* § 339-mm. Establishment of reserve fund and dedicated capital fund
for buildings converting to condominium ownership under section three
hundred fifty-two-eeeee of the general business law. 1. Within thirty
days after the consummation of a preservation plan, the offeror thereof
(and/or its designee or designees and/or successor or successors) shall
establish and transfer:

(a) to the condominium board of managers a reserve fund to be used
exclusively for making capital repairs, replacements and improvements
necessary for the health and safety of the residents (including
residents of the income-restricted rental units) of such building or
group of buildings or development. Such reserve fund shall be exclusive
of any other funds required to be reserved under the preservation plan
or applicable law or regulation of the attorney general, except a fund
for capital repairs, replacements and improvements substantially similar
in purpose to and in an amount not less than the reserve fund mandated
by this section. Such reserve fund shall also be exclusive of any
working capital fund or dedicated capital fund and shall not be subject
to reduction for closing apportionments.

(b) to the qualified owner of the income-restricted rental units, and
subject to the oversight of the relevant housing finance agency set
forth in a regulatory agreement, a dedicated capital fund to be used
exclusively for making unit repairs, replacements and improvements
necessary for the health and safety of the residents of an
income-restricted rental unit or units of such building or group of
buildings or development. Such dedicated capital fund shall be exclusive
and supplemental of any other funds required to be reserved under the
preservation plan or applicable law or regulation. Such dedicated
capital fund shall also be exclusive and supplemental of any reserve
fund or working capital fund and shall not be subject to reduction for
closing apportionments. The dedicated capital fund shall not be used
towards any building-wide capital replacement, and instead shall be used
solely for unit repairs, replacements and improvements of the
income-restricted rental units.

1-a. In the event that the funds are insufficient, unless the relevant
housing finance agency provides otherwise, repairs and capital
improvements necessary for the health and safety of the residents in all
common areas and building infrastructure shall be at the sole expense of
the condominium board of managers. The relevant housing finance agency
may establish penalties for failure to comply with legal and regulatory
requirements.

2. (a) Such reserve fund shall be established in an amount equal to
either (i) three percent of the total price or, (ii) (A) three percent
of the actual sales price of all condominium units sold by the offeror
at the time the preservation plan is declared effective, provided,
however, that if such amount is less than one percent of the total
price, then the fund shall be established as a minimum of one percent of
the total price; plus (B) supplemental contributions to be made by the
offeror at a rate of three percent of the actual sales price of
condominium units for each unit held by the offeror and sold to bona
fide purchasers subsequent to the effective date of the preservation
plan and within five years of the consummation of the preservation plan,
notwithstanding that the total amount contributed may exceed three
percent of the total price; and provided, further, that if five years
from thirty days after the consummation of the preservation plan the
total contributions by the offeror to the fund are less than three
percent of the total price the offeror shall pay the difference between
the amount contributed and three percent of the total price.
Supplemental contributions shall be made within thirty days of each
sale.

(b) Such dedicated capital fund shall be established in an amount
equal to one-half of one percent of the total price, and shall be
transferred in full within thirty days of the date of consummation of
the preservation plan into an account at a financial institution
regulated by the department of financial services of the state of New
York that shall have been opened by, and shall at all times be subject
to the oversight authority of the relevant housing finance agency of the
qualified owner of the income-restricted rental unit or units.

3. Notwithstanding the provisions of subdivisions one and two of this
section, the contributions required pursuant to this section may be made
earlier or in an amount greater than so provided, including as may be
directed by the relevant housing finance agency. An offeror may claim
and receive credit against the mandatory initial contribution to the
reserve fund for the actual cost of capital replacements which such
offeror has begun after the preservation plan is submitted for filing to
the department of law and before the preservation plan is declared
effective; provided, however, that any such replacements shall be set
forth in the preservation plan together with their actual or estimated
costs and further provided, that such credit shall not exceed the lesser
of the actual cost of the capital replacements or one and a half percent
of the total price.

4. The condominium board of managers shall report to unit owners and
the relevant housing finance agency, and shall make available to all
tenants in each building, on a semi-annual basis with respect to all
deposits into and withdrawals from the reserve fund mandated by
paragraph (a) of subdivision two of this section.

5. The offeror, not later than the thirtieth day following the
acceptance of a preservation plan for filing by the department of law
pursuant to section three hundred fifty-two-eeeee of the general
business law and until the consummation of the preservation plan, shall
post and maintain in a prominent place, accessible to all tenants in
each building covered by the preservation plan, a listing of all
violations of record against such buildings as determined by the
department of buildings of the city of New York and the department of
housing preservation and development of the city of New York. All newly
issued violations shall be posted within forty-eight hours of their
issuance and maintained as described in this subdivision. The offeror
may satisfy the requirements of this section by designating an agent on
the premises with whom such listing shall be made available for
inspection by the tenants. Any penalty for failure to comply with a
state or local building and housing maintenance law or regulation shall
be paid by, and the sole responsibility of, the condominium board of
managers.

6. Any provision purporting to waive the provisions of this section in
any contract to purchase, any agreement between an offeror and a unit
purchaser, any agreement between an offeror and the condominium board of
managers created under a preservation plan, any agreement between an
offeror and the owner of the income-restricted rental unit or units
shall be void as against public policy.

7. (a) Except as otherwise provided in paragraph (b) of this
subdivision, any person who knowingly violates or assists in the
violation of any provision of this section shall be subject to a civil
penalty of one hundred dollars per day per unit for each day that a
building is not in compliance with the provisions of such section;
provided, however, that such civil penalty shall not exceed one thousand
dollars per unit.

(b) Any person who violates or assists in the violation of subdivision
two of this section shall also be subject to a civil penalty of one
thousand dollars per day for each day that the reserve fund required by
subdivision two of this section is not established; provided, however,
that such civil penalty shall not exceed the amount required to be
reserved pursuant to subdivision two of this section.

(c) Any other action or proceeding in any court of competent
jurisdiction that may be appropriate or necessary for the enforcement of
the provisions of this section may be brought in the name of the people
of the state of New York by the attorney general, including actions to
secure permanent injunctions enjoining any acts or practices which
constitute a violation of any provision of this section, mandating
compliance with the provisions of this section or for such other relief
as may be appropriate. In any such action or proceeding, the attorney
general may apply to any court of competent jurisdiction, or to a judge
or justice thereof, for a temporary restraining order or preliminary
injunction enjoining and restraining all persons from violating any
provision of this section, mandating compliance with the provisions of
this section, or for such other relief as may be appropriate, until the
hearing and determination of such action or proceeding and the entry of
final judgment or order therein. The court, or judge or justice thereof,
to whom such application is made, is hereby authorized to make any or
all of the orders specified in this paragraph, as may be required in
such application, with notice, and to make such other or further orders
or directions as may be necessary to render the same effectual. No
undertaking shall be required as a condition of the granting or issuing
of such order, or by reason thereof.

(d) Nothing contained in this section shall impair any rights,
remedies or causes of action accrued or accruing to purchasers of
condominium units with regard to the funding of the reserve fund and
capital fund under this section.

* NB Effective November 5, 2025

* NB Repealed November 5, 2031