§ 4403. Public offering statement; general provisions.
(a) General rule.--Except as provided in subsection (b), a public offering statement must contain or fully and accurately disclose:
(1) The name and principal address of the declarant and of the cooperative.
(2) A general description of the cooperative, including, to the extent possible, the types, number and its declarant's schedule of commencement and completion of construction of buildings and amenities that the declarant anticipates including in the cooperative, and a narrative description of the type and character of units offered, including a statement of the degree of completion to be provided or undertaken by the declarant of the units and the common elements necessary for use and enjoyment of the units upon the conveyance by the declarant of the units offered.
(3) The number of units in the cooperative.
(4) Copies and a brief narrative description of the significant features of the declaration, any other recorded covenants, conditions, restrictions and reservations affecting the cooperative, the bylaws, the agreement of sale and any rules or regulations of the association; copies and a brief narrative description of any contracts, leases or agreements to be signed by purchasers prior to or at closing; and a brief narrative description of any other contracts, leases or agreements of a material nature to the cooperative.
(5) Any current balance sheet and a projected budget for the association, either within or as an exhibit to the public offering statement, for the year commencing on the anticipated date of the first conveyance to a purchaser and, thereafter, the current budget of the association, a statement of who prepared the budget and a statement of the budget's assumptions, including those concerning occupancy and inflation factors. The budget must include, without limitation:
(i) A statement of the amount or a statement that there is no amount included in the budget as a reserve for repairs and replacement.
(ii) A statement of any other reserves, including, without limitation, reserves for debt service on an obligation of the association and reserves for anticipated material capital expenditures or, if no provision is made for such other reserves, a statement to this effect.
(iii) The projected common expense assessment by category of expenditures for the association.
(iv) The projected monthly common expense assessment for each type of unit.
(6) Any:
(i) services not reflected in the budget that the declarant provides or expenses that he pays and that he expects may become at any subsequent time a common expense of the association; and
(ii) personal property not owned by the association but provided by the declarant and being used or to be used in the operation and enjoyment of the common elements which is or will be required in connection with the operation and enjoyment of the common elements after such personal property is no longer provided by the declarant and the projected common expense assessment for the association and for each type of cooperative interest attributable to each of those services and purchase or rental of such personal property.
(7) Any initial or special fee due from the purchaser at closing, together with a description of the purpose and method of calculating the fee.
(8) A description of any liens, defects or encumbrances on or affecting the title to the cooperative.
(9) A description of any financing for purchasers offered or arranged by the declarant.
(10) The terms and significant limitations of any warranties provided by the declarant, including statutory warranties and limitations on the enforcement thereof or on damages.
(11) Except in the case of time shares (section 4405), a statement in at least ten-point boldface type, appearing on the first page of the public offering statement, that:
(i) Within 15 days (seven days in the case of a time-share estate) after a purchaser's receipt of a public offering statement or any amendment thereto that would have a material and adverse effect on the rights or obligations of the purchaser, the purchaser, before conveyance, may cancel any contract for purchase of a cooperative interest from a person required to deliver a public offering statement under this subpart.
(ii) If a person required to deliver a public offering statement under this subpart fails to provide a public offering statement and all amendments thereto to a purchaser before conveying a cooperative interest or if the public offering statement or any amendment does not comply with the requirements of this subpart, that purchaser may recover from such person damages, described in detail, as provided in section 4408(f) (relating to purchaser's right to cancel).
(iii) A description of such damages.
(iv) If a purchaser receives the public offering statement more than 15 days before signing a contract for the purchase of a cooperative interest, he cannot cancel the contract, except that, in accordance with subparagraph (i), he shall have the right to cancel, before conveyance, the contract within 15 days after receipt of any amendment to the public offering statement that would have a material and adverse effect on the rights or obligations of that purchaser.
(12) A statement of any unsatisfied judgments or pending suits against the association and the status of any pending suits material to the cooperative of which a declarant has actual knowledge.
(13) A statement that any deposit made in connection with the purchase of a cooperative interest will be held in an escrow account until closing and will be returned to the purchaser if the purchaser cancels the contract pursuant to section 4408 and that the name and address of the escrow agent will be set forth in the purchaser's agreement of sale.
(14) Any restrictions on:
(i) Use and occupancy of the units.
(ii) Alienation of the cooperative interests.
(iii) The amount for which a cooperative interest may be sold or on the amount that may be received by a proprietary lessee upon sale, condemnation or casualty loss to the unit or the cooperative or termination of the cooperative.
