(a) Right to sell and the limitations on an Occupant's right to sell.
(1) The Right to Sell. The residential Occupant of an IMD unit may sell the rights afforded such Occupant pursuant to Art. 7-C, to the Owner of the IMD or the Owner's authorized representative, including a net lessee, in accordance with the terms of MDL § 286(12) and these rules. A sale pursuant to MDL § 286(12), after the effective date of the relevant provision of MDL § 281, as provided in 29 RCNY § 2-10(a)(2) below, constitutes a sale to the Owner of all of the Tenant's rights in the unit.
(2) Limitations.
(i) No sale or agreement made before the following dates in which an Occupant purported to waive rights under the Art. 7-C will be given any force or effect:
(A) June 21, 1982 for units subject to Art. 7-C pursuant to MDL § 281(1),
(B) July 27, 1987 for units subject to Art. 7-C solely pursuant to MDL § 281(4), or
(C) June 21, 2010 for units covered under MDL § 281(5), or
(D) June 25, 2019 for units covered by MDL § 281(6) that became subject to Art. 7-C pursuant to Chapter 41 of the Laws of 2019.
(ii) For any sale made pursuant to MDL § 286(12), the unit subject to a sale of rights may not be the subject of another sale pursuant to MDL § 286(12); nor may such unit be the subject of a subsequent sale of improvements pursuant to MDL § 286(6).
(b) Filing requirement for sales which occur on or after the effective date of these Rules.
(1) For a sale of rights in an IMD unit subject to Art. 7-C pursuant to
(i) MDL § 281(1), which occurs on or after March 16, 1990,
(ii) MDL § 281(4), which occurs on or after November 23, 1992,
(iii) MDL § 281(5), which occurs on or after September 11, 2013, or
(iv) MDL § 281(6), which occurs on or after March 31, 2023, the effective date of this amended rule,
the Owner or Responsible Party must file with the Loft Board a sales record on the Loft Board approved form ("sales record form") within thirty (30) days of the sale.
(2) The Owner or authorized representative must include documentation supporting the sale. Supporting documentation should include a fully executed sales agreement and proof of payment of the sales price (if applicable). The sales agreement must include a full description of the consideration, including the amount of monetary compensation, if any, supporting the sale. The Loft Board must reject any purported sale of rights that does not include a full statement of the consideration supporting the sale. The refund of a security deposit, or a portion thereof, is not acceptable consideration for a sale.
(3) The Loft Board's approved form must be signed by the Owner or its authorized representative and the Occupant or an Occupant's authorized representative who sold rights to the unit. Except for sales between the Owner or its representative and a representative of a deceased Occupant's estate, the Occupant must be residing in the unit at the time of the sale. Sales occurring after an Occupant has vacated the unit are invalid.
(4) Except as provided in subdivision (c) below, failure by the Owner or Responsible Party to file a sales record form within thirty (30) days of the date of the sale may subject the Owner to a civil penalty as determined by the Loft Board in 29 RCNY § 2-11.1.
(c) Filing requirement for sales which occurred before the effective date of these rules.
(1) Filing deadlines:
(i) For a unit subject to Art. 7-C pursuant to MDL § 281(1), if the sale of rights occurred after June 21, 1982, but before March 16, 1990, the Owner or Responsible Party must file the sales record form and the sales agreement with the Loft Board on or before June 14, 1990;
(ii) For a unit subject to Art. 7-C solely pursuant to MDL § 281(4), if the sale of rights occurred after July 27, 1987, but before November 23, 1992, the Owner or Responsible Party must file the sales record form and the sales agreement with the Loft Board on or before February 21, 1993;
(iii) For a unit covered by MDL § 281(5) that became subject to Art. 7-C pursuant to Chapter 135 or 147 of the Laws of 2010, if the sale of rights occurred after June 21, 2010, but before September 11, 2013 the effective date of this section, the Owner or Responsible Party must file the sales record form and the sales agreement with the Loft Board on or before December 10, 2013; or if the unit was not registered on September 11, 2013, the Owner or Responsible Party must file the sales record form and the duly executed sales agreement with the Loft Board on or before June 29, 2023, which is ninety days (90) days following the effective date of this amended section;
(iv) For a unit covered by MDL § 281(6) that became subject to Art. 7-C, if the sale of rights occurred after June 25, 2019, the Owner or its authorized representative must file the sales record form and the sales agreement with the Loft Board on or before June 29, 2023, which is ninety (90) days following the effective date of this rule.
