R&E’s Legislative Summary of the Community Opportunity to Purchase Act (“COPA”) NYC Council Intro 902B

On December 18, 2025, The New York City Council passed the Community Opportunity to Purchase Act (“COPA”) to give community groups, certified by the NYC Department of Housing Preservation & Development (“HPD”) as a “Qualified Entity”, a right to purchase buildings from the owners of certain properties (a “Covered Property”) on the same terms and conditions as those properties are available on the market.  It has been reported that Mayor Adams will veto COPA and the final votes in favor of the bill did not reach the threshold to override a possible veto, so it remains to be seen whether COPA will become law.

 

Qualified Entities may be, as is detailed below, joint ventures between community groups and private developers, as long as the community group maintains a controlling interest in the Qualified Entity. While COPA does not provide any preferential pricing to a Qualified Entity, it does significantly extend the timeline for a sale of a Covered Property and expand the risk of litigation and financial penalties with respect to a sale to a private purchaser which is not a Qualified Entity for failure to comply with COPA requirements.

 

As presently structured, COPA provides a Qualified Entity an opportunity to submit a right of first offer to purchase a Covered Property, as well as a right of first refusal in limited circumstances, if an owner receives an offer from a person other than a Qualified Entity. The “right of first offer to purchase” permits a Qualified Entity to submit a bona fide offer to purchase to the owner of a Covered Property before the property becomes publicly available for sale… If, following notice of a right of first offer by owner, a statement of interest is not timely submitted by a Qualified Entity, then the right of first offer is deemed waived. If a Qualified Entity submits a statement of interest, COPA provides that the owner must enter into a confidentiality agreement with such Qualified Entity and provide extensive information about the Covered Property.

 

When an Owner sells a covered property to a Qualified Entity, HPD, along with DOF, must waive applicable municipal charges, taxes, and fees associated with the transaction. Undefined Capitalized Terms are defined in COPA, the text of which follows.

 

What are Qualified Entities:         

The definition of not-for profit Qualified Entities includes entities certified pursuant to rules that HPD will promulgate, to include not-for-profit entities:

1. Qualified as 501(c)(3) organizations;
2. Having the financial capacity to acquire and manage residential real property;
3. Having the ability to work with governmental organizations and community stakeholders;
4. Having experience owning and managing residential property, including experience with affordable housing;
5. Having demonstrable experience in and a commitment to the preservation of affordable housing; and
6. Satisfying other criteria HPD determines relevant to determining whether such entity should have the right of first opportunity to purchase and the right of first refusal in accordance with this chapter.

 

The definition of for-profit Qualified Entities includes entities certified pursuant to rules that HPD will promulgate, to include entities which have demonstrated:

1. The capacity, including but not limited to the legal and financial capacity, to effectively acquire, rehabilitate, and manage residential real property;
2. A record of managing residential real property with dwelling units that are subject to affordability restrictions, and maintaining the affordability of such units; and
3. Experience in and a commitment to the preservation of affordable housing.

 

What is a Covered Property:

Class A multiple dwellings that have 4 or more dwelling units[1] may be subject to COPA if they also satisfy the following criteria when they become subject to COPA, as follows:

 

Within the first year after the effective date of the law a covered property becomes subject to COPA at the time if it:

1. Participates in HPD’s Alternative Enforcement Program, and has been a participant for at least one year;
2. Is subject to an in rem foreclosure action;
3. Is subject to an order to correct underlying conditions pursuant to the Housing Maintenance Code, Multiple Dwelling Law, and/or other state and local laws that impose requirements on dwellings, and has been subject to same for at least one year;
4. Has been denied a Certificate of No Harassment based on a finding of harassment in the preceding 12 months and there has been no cure of such harassment;
5. Is subject to an affordability restriction that is set to expire within two years; or
6. Meets other criteria established by HPD by rule.

 

Beginning one year after the effective date of the law a covered property becomes subject to COPA at the time if it:

1. Has an average of at least one open “hazardous” or “immediately hazardous” violation of the Housing Maintenance Code per dwelling unit;
2. Is subject to an affordability restriction that is set to expire within two years; or
3. Meets other criteria established by HPD by rule.

 

[1] Properties of 5 or fewer units are not subject to COPA if the owner of such property occupies a dwelling unit for residential purposes.

 

HPD is charged with notifying owners of properties that meet the foregoing criteria with annual notice that the property is subject to COPA and shall provide such owners with an opportunity to challenge HPD’s determination that COPA is applicable to its property.

 

Owner Requirements Prior to Sale: Prior to taking any action to sell a Covered Property, an owner must provide HPD and all certified Qualified Entities with a “notice of intent to sell” that must include the following:

1. The name and address of each owner of the Covered Property;
2. All addresses and names of the Covered Property;
3. The total number and type of dwelling units subject to the sale;
4. The date by which a statement of interest must be delivered to the owner, the deadline for which will be at least 25 days;
5. Information related to the Covered Property’s income and expenses; and
6. Such other information as HPD requires.

