Senate Bill S9865

                             
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   9865
 
                             I N  S E N A T E
 
                               June 7, 2024
                                ___________
 
 Introduced  by  Sen. MATTERA -- read twice and ordered printed, and when
   printed to be committed to the Committee on Rules
 
 AN ACT to amend the real property law,  in  relation  to  transition  of
   control of certain homeowners' associations
 
   THE  PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section 1. The real property law is amended by adding a new article 16
 to read as follows:
                                ARTICLE 16
               TRANSITION TO HOMEOWNERS' ASSOCIATION CONTROL
 SECTION 500. TRANSITION TO HOMEOWNERS' ASSOCIATION CONTROL.
         501. DEFINITIONS.
   § 500. TRANSITION TO HOMEOWNERS' ASSOCIATION CONTROL.  1.  HOMEOWNERS,
 OTHER  THAN THE REAL ESTATE DEVELOPER OF A RESIDENTIAL HOUSING COMMUNITY
 ARE ENTITLED TO ELECT AT LEAST A MAJORITY OF THE MEMBERS OF THE BOARD OF
 DIRECTORS OF THE HOMEOWNERS' ASSOCIATION WHEN THE EARLIER OF THE FOLLOW-
 ING EVENTS OCCURS:
   (A) THREE MONTHS AFTER NINETY PERCENT OF THE PARCELS IN ALL PHASES  OF
 THE  RESIDENTIAL  HOUSING  COMMUNITY THAT WILL ULTIMATELY BE OPERATED BY
 THE HOMEOWNERS' ASSOCIATION HAVE BEEN CONVEYED TO MEMBERS OTHER THAN THE
 DEVELOPER;
   (B) SUCH OTHER PERCENTAGE OF THE PARCELS HAS BEEN CONVEYED TO MEMBERS,
 OR SUCH OTHER DATE OR EVENT HAS OCCURRED, AS IS SET FORTH IN  THE  ARTI-
 CLES OF INCORPORATION AND BYLAWS OF THE HOMEOWNERS' ASSOCIATION IN ORDER
 TO  COMPLY  WITH THE REQUIREMENTS OF ANY GOVERNMENTALLY CHARTERED ENTITY
 WITH REGARD TO THE MORTGAGE FINANCING OF PARCELS;
   (C) UPON THE DEVELOPER ABANDONING OR DESERTING ITS  RESPONSIBILITY  TO
 MAINTAIN  AND  COMPLETE  THE AMENITIES OR INFRASTRUCTURE AS DISCLOSED IN
 THE ARTICLES OF INCORPORATION AND BYLAWS OF THE HOMEOWNERS' ASSOCIATION.
 THERE IS A REBUTTABLE PRESUMPTION THAT THE DEVELOPER HAS  ABANDONED  AND
 DESERTED THE PROPERTY IF THE DEVELOPER HAS UNPAID ASSESSMENTS OR GUARAN-
 TEED AMOUNTS A PERIOD OF MORE THAN TWO YEARS;
   (D)  UPON  THE  DEVELOPER  FILING  A PETITION SEEKING PROTECTION UNDER
 CHAPTER SEVEN OF THE FEDERAL BANKRUPTCY CODE;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD13367-01-3
 S. 9865                             2
 