(2) The sales record form must contain a sworn statement by the Owner or Responsible Party, on a form issued by the Loft Board, as to the current use and occupancy of the unit. If the Owner or Responsible Party intends to use the unit for non-residential purposes, the Owner or Responsible Party must: a) disclose its intention on the sales record form; and b) include a declaration of intent by the Owner or Responsible Party that the use is consistent with applicable provisions of the New York City Zoning Resolution and the New York City Administrative Code, and in conformity with any existing certificate of occupancy, and any other source of legal authorization for such use.
(3) If the Owner or Responsible Party indicates in the sales record an intention to use the unit for non-residential purposes, the unit will be subject to inspection to determine its compliance with the requirements set forth in 29 RCNY § 2-10(d)(1)(ii).
(4) Failure by the Owner or Responsible Party to timely file a sales record form may subject the Owner to a civil penalty as determined by the Loft Board in 29 RCNY § 2-11.1. The Loft Board may inspect any unit for which a sale of rights has occurred before the effective date of these rules. The Loft Board may also inspect any unit for which a sales record form was not timely filed to determine the current use of space.
(d) Effect of sales.
(1) Non-Residential use.
(i) If the unit is to be used for non-residential purposes after a sale of rights pursuant to MDL § 286(12), upon approval by the Loft Board, the owner will be relieved of its obligations to comply with the requirements of Article 7-C of the MDL regarding such unit. The non-residential use must comply with applicable provisions of the New York City Zoning Resolution and the New York City Administrative Code, and with any existing certificate of occupancy for the unit, and any other source of legal authorization for such use. The unit may not be converted to non-residential use if there is a harassment finding by the Loft Board as to any occupants of the unit that the Loft Board has not terminated pursuant to 29 RCNY § 2-02(d)(2). If the Loft Board issues a harassment finding after the sale of rights, the owner is permitted to convert the IMD unit to non-residential use, provided that all other applicable requirements in this section are met.
(ii) Prior to conversion to a non-residential use, the owner or its authorized representative must file with the Loft Board a declaration of intent on a form issued by the Loft Board stating that the unit will only be occupied for a conforming non-residential use. Following the Loft Board's receipt of the filing, the Loft Board must conduct or require an inspection of the premises to verify that the following fixtures, as defined in 29 RCNY § 2-07(a), have been removed or approved: (1) fixtures that were constructed or installed without necessary approvals by the appropriate government agencies and for which approvals have not been secured, and (2) fixtures that are intended primarily for residential occupancy.
The results of this inspection will be reported to the owner or its authorized representative. A determination on the request for non-residential conversion will be issued after the removal or approval of these fixtures has been verified. Any disputes will be resolved by application to the Loft Board.
(iii) Prior to approval by the Loft Board, in accordance with 29 RCNY § 2-10(d)(1)(ii), the owner remains subject to all the requirements of Article 7-C, these rules, and orders of the Loft Board, including the legalization requirements of MDL § 284.
(iv) When the conversion of a unit to a non-residential conforming use reduces the number of IMD units below three or two, as provided by MDL § 281(5), the IMD status for the building and for the remaining IMD units in the building, and the protections provided in Article 7-C to the protected occupants will not be eliminated.
(v) Notwithstanding the provisions of 29 RCNY § 2-01(l), if conversion of a unit to a non-residential conforming use increases the costs of legalization under MDL § 284 for the remaining IMD units, the additional increased costs must be paid by the owner and may not be passed through to the remaining residential occupants pursuant to Article 7-C and these Rules.
(2) Residential use. If the unit is to remain residential after a sale of rights pursuant to MDL § 286(12), the owner remains subject to all of the requirements of Article 7-C, these rules and orders of the Loft Board, including the legalization requirements of MDL § 284, except that the unit is no longer subject to rent regulation where coverage under Article 7-C was the sole basis for such rent regulation. The exemption from rent regulation will not be permitted if there is a finding by the Loft Board of harassment as to any occupant(s) in the IMD unit which has not been terminated pursuant to 29 RCNY § 2-02(d)(2).
(3) Termination of harassment. If a sale of rights pursuant to MDL § 286(12) occurs during the period between the date of the order finding harassment and the date of the order terminating the harassment finding, the sale of rights does not relieve the owner of the requirements of Article 7-C, including rent regulation, and the owner may not convert the unit to non-residential use. The effect of a termination of harassment finding applies prospectively only.
(e) [Reserved.]
(f) Abandonment of IMD unit.
(1) An owner or its authorized representative may apply to the Loft Board for a determination that the occupant of an IMD unit has abandoned the unit and no sale of rights pursuant to MDL § 286(12) or sale of improvements pursuant to MDL § 286(6) has been executed, provided there has been no finding of harassment as to any occupant(s) of the unit which has not been terminated pursuant to 29 RCNY § 2-02(d)(2).