 

Qualified Entity Deadlines: Upon receipt of the owner’s notice of intent to sell, a qualified entity has 25 days to submit a statement of interest in exercising a right of first offer to purchase, and within 5 days of receipt of such statement of interest, enter into a confidentiality agreement with the owner. Subject to such confidentiality agreement, the Qualified Entity will have the right to receive the following information related to the Covered Property from the owner;

1. The current rent roll for the Covered Property, including legal rents, preferential rents and any rental assistance;
2. The income and expense report for the Covered Property for the preceding 12 months, including capital improvements, real property taxes and other municipal charges;
3. The amount of any outstanding mortgage for the Covered Property;
4. The 2 most recent reports of building-wide inspections conducted by HPD or DOB;
5. Any pending legal actions involving the Covered Property;
6. Any findings of tenant harassment during the preceding 5 years; and
7. Such other information as HPD may require.

 

An owner may not take other actions to sell the Covered Property if a Qualified Entity timely delivers a statement of interest. If no statement of interest is timely received, the owner of a Covered Property has no further obligation under COPA and shall have the right to sell the Covered Property to a non-Qualified Entity.

 

What Happens After a Qualified Entity Delivers a Statement of Interest?

If a Qualified Entity delivers a statement of interest, it will have 80 days, subject to extension by HPD, to submit a bona fide offer to purchase the Covered Property to the owner, during which time the owner may not take other actions to sell the Covered Property. Such offer shall include the name and address of the Qualified Entity, as well as the price, terms and conditions of the offer. Upon receipt of an offer, the owner will have 10 days from the end of the 80 day period to notify the Qualified Entity and HPD as to whether it will accept, reject or counter same. If the owner accepts or counters a bona fide offer, the owner and the Qualified Entity will have 30 days to enter into a contract of sale. The owner must notify HPD and all Qualified Entities from whom it received a bona fide offer of its decision with respect to each such offer. If the owner rejects all bona fide offers, or a Qualified Entity fails to timely close, the owner may sell the Covered Property to a person other than a Qualified Entity.

 

When Is an Owner Obligated to Provide a Notice of Offer Subject to Match?

If, within one year of its rejection of an offer to purchase from a qualified entity, an owner of a Covered Property receives an offer to purchase that it intends to accept, then no more than 15 days from the receipt of the offer, it must provide notice of such offer, in English and Spanish, to HPD and to the Qualified Entity that submitted the first bona fide offer to purchase the Covered Property, which Qualified Entity then has the right of first refusal to purchase same. The notice must include the name and address of the purchaser who made the offer that is subject to being matched, the price and the terms and conditions of the offer, and whether or not a contract exists. If a contract does exist, then a copy of the contract must accompany the notice.

 

If the Qualified Entity wishes to exercise its right of first refusal, it must do so within 15 days and must close on the identical terms and conditions of the offer it elects to match. If that Qualified Entity either declines to exercise its right of first refusal, or exercises its right but fails to close, the Owner has no further obligation under COPA.

 

Penalties for Non-Compliance:

COPA expressly provides a private right of action for a Qualified Entity to enforce its terms, and subjects an owner to civil penalties in an amount to be determined by a court of competent jurisdiction, without limitation. In addition to civil penalties to be determined by the court, an owner found to have violated COPA will be liable for the attorney’s fees and expert fees incurred by the Qualified Entity. Finally, COPA provides a Qualified Entity the right to seek injunctive relief against an Owner based on alleged non-compliance with COPA.

 

Concerns for Owners:

Although the applicability of COPA has been narrowed in its current form, it nevertheless imposes significant restrictions on owners of Covered Properties, as follows:

 

HPD Could Expand The Scope of Covered Properties By Promulgation of Rules: COPA gives HPD extraordinary latitude to expand the definition of a Covered Property Owners by virtue of the inclusion of a catch-all which permits HPD to establish “any other criteria” “consistent with this subdivision”. Accordingly, although the delineated list of Covered Properties is seemingly limited to distressed properties, properties which are not in compliance with the Housing Maintenance Code, or properties subject to a regulatory agreement with HPD for which there are income based occupancy restrictions set to expire within two years, the broad authority granted to HPD leaves open the possibility of a significant expansion.

 

COPA Interferes with a Seller’s Ability To Market Properties and Limits Buyer Pool: COPA significantly impacts an owner’s ability to market its property for sale on the market by virtue of the obligation to provide advance notice to Qualified Entities and the associated built-in delays with which an owner must comply. As a result, it also likely narrows the pool of potential buyers who are willing to negotiate for the purchase of a property that may ultimately be bought by a Qualified Entity.   Similarly, it will potentially prevent an owner trying to complete a 1031 exchange from identifying a Covered Property for its exchange because of the delays inherent in the process.

 

Risk of Litigation by Qualified Entities: Potential sales of Covered Properties will be at risk of litigation by Qualified Entities asserting their rights to both injunctive relief with respect to their right to exercise a first opportunity to purchase – that litigation could encompass both procedural compliance with COPA, as well as disputes as to whether an offer was bona fide. Whether or not a seller ultimately prevails, the delay associated with such litigation could be significant.

 

Questions as to Financing to Acquire Covered Properties: COPA does not address the probability that most Qualified Entities lack the financing to acquire Covered Properties, and certainly not market rate or predominantly market rate covered buildings.

 

Challenges to HPD’s designation as a Covered Project: Owners will need to monitor and analyze HPD’s determination as to whether their property qualifies as a “Covered Property”. To the extent there are disputes with respect to HPD’s determination, there may be litigation delays associated with challenging the inclusion of a property by HPD in its designation of Covered Properties.

 

For more information about how COPA may affect NYC residential property sales, please contact your trusted R&E attorney or Daniel M. Bernstein or Deborah E. Riegel who authored this alert.