   (E) UPON THE DEVELOPER LOSING TITLE TO THE PROPERTY THROUGH A FORECLO-
 SURE ACTION OR THE TRANSFER OF A DEED IN LIEU OF FORECLOSURE, UNLESS THE
 SUCCESSOR OWNER HAS ACCEPTED  AN  ASSIGNMENT  OF  DEVELOPER  RIGHTS  AND
 RESPONSIBILITIES FIRST ARISING AFTER THE DATE OF SUCH ASSIGNMENT; OR
   (F)  UPON  A  RECEIVER  FOR THE DEVELOPER BEING APPOINTED BY A CIRCUIT
 COURT AND NOT BEING DISCHARGED WITHIN THIRTY DAYS  AFTER  SUCH  APPOINT-
 MENT, UNLESS THE COURT DETERMINES WITHIN THIRTY DAYS AFTER SUCH APPOINT-
 MENT THAT TRANSFER OF CONTROL WOULD BE DETRIMENTAL TO THE ASSOCIATION OR
 ITS MEMBERS.
   2. (A) MEMBERS OF A HOMEOWNERS' ASSOCIATION, OTHER THAN THE DEVELOPER,
 ARE  ENTITLED  TO ELECT AT LEAST ONE MEMBER OF THE BOARD OF DIRECTORS OF
 THE HOMEOWNERS' ASSOCIATION IF FIFTY PERCENT OF THE PARCELS IN ALL PHAS-
 ES OF THE RESIDENTIAL HOUSING COMMUNITY WHICH WILL ULTIMATELY  BE  OPER-
 ATED  BY  THE  ASSOCIATION  HAVE BEEN CONVEYED TO MEMBERS OTHER THAN THE
 DEVELOPER. FOR PURPOSES OF THIS SECTION, THE TERM  "MEMBERS  OTHER  THAN
 THE  DEVELOPER"  SHALL  NOT INCLUDE BUILDERS, CONTRACTORS, OR OTHERS WHO
 PURCHASE A PARCEL FOR THE PURPOSE OF CONSTRUCTING  IMPROVEMENTS  THEREON
 FOR RESALE.
   (B)  THE  DEVELOPER  IS  ENTITLED  TO ELECT AT LEAST ONE MEMBER OF THE
 BOARD OF DIRECTORS OF THE HOMEOWNERS' ASSOCIATION AS LONG AS THE  DEVEL-
 OPER  HOLDS  FOR  SALE  IN THE ORDINARY COURSE OF BUSINESS AT LEAST FIVE
 PERCENT OF THE PARCELS IN ALL PHASES OF THE RESIDENTIAL HOUSING COMMUNI-
 TY. AFTER THE DEVELOPER RELINQUISHES CONTROL OF THE HOMEOWNERS'  ASSOCI-
 ATION,  THE DEVELOPER MAY EXERCISE THE RIGHT TO VOTE ANY DEVELOPER-OWNED
 VOTING INTERESTS IN THE SAME MANNER AS  ANY  OTHER  MEMBER,  EXCEPT  FOR
 PURPOSES  OF  REACQUIRING  CONTROL  OF  THE  HOMEOWNERS'  ASSOCIATION OR
 SELECTING THE MAJORITY OF THE MEMBERS OF THE BOARD OF DIRECTORS.
   3. AT THE TIME THE MEMBERS ARE ENTITLED TO ELECT AT LEAST  A  MAJORITY
 OF  THE BOARD OF DIRECTORS OF THE HOMEOWNERS' ASSOCIATION, THE DEVELOPER
 SHALL, AT THE DEVELOPER'S EXPENSE,  WITHIN  NO  MORE  THAN  NINETY  DAYS
 DELIVER THE FOLLOWING DOCUMENTS TO THE BOARD:
   (A) ALL DEEDS TO COMMON PROPERTY OWNED BY THE ASSOCIATION;
   (B)  THE  ORIGINAL  OF THE ASSOCIATION'S DECLARATIONS OF COVENANTS AND
 RESTRICTIONS;
   (C) A CERTIFIED COPY OF THE ARTICLES OF INCORPORATION OF  THE  ASSOCI-
 ATION;
   (D) A COPY OF THE BYLAWS;
   (E) THE MINUTE BOOKS, INCLUDING ALL MINUTES;
   (F) THE BOOKS AND RECORDS OF THE ASSOCIATION;
   (G) POLICIES, RULES, AND REGULATIONS, IF ANY, WHICH HAVE BEEN ADOPTED;
   (H)  RESIGNATIONS  OF DIRECTORS WHO ARE REQUIRED TO RESIGN BECAUSE THE
 DEVELOPER IS REQUIRED TO RELINQUISH CONTROL OF THE ASSOCIATION;
   (I) THE FINANCIAL RECORDS OF THE ASSOCIATION FROM THE DATE OF INCORPO-
 RATION THROUGH THE DATE OF TURNOVER;
   (J) ALL ASSOCIATION FUNDS AND CONTROL THEREOF;
   (K) ALL TANGIBLE PROPERTY OF THE ASSOCIATION;
   (L) A COPY OF ALL CONTRACTS WHICH MAY BE IN FORCE WITH THE ASSOCIATION
 AS ONE OF THE PARTIES;
   (M) A LIST OF THE NAMES AND ADDRESSES AND  TELEPHONE  NUMBERS  OF  ALL
 CONTRACTORS,  SUBCONTRACTORS,  OR  OTHERS  IN  THE CURRENT EMPLOY OF THE
 ASSOCIATION;
   (N) ANY AND ALL INSURANCE POLICIES IN EFFECT;
   (O) ANY PERMITS ISSUED TO THE ASSOCIATION BY GOVERNMENTAL ENTITIES;
   (P) ANY AND ALL WARRANTIES IN EFFECT;
   (Q) A ROSTER OF CURRENT HOMEOWNERS AND THEIR ADDRESSES  AND  TELEPHONE
 NUMBERS AND SECTION AND LOT NUMBERS;
 S. 9865                             3
 
