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COURT HOLDS THAT RENTAL TENANTS LACK STANDING TO CHALLENGE ATTORNEY GENERALS APPROVAL OF NON-EVICTION OFFERING PLAN A GANFER & SHORE, LLP CLIENT ADVISORY FEBRUARY 2008

Existing residential tenants of a building whose owner seeks to convert it to condominium status may not bring a court challenge against the Attorney Generals approval of a non-eviction Offering Plan, under which the tenants would be entitled to the same or greater rights after the conversion as they enjoyed previously.So holds Matter of Urquia v. Cuomo, N.Y.L.J., Jan 11, 2008, p. 26 col. 1 (Sup. Ct. N.Y. Co.).The decision contains a lengthy discussion of the history of cooperative and condominium conversions in New York and their regulation by the Legislature and the Attorney General.

To enjoy standing to bring this type of challenge, the court wrote, a party must be aggrieved by the Attorney Generals action, that is, the party must show that his or her rights would be adversely affected by the decision under review.Reviewing the facts of the case before it, the court determined that [n]ot only are all existing tenants of [the building] not disadvantaged in any legally recognized way should the Plan become effective, [but] if the Plan did become effective, their situation would only improve.The court found that the tenants would have the right to continued occupancy even if they chose not to purchase their apartments, and in fact they might enjoy additional rights under the rent stabilization laws after the conversion took effect.Earlier cases in which tenants had been accorded standing to challenge approval did not apply, the court held, because they involved eviction plans under which non-purchasing tenants risked losing their rent-regulated apartments.

Even though the petitioning tenants lacked standing, the court briefly addressed the merits of their challenges to the Attorney Generals approval, and held that if the challenges were properly before the court, it would reject them.The court disagreed with the tenants contention that because the originally filed Offering Plan contained deficiencies, the Attorney General was required to reject the plan.Instead, it was within the Attorney Generals discretion to allow the Sponsor to file corrective amendments to remedy errors or inadequacies in the Offering Plan.The court then discussed a number of areas in which the tenants contended that the disclosures in the Offering Plan were inadequate or misleading.It found that in each instance, it was within the Attorney Generals discretion to conclude that either the disclosures in the original Offering Plan were satisfactory or that they had been cured in an amendment.The court also decided that it was within the Attorney Generals discretion to take action based on alleged premature disclosure of the Offering Plan in violation of the Martin Act, or based on alleged harassment of tenants by the landlord in violation of the General Business Law sections governing conversions.The court noted that other forums were open to tenants who believed they had been harassed.

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