(2) Abandonment means the relinquishment of possession of a unit and all rights relating to a unit either: (i) voluntarily, with the intention of never resuming possession or reclaiming the rights surrendered, or (ii) by the death of the IMD tenant, provided no family member, as defined in 29 RCNY § 2-08.1(c)(3), is denied the benefits of succession rights in accordance with 29 RCNY § 2-08.1.
(3) To be considered timely, an owner's application alleging abandonment must be filed with the Loft Board within 1 year of the date the owner knew or should have known that the IMD tenant vacated the unit.
(4) In deciding whether a unit has been abandoned voluntarily pursuant to subparagraph (i) of paragraph (2) above, the factors the Loft Board may consider include, but are not limited to, the following:
(i) The length of time since the occupant allegedly abandoned the unit;
(ii) Whether the occupant owed rent as of the time the occupant allegedly abandoned the unit and whether court proceedings to attempt to collect this rent have been initiated;
(iii) Whether the occupant's lease for the unit has expired;
(iv) Whether the occupant provided notice of an intent to vacate or requested permission to sublet the unit for a specific period of time;
(v) Whether the unit contained improvements which were made or purchased by the occupant and whether the occupant was reimbursed for those improvements;
(vi) Whether any prior harassment findings have been made by the Loft Board concerning the occupant(s) of the unit or whether any harassment application remains pending;
(vii) Whether any notices of violation or notices to appear pursuant to the Loft Board's Minimum Housing Maintenance Standards have been issued;
(viii) Whether the owner has made affirmative efforts to locate the occupant to attempt to purchase rights pursuant to MDL § 286(12) or improvements pursuant to MDL § 286(6); and
(ix) Whether an inspection of the unit by the Loft Board staff indicates that the unit is presently vacant.
(5) In determining whether abandonment has occurred as a result of the death of an IMD occupant as set forth in subparagraph (ii) of paragraph (2) above, proof of the occupant's death must be made by the presentation of a death certificate, or any other trustworthy evidence. The heir, beneficiary, administrator, or executor of the occupant's estate, as applicable, is an affected party in a case where an owner seeks an abandonment finding based on the death of an IMD occupant.
(6) If the owner's application alleging abandonment is granted by the Loft Board and if the unit is to be used for non-residential purposes, the owner or its authorized representative must comply with 29 RCNY § 2-10(d)(1).
(7) (i) Upon compliance with these specified provisions of 29 RCNY § 2-10(d)(1) with regard to units determined to be abandoned and used for non-residential purposes, the legal effect of the Loft Board's determination of abandonment is the same as that of a sale of rights as provided in 29 RCNY § 2-10(d).
(ii) Upon the Loft Board's granting of the owner's application alleging abandonment with regard to units to remain residential, the legal effect of the Loft Board's determination of abandonment is the same as that of a sale of rights as provided in 29 RCNY § 2-10(d), but only if:
(A) On or prior to the date of the Loft Board's granting of the owner's application alleging abandonment, the owner has obtained a certificate of occupancy for the affected building and filed an application seeking a final rent order and/or removal from the Loft Board's jurisdiction; or
(B) Within one year after the date of the Loft Board's granting of the owner's application alleging abandonment, or prior to the expiration of the code compliance deadline for obtaining a certificate of occupancy in effect on the date of the Loft Board's granting of such application, as such code compliance deadline may be extended pursuant to 29 RCNY § 2-01(b), whichever is earlier, the owner has obtained a certificate of occupancy for the affected building and has filed an application seeking a final rent order and/or removal from the Loft Board's jurisdiction.
(8) If an IMD unit becomes vacant without a prior sale of rights or improvements and subparagraph (i) of paragraph (7) does not apply, and the owner fails to meet either the criteria set forth in 29 RCNY § 2-10(f)(7)(ii)(A) or the criteria set forth in 29 RCNY § 2-10(f)(7)(ii)(B), the unit must remain residential and the owner is not permitted to re-rent the unit at a market rate to the incoming tenant. Additionally, the owner must provide any incoming tenant(s) with written notice that the rent for the IMD unit may increase to a market rate if and when the owner complies with the criteria set forth in 29 RCNY § 2-10(f)(7)(ii)(A) or 29 RCNY § 2-10(f)(7)(ii)(B).
The written notice to an incoming tenant or tenants must include a copy of this subdivision (f) and a copy of the Loft Board order granting the abandonment application, if any. If an owner re-rents the unit at a market rate in violation of this provision, the incoming tenant(s) may challenge such rent by filing an application alleging a rent overcharge with the Loft Board.
(9) Paragraphs (3) and (8), and the amendments to paragraph (7) of this subdivision (f), made effective on October 8, 2006 apply only to those IMD units for which applications alleging abandonment are filed after April 8, 2007.
(Amended City Record 3/1/2023, eff. 3/31/2023)