   (R) EMPLOYMENT AND SERVICE CONTRACTS IN EFFECT;
   (S) ALL OTHER CONTRACTS IN EFFECT TO WHICH THE ASSOCIATION IS A PARTY;
 AND
   (T) THE FINANCIAL RECORDS, INCLUDING FINANCIAL STATEMENTS OF THE ASSO-
 CIATION,  AND SOURCE DOCUMENTS FROM THE INCORPORATION OF THE ASSOCIATION
 THROUGH THE DATE OF TURNOVER. THE RECORDS SHALL BE AUDITED BY  AN  INDE-
 PENDENT  CERTIFIED  PUBLIC  ACCOUNTANT  FOR THE PERIOD FROM THE INCORPO-
 RATION OF THE ASSOCIATION OR FROM THE PERIOD COVERED BY THE LAST  AUDIT,
 IF AN AUDIT HAS BEEN PERFORMED FOR EACH FISCAL YEAR SINCE INCORPORATION.
 ALL  FINANCIAL STATEMENTS SHALL BE PREPARED IN ACCORDANCE WITH GENERALLY
 ACCEPTED ACCOUNTING PRINCIPLES AND SHALL BE AUDITED IN  ACCORDANCE  WITH
 GENERALLY  ACCEPTED  AUDITING STANDARDS. THE CERTIFIED PUBLIC ACCOUNTANT
 PERFORMING THE AUDIT SHALL EXAMINE TO THE  EXTENT  NECESSARY  SUPPORTING
 DOCUMENTS AND RECORDS, INCLUDING THE CASH DISBURSEMENTS AND RELATED PAID
 INVOICES  TO DETERMINE IF EXPENDITURES WERE FOR ASSOCIATION PURPOSES AND
 THE BILLINGS, CASH RECEIPTS, AND RELATED RECORDS OF THE  ASSOCIATION  TO
 DETERMINE  THAT THE DEVELOPER WAS CHARGED AND PAID THE PROPER AMOUNTS OF
 ASSESSMENTS.
   4. THIS ARTICLE DOES NOT APPLY TO A HOMEOWNERS' ASSOCIATION IN  EXIST-
 ENCE  ON THE EFFECTIVE DATE OF THIS ARTICLE, OR TO A HOMEOWNERS' ASSOCI-
 ATION, NO MATTER WHEN CREATED, IF  SUCH  ASSOCIATION  IS  CREATED  IN  A
 COMMUNITY  THAT IS INCLUDED IN A PLANNED UNIT DEVELOPMENT DISTRICT AS OF
 THE EFFECTIVE DATE OF THIS ARTICLE, TOGETHER WITH ANY APPROVED MODIFICA-
 TIONS THEREOF.
   § 501. DEFINITIONS. FOR THE PURPOSES OF THIS ARTICLE:
   1. "RESIDENTIAL HOUSING COMMUNITY" MEANS THE REAL PROPERTY THAT IS  OR
 WILL  BE  SUBJECT TO A DECLARATION OF COVENANTS WHICH IS RECORDED IN THE
 COUNTY WHERE THE PROPERTY IS  LOCATED.  THE  TERM  "RESIDENTIAL  HOUSING
 COMMUNITY"  INCLUDES  ALL  REAL  PROPERTY, INCLUDING UNDEVELOPED PHASES,
 THAT IS OR WAS THE SUBJECT OF A DEVELOPMENT-OF-REGIONAL-IMPACT  DEVELOP-
 MENT ORDER, TOGETHER WITH ANY APPROVED MODIFICATION THERETO.
   2. "DEVELOPER" MEANS A PERSON OR ENTITY THAT:
   (A)  CREATES  THE  RESIDENTIAL HOUSING COMMUNITY SERVED BY THE ASSOCI-
 ATION; OR
   (B) SUCCEEDS TO THE RIGHTS AND LIABILITIES OF  THE  PERSON  OR  ENTITY
 THAT  CREATED  THE  RESIDENTIAL  HOUSING COMMUNITY SERVED BY THE ASSOCI-
 ATION, PROVIDED THAT SUCH IS EVIDENCED IN WRITING.
   3. "HOMEOWNERS' ASSOCIATION" OR "ASSOCIATION" MEANS A NEW YORK  CORPO-
 RATION  RESPONSIBLE FOR THE OPERATION OF A RESIDENTIAL HOUSING COMMUNITY
 OR A MOBILE HOME SUBDIVISION IN WHICH THE VOTING MEMBERSHIP IS  MADE  UP
 OF PARCEL OWNERS OR THEIR AGENTS, OR A COMBINATION THEREOF, AND IN WHICH
 MEMBERSHIP  IS  A  MANDATORY CONDITION OF PARCEL OWNERSHIP, AND WHICH IS
 AUTHORIZED TO IMPOSE ASSESSMENTS THAT, IF UNPAID, MAY BECOME A  LIEN  ON
 THE PARCEL. THE TERM "HOMEOWNERS' ASSOCIATION" DOES NOT INCLUDE A COMMU-
 NITY  DEVELOPMENT  DISTRICT  OR  OTHER  SIMILAR  SPECIAL TAXING DISTRICT
 CREATED PURSUANT TO STATUTE.
   § 2. This act shall take effect on the sixtieth  day  after  it  shall
 have become a law.