The veto provision a board can actually point at

Subdivisions (w)(2) and (3) address something transition boards encounter constantly — a sponsor blocking spending it does not want to fund a share of:

“(2) Sponsor may not exercise veto power over expenses described in schedule B, or over expenses required: (i) to comply with applicable laws or regulations; or (ii) to remedy any notice of violation; or (iii) to remedy any work order by an insurer. (3) If the plan is an eviction plan, or a non-eviction plan submitted to the Department of Law on or after June 15, 2019 pursuant to G.B.L, section 352-eeee, sponsor may, if the plan so provides, exercise veto power over expenses other than those described in paragraph (2) of this subdivision for a period ending not more than three years after the closing of the first unit or whenever the unsold units constitute less than 25 percent of the common interest, whichever is sooner.”

Three categories become permanently un-vetoable: compliance spending, curing a notice of violation, and satisfying an insurer's work order. In a New York City building that is a substantial carve-out — facade filings, parapet work, gas-piping certifications and Local Law 97 compliance all generate exactly that kind of spend, and all of it is expensive in the first two years after a conversion when reserves are thin. See our budget approval and condo safety inspections pages.

Fifteen percent becomes fifty-one percent

The other headline change codifies the HSTPA conversion threshold in the regulations. Proposed 13 NYCRR 23.3(s)(6)(i), with the deleted figure in brackets as the Department of State convention shows it:

“For a noneviction plan submitted to the Department of Law on or after June 15, 2019, state that the plan may not be declared effective until written purchase agreements have been executed and delivered for at least [15] 51 percent of all dwelling units in the building or group of buildings or development subscribed for by bona fide tenants in occupancy...”

The base for computing 51% excludes units not leased or occupied by bona fide tenants for more than five months before submission, and units of eligible senior citizens and disabled persons who have not purchased.

Chapter 696 of 2022 carved back to 15% for a small category: a non-eviction plan for “a building containing five or fewer units and where the sponsor of the offering plan offers the unit that they or their immediate family member has occupied for at least two years.”

Why a board cares about a sales threshold: at 15%, a transition board inherits a building that is 85% rental with a sponsor holding the votes. At 51%, it inherits a majority-owner-occupied building. That difference determines whether the first board is a real board.

The Bureau's own numbers explain the timing

The Regulatory Impact Statement contains a data point worth quoting at length, because it is the reason this rulemaking exists now:

“To illustrate, from June 15, 2019 through the end of 2024, an average of approximately three (3) occupied conversion offering plans relating to properties located in the City of New York were submitted to the DOL's Real Estate Finance Bureau each year. Only approximately 15% of the properties relating to these occupied conversion offering plans ultimately converted to condominium or cooperative ownership... In contrast, in 2025, the DOL's Real Estate Finance Bureau received twenty-three (23) occupied conversion offering plans relating to properties located in the City of New York, representing a nearly 700% increase in the submission of occupied conversion offering plans located in the City of New York from prior years following the adoption of the HSTPA. The DOL presently anticipates that this trend will continue.”

Conversion activity in New York City went from roughly three plans a year to twenty-three. The Bureau expects more. The regulations governing what a sponsor may do to a new board have not been updated for the statute that changed the arithmetic.

Two further RIS statements are worth knowing. On cost: “The DOL does not anticipate that the cost of implementation of and continued compliance with the regulatory revisions will be meaningfully different than already exists under the DOL's current regulatory framework.” And a clean statement of the geographic limit of the conversion statute, from the Rural Area Flexibility Analysis: “No localities have opted into GBL 352-eeee.”

Two important limits on what this reaches

It is conversions only. The rulemaking amends Parts 18 and 23, which govern conversions of occupied rental property in New York City. It does not amend Part 20 (new and vacant condominiums), Part 21 (new and vacant cooperatives) or Part 22 (homeowners associations). We found no 2025–2026 amendment to the HOA offering plan regulations at all.

The mixed-building disclosure survives. One proposed passage requires a sponsor to “disclose that because the plan can be declared effective based on sales of 15 percent of the units to tenants or bona fide purchasers for their own occupancy, purchasers may be living a mixed rental/owner occupied building for an indeterminate period of time, and that purchasers' units may not be marketable and owner occupants may not control the board or operation of the property during such transition” — language that belongs to the pre-2019 regime and remains relevant to plans submitted before June 15, 2019.

Where a board stands now

If your building converted after June 15, 2019, or is converting: get the sponsor-control and veto provisions of your offering plan and bylaws out and read them against 23.3(w). Even unadopted, the proposal tells you what the regulator thinks the right answer is, which is useful in a negotiation with a sponsor. And check for the owner-occupant-majority bylaw provision — if it is missing, the Bureau now proposes to treat that as a special risk, which is a strong signal about how it views the absence.

Our director qualifications page covers what New York requires of a board member today, and our governing statute page covers the offering-plan regime the Bureau administers. Comments closed in July; the proposal does not expire until May 13, 2027, so adoption could come at any point before then, and the Bureau lists its pending rulemakings on its own regulatory page.⁴