NYC Condo Offering Plans: AG Filing, Amendment Process, Red Herring, and Common Pitfalls
9 min read · Updated 2025-01-15
Guide to NYC condominium offering plans: New York State AG filing requirements, the red herring period, how to amend a plan, required disclosures, and common pitfalls that delay AG acceptance.
Condo Offering Plan Process
What is a condominium offering plan in NYC?
A condominium offering plan is the disclosure document required by New York State law (Article 23-A of the General Business Law) before units in a condominium can be offered for sale to the public. It contains all material information about the condominium: the building's physical description and condition, the budget for common charges, a description of each unit, the declaration and bylaws, the sponsor's financial condition, legal matters, and all terms of the offering. The plan must be accepted ("accepted for filing") by the NY State Office of the Attorney General (AG) before sales can begin.
What is a "red herring" and how does the AG review process work?
Before the AG accepts the offering plan for filing, the sponsor can distribute a "red herring" (also called a preliminary offering plan) to prospective purchasers as long as it is clearly marked "This offering has not yet been accepted for filing" in red ink. No binding contracts can be signed while in red herring status. The AG's Real Estate Finance Bureau reviews the submitted plan for completeness and compliance with the regulations. If deficiencies are found, the AG issues comment letters requiring revisions before acceptance.
What must a condo offering plan contain?
Required contents include: description of the property and building; condition report (including any pending litigation, environmental issues, or code violations); projected common charge budget and budget assumptions; description of all units (size, bedrooms, layout); the condominium declaration and bylaws; form purchase agreement; sponsor's background and financials; any mortgage on the property; tax information and any applicable tax abatement; engineering report; proposed managing agent's terms; and escrow arrangements for purchase deposits.
When can the sponsor begin accepting purchase contracts?
Once the AG accepts the offering plan for filing, the sponsor can begin accepting binding purchase contracts and collecting deposit payments. Deposits are held in escrow and cannot be released to the sponsor until the sale closes. If the offering plan is not declared effective (15% of the units under contract is the standard threshold), deposits must be returned to purchasers. The plan must be declared effective before the first closing can occur.
What is an amendment to a condo offering plan?
Material changes to the offering plan after acceptance require amendments, which must also be reviewed and accepted by the AG before being used in sales. Common amendments: price changes, changes to the proposed construction scope, changes in the estimated budget, resolution of litigation, changes in the sponsor's financial condition, changes in the declaration or bylaws, or physical changes to the building. Amendment filings must be detailed and include all required supporting documentation.
What are common pitfalls that delay AG acceptance of a condo plan?
Common delay causes: (1) Incomplete or outdated engineering report; (2) Budget assumptions that the AG finds unrealistic or unsupported; (3) Pending litigation not adequately disclosed; (4) Outstanding DOB violations or unresolved permit issues; (5) Inadequate sponsor financial disclosure; (6) Declaration or bylaws that don't comply with the AG's standard requirements; (7) Missing environmental disclosures; (8) Inadequate escrow arrangements for deposits. AG comment letters can require substantial revisions — using experienced condo offering plan attorneys minimizes these delays.
What is the RPTT and New York State transfer tax for condo sales?
Condo sales are subject to: (1) NYC Real Property Transfer Tax (RPTT) — 1% for sales under $500K; 1.425% for sales $500K+; (2) NYS Transfer Tax — 0.4% for sales under $3M; 0.65% for sales $3M+ (residential); (3) NYC Mansion Tax — 1% for sales $1-2M, escalating to 3.9% for $25M+. These taxes are typically paid by the purchaser on the full purchase price. In competitive markets, sellers sometimes offer to pay transfer taxes as a concession, but the legal obligation is on the buyer under NYC law.