Erica F. Buckley Group of Friends Looking to Buy Condo Should Consider Syndicate Act First
In her Ask the Former Regulator column, Erica F. Buckley discusses the Syndicate Act as well at the Martin Act for small group of friends looking to buy a condominium together.
September 23, 2020 at 11:19 AM
7 minute read
Question: I am a developer who was approached by a small group of friends that want to pool their money and build a condominium in upstate New York. Specifically, the small group has asked me to act as a turnkey developer. Is this type of transaction possible in New York under the Martin Act?
Answer: The short answer to your question is yes, it is possible, but not without careful planning among all parties involved. From what you describe, it appears as though the small group of friends is looking to engage in an investment in real estate, which is regulated by the New York Real Estate Syndicate Act (the Syndicate Act), codified at N.Y. Gen. Bus. Law § 352-e, and the governing regulations found at 13 NYCRR Part 16. The Syndicate Act clarifies that the Martin Act not only regulates the offer and sale of cooperative interests in realty (i.e., cooperatives, condominiums, homeowners' associations, timeshares, and seniors communities) but certain participation interests or investments in real estate as well. In such instances where a group of individuals wish to pool money to develop a cooperative interest in realty, their first obligation is to meet the requirements of the Syndicate Act.
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