What Is an Offering Plan? Reading NYC Condo and Co-op Plans

An offering plan is the legal disclosure document a sponsor must file with the New York State Attorney General before it can offer condo or co-op units for sale. It sets out the prices, the building's first-year budget, the sponsor's promises, the purchase agreement and the governing documents, and it is updated through filed amendments.

If you buy a new development condo or a sponsor unit, the plan and its amendments are the deal. If you buy a resale, the plan is still the starting point for understanding how the building was set up. This guide is a map of what is inside and where buyers get caught out.

Why offering plans exist

New York treats co-op and condo offerings like securities. Under General Business Law § 352-e, it is illegal to publicly offer or sell these interests in or from New York unless an offering statement has first been filed with the Department of Law. No offer, advertisement or sale may be made until the Attorney General issues a letter stating that the plan has been filed. The plan must not leave out any material fact or contain any untrue statement of a material fact, and buyers must receive true copies.

The detailed rules are in Title 13 of the New York Codes, Rules and Regulations. Different Parts cover different kinds of plans: Part 18 for conversions of occupied buildings to co-ops, Part 20 for new or vacant condos, Part 21 for new or vacant co-ops, and Part 23 for conversions of occupied buildings to condos, among others.

The main sections and what they tell you

The regulations fix the order of the table of contents, so once you learn one plan you can find your way around others. Here are the sections that matter most to a buyer, using a new-construction condo plan as the model. Co-op plans have parallel sections with co-op names, such as “Purchase Price of Shares” and “Summary of Proprietary Lease.”

Amendments: where the real changes are

A plan is not frozen on its filing date. Sponsors file amendments to change prices, update the budget, report sales, declare the plan effective and disclose financial information after closings begin. The plan must say that amendments will be served on all offerees. In practice, a plan for a building that has been selling for years may have many amendments, and the latest ones can change what you read in the original.

The Attorney General's database tags amendments with content codes, which help you spot important ones quickly:

How to find a plan and its amendments

1. 1

   Search the AG Offering Plan Database

   You can search by property name, property address, file number, or sponsor or principal name. Each filing has a stat card with its basic details.
2. 2

   Open the “documents” tab if there is one

   The Attorney General has posted plans and amendments for some filings. If they are available, they appear on a documents tab next to the stat card.
3. 3

   Ask the sponsor, seller or managing agent

   For a sponsor sale, the sponsor must give you the plan and all filed amendments. For a resale, the managing agent or seller’s attorney usually has a copy.
4. 4

   Request copies through FOIL if needed

   If documents are not posted, the AG says you may request copies of offering plans or amendments under the Freedom of Information Law.

Buyer protections written into the rules

For new-construction condo plans under 13 NYCRR Part 20, the regulations require, among other things:

• Time to review. At the sponsor's option, either at least three business days to review the plan and all amendments before signing, or at least seven days after signing to rescind and get the full deposit back.
• Escrowed deposits. Deposits must go into an attorney's segregated escrow account at a New York bank within five business days, and you must be notified within 10 business days. See buying a new development condo for the details.
• A minimum sales level. The plan cannot be declared effective until bona fide purchasers have signed for at least 15% of the units offered. Purchases by the sponsor or its insiders do not count.
• Budget protection. If operations start more than six months later than the budget year and the revised projection is 25% or more higher, buyers must be offered the right to rescind.
• Delay protection. If the first closing is delayed 12 months or more beyond the date stated, buyers will be offered rescission.
• No material changes without consent. Once you have a signed agreement and are not in default, the sponsor cannot materially change your unit's size, layout or common interest percentage without your consent.

Plans to convert occupied rental buildings have their own rules. In New York City, under GBL § 352-eeee, a non-eviction conversion plan generally cannot take effect until at least 51% of all units are under contract by tenants living there when the plan was accepted, and tenants who do not buy keep strong protections.

Red flags a buyer's attorney looks for

• Sponsor can rent instead of sell. If the sponsor keeps an unconditional right to rent units, the cover must warn that owner-occupants may never control the building.
• Long sponsor control of the board. Check when owners elect a majority of the board.
• Seller costs shifted to you. If the sponsor makes you pay a cost the law puts on the seller, such as transfer taxes, the plan must flag it as a special risk.
• Deposit above 10%. A deposit or liquidated damages above 10% of the price must be highlighted as a special risk.
• No financing contingency or a “time is of the essence” clause. Both must be flagged as special risks because they can cost you your deposit.
• Thin reserves or an optimistic budget. Low reserves or understated expenses often lead to higher common charges or special assessments later.
• For co-ops: a large underlying mortgage with a balloon. Co-op plans must project any balloon due at maturity and explain the refinancing risk.
• Tax benefits that phase out. A low tax estimate may rely on an exemption that ends. See 421-a tax abatements.

A real estate attorney reviews the plan as part of your purchase (see what a real estate attorney does). For a resale co-op, pair the plan with recent financial statements and board minutes using the co-op due diligence checklist.