By Adam Leitman Bailey, P.C.
On April 16, 2020, Governor Cuomo issued Executive Order 202.18 (EO 202.18), which among other things, extended several deadlines applicable to condominium and cooperative offering plans. EO 202.18 tolls several deadlines that could prevent condo/co-op sponsors from completing and selling condo/co-op projects, though it does not significantly change most ongoing reporting requirements. Among other things, it:
- Tolls the requirement that the requirement that a sponsor offer rescission to buyers if the first closing in the condo/co-op does not occur within one year of the projected beginning of the first year of operations contained in the offering plan (or the amendment effective at the time the buyer’s purchase contract was signed).
- Tolls the obligation that a sponsor declare an offering plan for the conversion of an occupied building effective within 15 months after the offering plan is accepted for filing.
- Tolls a sponsor’s requirement to include or update a budget for the projected first year of condo/co-op operations in any offering plan or amendment.
These tolls last for the duration of EO 202.18, but all affected offering plans must be updated within 30 days of its expiration.
EO 202.18 does not change the regulations that provide that the term of an offering is extended by six months by the filing of a substantive (non-price change) amendment, and that if no amendment is filed within six months of the last substantive amendment (or after 12 months once the first closing occurs), the sponsor must cease sales activity until a substantive amendment is filed.
In sum, EO 202.18 extends some of the long-term milestones that condo/co-op sponsors are required to meet for their developments to become viable for the duration of the COVID-19 emergency, but sponsors are still required to keep their offering plans updated (except as to the projected first year budgets) when their terms expire. Although EO 202.18 provides relief to sponsors whose developments are running up against project deadlines, it increases the uncertainty that many buyers feel over when, if ever, they will be able to close on the units they have contracted for.