Tax Incentives & Affordable Housing

NYC’s Community Opportunity to Purchase Act (COPA): A Comprehensive Analysis of Its Potential Impact on Residential Property Sales

NYC’s Community Opportunity to Purchase Act (COPA): A Comprehensive Analysis of Its Potential Impact on Residential Property Sales

Published 12/19/2025 at 1:17 PM

By: Daniel M. Bernstein & Deborah E. Riegel

On December 18, 2025, the New York City Council passed the Community Opportunity to Purchase Act (COPA), a far-reaching piece of legislation aimed at reshaping how certain residential properties are sold in New York City. COPA is designed to provide community-based organizations with a meaningful opportunity to acquire multifamily residential buildings before they are transferred to private investors, with the broader goal of preserving affordable housing and preventing displacement.

Despite its passage by the City Council, COPA’s future remains uncertain. It has been widely reported that Mayor Eric Adams is expected to veto the legislation, and the final Council vote in favor of COPA did not reach the supermajority required to override a mayoral veto. As a result, whether COPA will ultimately become law remains to be seen. Nevertheless, the bill provides important insight into the City’s policy direction and raises significant considerations for property owners, developers, lenders, and community organizations alike.

This article provides a detailed overview of COPA’s structure, the rights it grants to community purchasers, the obligations it imposes on property owners, and the potential risks and challenges associated with its implementation.

The Purpose and Policy Goals of COPA

At its core, COPA seeks to address concerns about the loss of affordable housing and the displacement of long-term tenants in New York City. The legislation is premised on the idea that community-based organizations—particularly those with experience in affordable housing—are better positioned than purely market-driven buyers to maintain long-term affordability and stabilize neighborhoods.

Rather than mandating below-market pricing or forced sales, COPA operates procedurally. It creates rights of first offer and, in limited circumstances, rights of first refusal for designated community purchasers. While owners remain free to sell their properties at market prices, COPA significantly alters the timing, process, and risk profile of selling certain residential buildings.

Qualified Entities: Who Can Exercise COPA Rights?

Only entities certified by the New York City Department of Housing Preservation and Development (HPD) may exercise rights under COPA. These certified purchasers are known as “Qualified Entities.” Importantly, COPA allows both not-for-profit and for-profit entities to qualify, provided they meet HPD’s certification requirements.

COPA also permits joint ventures between community groups and private developers, as long as the community organization maintains a controlling interest. This structure is intended to allow community groups to leverage private capital and development expertise while retaining mission-driven control.

Not-for-Profit Qualified Entities

Not-for-profit entities must meet criteria to be established by HPD through rulemaking, including:

  • Qualification as a 501(c)(3) organization
  • Demonstrated financial capacity to acquire and manage residential real property
  • Ability to work effectively with governmental agencies and community stakeholders
  • Experience owning and managing residential buildings, including affordable housing
  • A demonstrated commitment to the preservation of affordable housing
  • Satisfaction of any additional criteria HPD deems relevant

For-Profit Qualified Entities

For-profit entities must likewise be certified by HPD and must demonstrate:

  • Legal and financial capacity to acquire, rehabilitate, and manage residential real property
  • A track record of managing housing subject to affordability restrictions
  • Experience with and commitment to preserving affordable housing

Notably, COPA does not provide preferential pricing or financing to Qualified Entities. Their advantage lies in procedural priority, not economic subsidy.

Covered Properties: Which Buildings Are Subject to COPA?

COPA does not apply to all residential buildings in New York City. Instead, it targets a subset of multifamily properties defined as “Covered Properties.”

Generally, Covered Properties include Class A multiple dwellings with four or more dwelling units, subject to additional criteria. Properties with five or fewer units are excluded if the owner occupies one of the units as a primary residence.

Covered Properties During the First Year After COPA Takes Effect

Within the first year after the law’s effective date, a property may be designated as covered if it meets one or more of the following conditions:

  • Participation in HPD’s Alternative Enforcement Program for at least one year
  • Being subject to an in rem foreclosure action
  • Being subject to outstanding orders to correct housing code violations for at least one year
  • A denial of a Certificate of No Harassment within the prior 12 months, without a cure
  • Being subject to an affordability restriction scheduled to expire within two years
  • Meeting other criteria established by HPD through rulemaking

Covered Properties After the First Year

Beginning one year after COPA’s effective date, the definition expands to include properties that:

  • Have an average of at least one open “hazardous” or “immediately hazardous” housing violation per dwelling unit
  • Are subject to affordability restrictions expiring within two years
  • Meet other criteria established by HPD

HPD is responsible for notifying owners annually if their property qualifies as a Covered Property and must provide owners with an opportunity to challenge that determination.

Owner Obligations Before Selling a Covered Property

COPA imposes detailed procedural requirements on owners before they may take steps to sell a Covered Property. Prior to marketing or negotiating a sale, the owner must provide a Notice of Intent to Sell to HPD and all certified Qualified Entities.

