55-478 - Public offering statement; general provisions.
§ 55-478. Public offering statement; general provisions.
A. Except as provided in subsection B, a public offering statement mustcontain 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 extentpossible, the types, number, declarant's schedule of commencement andcompletion of construction of buildings, and amenities that the declarantanticipates including in the cooperative;
3. The number of units in the cooperative;
4. Copies and a brief narrative description of the significant features ofthe declaration and any other recorded covenants, conditions, restrictionsand reservations affecting the cooperative; the bylaws and any rules orregulations of the association; copies of any contracts and leases to besigned by purchasers at closing; and a brief narrative description of anycontracts or leases that will or may be subject to cancellation by theassociation under § 55-462;
5. Any current balance sheet and a projected budget for the association,either within or as an exhibit to the public offering statement, for one yearafter the date of the first conveyance to a purchaser, and thereafter thecurrent budget of the association, a statement of who prepared the budget,and a statement of the budget's assumptions concerning occupancy andinflation factors. The budget must include, without limitation:
a. A description of provisions made in the budget for reserves for repairsand replacement;
b. A statement of any other reserves;
c. The projected common expense assessment by category of expenditures forthe association;
d. The projected monthly common expense assessment for each type of unit; and
e. The projected debt, inclusive of principal and any accrued interest, loanfees and other similar charges, assumed or to be assumed by the associationand an estimate of the payments necessary to service such debt.
6. Any services not reflected in the budget that the declarant provides, orexpenses that he pays and that he expects may become at any subsequent time acommon expense of the association, and the projected common expenseassessment attributable to each of those services or expenses for theassociation and for each type of unit;
7. Any initial or special fee due from the purchaser at closing, togetherwith a description of the purpose and method of calculating the fee;
8. A description of any liens, defects or encumbrances on or affecting thetitle to the cooperative;
9. A description of any financing offered or arranged by the declarant;
10. The terms and significant limitations of any warranties provided by thedeclarant, including statutory warranties and limitations on the enforcementthereof or on damages;
11. A statement that:
a. Within 10 days after receipt of a public offering statement a purchaser,before conveyance, may cancel any contract for purchase of a cooperativeinterest from a declarant;
b. If a declarant fails to provide a public offering statement to a purchaserbefore conveying a cooperative interest, that purchaser may recover from thedeclarant 10 percent of the sales price of the cooperative interest, plus 10percent of the share, proportionate to his common expense liability, of theindebtedness of the association secured by mortgages or deeds of trustencumbering the cooperative; and
12. A statement of any unsatisfied judgments or pending suits against theassociation, and the status of any pending suits material to the cooperativeof which a declarant has actual knowledge;
13. A statement that any deposit made in connection with the purchase of acooperative interest will be held in an escrow account until closing and willbe returned to the purchaser if the purchaser cancels the contract pursuantto § 55-483 together with the name and address of the escrow agent;
14. Any restrictions on: (i) use and occupancy of the units; (ii) alienationof the cooperative interests; or (iii) the amount for which a cooperativeinterest may be sold or on the amount that may be received by a proprietarylessee upon sale, condemnation or casualty loss to the unit or thecooperative or termination of the cooperative;
15. A description of the insurance coverage provided for the benefit ofproprietary lessees;
16. Any current or expected fees or charges to be paid by proprietary lesseesfor the use of the common elements and other facilities related to thecooperative;
17. The extent to which financial arrangements have been provided forcompletion of all improvements labeled "MUST BE BUILT" pursuant to § 55-494;
18. A brief narrative description of any zoning and other land userequirements affecting the cooperative;
19. A specified or maximum amount, if any, of acquisition, development orconstruction debt, inclusive of principal and any accrued interest, loan feesand other similar charges, assumed or to be assumed by the association andwhether there will be a security interest encumbering the cooperative tosecure repayment;
20. All unusual and material circumstances, features and characteristics ofthe cooperative and the units;
21. Whether the proprietary lessees will be entitled, for federal, state andlocal income tax purposes, to a pass-through of deductions for payments madeby the association for real estate taxes and interest paid the holder of asecurity interest encumbering the cooperative;
22. A statement as to the effect on every proprietary lessee if theassociation fails to pay real estate taxes or payments due the holder of asecurity interest encumbering the cooperative.
B. If a cooperative composed of not more than three units is not subject toany development rights, and no power is reserved to a declarant to make thecooperative part of a larger cooperative, group of cooperatives or other realestate, a public offering statement may, but need not include, theinformation otherwise required by subdivisions A 9, A 10, A 15 through A 19and the narrative descriptions of documents required by subdivision A 4.
C. A declarant promptly shall amend the public offering statement to reportany material change in the information required by this section.
D. The declarant shall provide a copy of the public offering statement andall amendments thereto to the association, and the association shall maintainthem in its records.
(1982, c. 277; 2004, c. 242; 2005, c. 436.)