark for any subsequent covered policy submitted by the covered entity.

(e) Burden of proof

(1) Although information dispositive of whether preclearance should be granted or denied may be provided by third-party individuals or entities or obtained by the CRB's own independent analysis, the burden of demonstrating that preclearance should be granted rests at all times with the covered entity submitting the proposed change.

(2) The covered entity must provide:

(i) sufficient information by which the CRB can determine the benchmark against which to compare the proposed covered policy; and

(ii) information sufficient to demonstrate that, as compared with that benchmark, the ability of any protected class present in the political subdivision to participate in the political process and to elect their preferred candidates to office will not be diminished as a result of enactment or implementation of the proposed change.

History

Adopted New York State Register September 11, 2024/Volume XLVI, Issue 37, eff. 9/22/2024

N.Y. Comp. Codes R. & Regs. Tit. 13 § 501.3 Covered entities

(a) The CRB will periodically publish a list of covered entities and may update such list at any time based on new information that is relevant to coverage determinations.

(b) For purposes of sections 17-210(3)(a) and (b) of the Election Law:

(1) A "finding of any violation" shall include a determination on the merits of a claim.

(2) A "finding of any violation" shall not include preliminary relief granted based on a likelihood of success on the merits and/or a weighing of relative harms.

(3) A consent decree or other executed written agreement shall be deemed to be based upon a finding of a violation, and thus may subject the political subdivision to preclearance coverage, if the agreement contains a finding of noncompliance with one of the laws or constitutional provisions enumerated in sections 17-210(3)(a) and (b) of the Election Law, and contains no provision denying liability with respect to such laws or constitutional provisions.

(4) "Similar formal action" as provided in section 17-204(9) of the Election Law includes, but is not limited to:

(i) A settlement agreement to which a federal or state entity is a party, if such agreement contains a finding of noncompliance with one of the laws or constitutional provisions enumerated in sections 17-210(3)(a) and (b) of the Election Law, and contains no provision denying liability with respect to such laws or constitutional provisions; and

(ii) A public report or other written document issued by a federal or state entity, if such report or document contains a finding of noncompliance with one of the laws or constitutional provisions enumerated in sections 17-210(3)(a) and (b) of the Election Law.

(1) Shall utilize rational methodologies, which may include information provided by the United States Census Bureau, or data of comparable quality; and

(2) May make such methodological decisions as may be reasonable and appropriate, including but not limited to:

(i) setting minimum population thresholds, for dissimilarity index score calculations or other measures;

(ii) selecting the appropriate spatial units (e.g., census tracts or block groups) to conduct any part of its analysis;

(iii) determining which tabulations of racial and ethnic data, as produced by the United States Census Bureau or a comparable body, are best suited to the CRB's analysis; and

(iv) excluding or including institutionalized persons and other group housing populations, or similarly situated individuals, from population totals.

(d) A political subdivision that is deemed a covered entity solely on the basis of containing a covered entity fully within its borders, pursuant to section 17-210(3)(e) of the Election Law, shall be required to submit covered policies for preclearance only to the extent that such policies affect elections held in the covered entity that is contained within such political subdivision's borders.

(e) The State of New York shall be deemed not to constitute a political subdivision as defined in section 17-204(4) of the Election Law. Accordingly, State actors, including the Governor and State Legislature, are not required to submit covered policies for preclearance.

History

Adopted New York State Register September 11, 2024/Volume XLVI, Issue 37, eff. 9/22/2024

N.Y. Comp. Codes R. & Regs. Tit. 13 § 501.4 Covered policies

(a) Scope of coverage

(1) The preclearance requirement applies to any covered policy, even if it appears to be minor or indirect, returns to a prior practice or procedure, purports to expand voting rights, or is designed to remove the elements that caused the CRB to deny preclearance to a prior submitted change.

(2) The preclearance requirement applies to changes enacted by or implemented through the Executive, Legislative, or Judicial branches.

(3) State or federal law

(i) State and federal laws and regulations are not subject to preclearance.

(ii) Covered policies enacted or implemented in order to comply with State or federal law are exempt from preclearance review only where such enactment or implementation does not require the use of discretion by the covered entity.

(4) A grant of preclearance by the CRB with respect to local legislation that requires, permits, or enables a political subdivision to implement a covered policy (hereinafter the "parent legislation") does not exempt the implementation of the particular covered policy that is enabled, permitted, or required from the preclearance requirement, unless such implementation was explicitly included and described in the submission of the precleared parent legislation. Such parent legislation may include:

(i) Local legislation authorizing a political subdivision to institute a covered policy described in section 17-210(2) of the Election Law or designated by this title;

(ii) Local legislation requiring a political subdivision that chooses a certain form of government to follow specified election procedures;

(iii) Local legislation requiring or authorizing political subdivisions of a certain size or a certain location to institute specified changes; and

(iv) Local legislation requiring a political subdivision to follow certain practices or procedures, unless the political subdivision's charter or local laws specify to the contrary.

(5) Court-ordered changes

(i) Covered policies for which approval by a state or federal court is required, or that are ordered by a state or federal court, are exempt from preclearance review only where the court prepared the change and the change was not proposed by, and has not been subsequently adopted or modified by, the relevant covered entity.

(ii) Where a court-ordered change at its inception is not subject to preclearance review, a subsequent adoption or ratification of the change, implementation in a manner not explicitly required or authorized by the court, or other action by the covered entity involving the use of discretion by such covered entity renders the change subject to preclearance review with regard to any future implementation.

(iii) Where a court-ordered change is not itself subject to preclearance review, subsequent changes necessitated by the court order but which reflect the use of discretion by the covered entity are subject to preclearance. For example, election district and polling site changes made necessary by a court-ordered redistricting plan, but which are determined through discretion exercised by the covered entity, are subject to preclearance review.

(6) A change is considered to be made when the determination to make the change, and the discretion involved in the decision, is finalized, even if the change is not made operative until the next applicable election. After a previously enacted covered policy has been precleared, implementation of that policy may be required to be precleared separately if it requires discretion to implement.

(7) A grant of preclearance by the CRB with respect to a procedure for instituting a covered policy does not exempt the substantive change from the preclearance requirement. For example, if the procedure for the approval of an annexation is changed from City Council approval to approval in a voter referendum, preclearance of the new annexation procedure does not exempt an annexation accomplished under the new procedure from the preclearance requirement.

(8) A "poll site" shall be construed to include any location at which a vote may be cast in accordance with State law, including but not limited to ballot drop boxes.

(b) Recurring practices

(1) Where a political subdivision implements a policy periodically or upon certain established contingencies, a change is deemed to have occurred upon any of the following circumstances:

(i) The first time the policy is implemented by the political subdivision;

(ii) When the manner in which the policy is implemented by the political subdivision is changed; and

(iii) When the rules for determining when the policy will be implemented are changed.

(2) A grant of preclearance by the CRB with respect to a recurrent policy constitutes preclearance of the future use of the policy if its recurrent nature is clearly stated or described in the submission or is expressly recognized in the report and determination of the CRB on the merits of the submission.

History

Adopted New York State Register September 11, 2024/Volume XLVI, Issue 37, eff. 9/22/2024