This notice must include:

  • The name and address of each owner
  • The address(es) of the Covered Property
  • The total number and type of dwelling units
  • A deadline—no fewer than 25 days—for submission of statements of interest
  • Information regarding the property’s income and expenses
  • Any additional information required by HPD

Failure to comply strictly with these notice requirements exposes owners to potential litigation and penalties.

The Right of First Offer Process

Upon receipt of a Notice of Intent to Sell, a Qualified Entity has 25 days to submit a statement of interest expressing its intent to make an offer. If no Qualified Entity submits a timely statement of interest, the right of first offer is deemed waived, and the owner may proceed with a sale to a non-Qualified Entity.

If a statement of interest is submitted, the owner must, within five days, enter into a confidentiality agreement with the Qualified Entity and provide extensive property-related information, including:

  • Current rent rolls, including legal and preferential rents
  • Income and expense statements for the preceding 12 months
  • Outstanding mortgage balances
  • Recent HPD or Department of Buildings inspection reports
  • Pending legal actions involving the property
  • Findings of tenant harassment during the prior five years
  • Any other information required by HPD

During this period, the owner is prohibited from taking other actions to sell the property.

Submitting and Responding to a Bona Fide Offer

After submitting a statement of interest, a Qualified Entity has 80 days, subject to HPD extension, to submit a bona fide offer to purchase the property. The offer must specify the proposed price and all material terms and conditions.

Upon receipt of a bona fide offer, the owner has 10 days after the 80-day period ends to notify the Qualified Entity and HPD whether the offer is accepted, rejected, or countered. If the owner accepts or counters an offer, the parties have 30 days to enter into a contract of sale.

If all bona fide offers are rejected—or if a Qualified Entity fails to close—the owner may proceed with a sale to a non-Qualified Entity.

 The Right of First Refusal

COPA also establishes a limited right of first refusal. If, within one year of rejecting a Qualified Entity’s offer, the owner receives a third-party offer that it intends to accept, the owner must notify HPD and the Qualified Entity that submitted the original offer.

The Qualified Entity then has 15 days to elect to match the third-party offer and must close on identical terms. If the Qualified Entity declines or fails to close, the owner’s obligations under COPA are satisfied.

Waiver of Municipal Charges

When a Covered Property is sold to a Qualified Entity, COPA requires HPD and the Department of Finance to waive applicable municipal charges, taxes, and fees associated with the transaction. While potentially beneficial to Qualified Entities, these waivers do not address acquisition financing challenges.

Enforcement and Penalties

COPA includes robust enforcement provisions. Qualified Entities are granted a private right of action to enforce compliance. Courts may impose civil penalties without statutory limitation, award attorney’s fees and expert fees, and grant injunctive relief to halt non-compliant transactions.

The availability of injunctive relief is particularly significant, as it allows Qualified Entities to delay or stop sales while disputes are litigated.

Key Concerns for Property Owners

While COPA’s scope has been narrowed from earlier proposals, it still raises several significant concerns.

  • Broad Discretion Granted to HPD

COPA grants HPD expansive authority to define Covered Properties through rulemaking. The inclusion of “other criteria” leaves open the possibility that the scope of COPA could expand beyond currently distressed or regulated buildings.

  • Interference with Market Sales

Mandatory notice periods and extended timelines interfere with owners’ ability to market properties efficiently. The uncertainty created by COPA may deter potential buyers and complicate transactions such as 1031 exchanges, which rely on strict timing requirements.

  • Increased Litigation Risk

Owners face heightened litigation risk from Qualified Entities alleging procedural non-compliance or disputing whether an offer was bona fide. Even meritless claims may result in costly delays.

  • Financing Challenges for Qualified Entities

COPA does not address whether Qualified Entities will have access to sufficient capital to acquire market-rate or predominantly market-rate properties, raising concerns about stalled transactions.

  • Challenges to Covered Property Designations

Owners may need to challenge HPD determinations that their property is covered, potentially leading to administrative appeals or litigation and further delays.

Conclusion

The Community Opportunity to Purchase Act represents a significant shift in New York City’s approach to residential property transactions. While its stated goal of preserving affordable housing resonates with many policymakers and advocates, COPA imposes substantial procedural burdens and legal risks on property owners.

Whether or not COPA ultimately becomes law, it reflects a broader trend toward increased regulation of residential property sales in New York City. Owners, investors, and developers should closely monitor legislative developments and evaluate how similar policies could affect future transactions.

For more information about how COPA may impact NYC residential property sales, property owners should consult experienced real estate counsel or contact Daniel M. Bernstein or Deborah E. Riegel.

 

Disclaimer: This post is for informational purposes only and is not legal or tax advice. Readers should consult the Tax Commission’s current forms/instructions and their advisors for guidance on their specific property and filing posture.