(15) A description of all insurance coverage provided for the benefit of proprietary lessees, including the types and extent of coverage, and the extent to which such coverage includes or excludes improvements or betterments made to units.
(16) Any current or expected fees or charges to be paid by proprietary lessees for the use of the common elements and other facilities related to the cooperative in addition to monthly common expense assessments described in paragraph (5) (iv) and including, without limitation, user or membership fees that may be charged for the use or enjoyment of common elements and other facilities related to the cooperative.
(17) The extent to which financial arrangements have been provided for completion of all improvements which the declarant is obligated to build pursuant to section 4417 (relating to declarant's obligation to complete and restore).
(18) A brief narrative description of any zoning and other land use requirements affecting the cooperative.
(19) All unusual and material circumstances, features and characteristics of the cooperative and the units.
(20) In the case of a leasehold cooperative, at least the following information:
(i) The name and address of each lessor and his assignee, if any.
(ii) Any relationship between the declarant and any lessor or assignee.
(iii) A description of the leased property.
(iv) The rent and any provision in the lease for increases in the rent and any other charges or payments required to be paid by the lessee under the lease.
(v) Whether the lessee has any right to terminate the lease and, if so, the effect of such a termination on the cooperative.
(vi) The information contained in the declaration as required by section 4206 (relating to leasehold cooperatives).
(vii) The following notice in boldface type: Purchasers should be aware that this is a leasehold cooperative, and the purchaser's interest therein may be less valuable than a fee interest, may depreciate over time and may be of questionable marketability.
(21) A copy of a legal opinion, based on stated factual assumptions, given to the declarant by legal counsel selected by the declarant and licensed to practice law in the state in which the cooperative is situated stating:
(i) Whether the proprietary lessees will be entitled for Federal, State and local income tax purposes to a pass-through of deductions for payments made by the association for real estate taxes and interest paid the holder of a security interest encumbering the cooperative.
(ii) That the proprietary lessees are entitled to rely upon the opinion.
(22) A statement as to the effect on every proprietary lessee if the association fails to pay real estate taxes or payments due the holder of a security interest encumbering the cooperative.
(23) A description of how votes are allocated among the cooperative interests and a statement as to whether cumulative or class voting is permitted and, if so, under what circumstances. The statement shall also explain the operation of the cumulative or class voting.
(24) A description of any circumstances under which the association is or may become a master association or part of a master association.
(25) A statement of all governmental approvals and permits required for the use and occupancy of the cooperative indicating the name and expiration date of each approval or permit that has been obtained and, as to any governmental approvals or permits that have not been obtained, a statement indicating when each permit or approval is expected to be obtained and the person who shall bear the expense of obtaining each permit or approval.
(26) A statement as to whether there are any outstanding and uncured notices of violations of governmental requirements and, if there are any such notices of violations, a description of the alleged violation and a statement indicating when each violation is expected to be cured and the person who shall bear the expense of curing such violation.
(27) A statement as to whether the declarant has knowledge of any one or more of the following:
(i) Hazardous conditions, including contamination affecting the cooperative site by hazardous substances, hazardous wastes or the like or the existence of underground storage tanks for petroleum products or other hazardous substances.
(ii) Any investigation conducted to determine the presence of hazardous conditions on or affecting the cooperative site.
(iii) Any finding or action recommended to be taken in the report of any such investigation or by any governmental body, agency or authority in order to correct any hazardous conditions and any action taken pursuant to those recommendations.
If the declarant has no knowledge of such matters, the declarant shall make a statement to that effect.
(b) Exceptions.--If a cooperative composed of not more than 12 units is not subject to any development rights and no power is reserved to a declarant to make the cooperative part of a larger cooperative, group of cooperatives or other real estate, a public offering statement may, but need not, include the information otherwise required by the narrative descriptions of documents required by subsection (a)(4).
(c) Amendment for material change in information.--Until all cooperative interests shall have been conveyed to persons not affiliated with the declarant, promptly after any material change in the information required by this section comes to the attention of a person required to deliver a public offering statement pursuant to section 4102(c) (relating to applicability of subpart), such person shall amend the public offering statement to report any material change in the information required by this section and shall deliver copies of such amendments to purchasers in accordance with section 4408(a).
(d) Providing and maintaining documents.--The declarant shall provide a copy of the public offering statement and all amendments thereto to the association, and the association shall maintain them in its records.
Cross References. Section 4403 is referred to in sections 4102, 4103, 4302, 4320, 4401, 4402, 4404, 4405, 4406, 4409, 4418 of this title.
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