New York City Council Passes Community Opportunity to Purchase Act

The New York City Council has passed a revised version of the Community Opportunity to Purchase Act (“COPA”). Substantially similar to its prior version, COPA requires owners of certain multifamily buildings in New York City to allow “qualified” not-for-profit entities or joint ventures a first opportunity to purchase and right of first refusal to purchase a covered property before a sale on the open market may proceed.

Unlike last year when the prior version of COPA was vetoed by Mayor Eric Adams, the revised version of COPA is expected to become law. Mayor Zohran Mamdani has supported the bill and made it part of his administration’s housing plan. If enacted, COPA will take effect one year after it becomes law (subject to likely constitutional challenges) and will affect sellers and purchasers of covered multifamily buildings, as well as lenders who make mortgage loans secured by such properties.

I. Background

As discussed in our prior advisory, the City Council passed an earlier version of COPA in December 2025, and Mayor Adams vetoed it on his final day in office. The City Council did not override the veto before the January 29, 2026 deadline, and that bill died. A revised version of COPA was introduced on May 14, 2026. The Council’s Committee on Housing and Buildings held a hearing on September 9, 2026, and the bill was amended again in October 2026 before the committee and full Council votes.

II. Key Definitions

A. “Covered Property”

Earlier COPA proposals would have applied broadly to most residential buildings with three or more units, regardless of violation history, affordability status, or condition. Unlike the original proposal, the current revised version narrows the types of properties potentially subject to COPA.

A property is a “Covered Property” if it is a Class A multiple dwelling in New York City with four or more dwelling units that, when the owner becomes subject to COPA’s notice requirement, meets at least one of the following criteria:

1. It has participated in the Alternative Enforcement Program (“AEP”) for at least one year. The AEP is a New York City Department of Housing Preservation and Development (“HPD”) enforcement program that targets physically distressed multiple dwellings in New York City based on the number and severity of open housing maintenance code violations and unpaid emergency repair charges;
2. HPD has determined the property to be a distressed property subject to an in rem foreclosure action. An in rem foreclosure is a proceeding brought by New York City against the property itself, typically based on unpaid real estate taxes, water and sewer charges, or other municipal liens;
3. It has been subject to an order to correct an underlying condition for at least one year. HPD issues these orders when recurring violations stem from a building-wide problem, such as defective plumbing, leaks, or mold, rather than isolated conditions. The order requires the owner to correct the root cause within a set period, and HPD may perform the work itself and bill the owner if the owner fails to comply;
4. It has a “violation annual daily average” of three or more. The term “violation annual daily average” means a Covered Property’s violation daily average, as of the preceding June first. “Violation daily average” means the quotient that is calculated by dividing the sum of the number of subject violations open against a Covered Property each day during the prior 365 days by 365, then further divided by the number of dwelling units in the property;
5. HPD has denied it a certification of no harassment within the preceding year, and there has been no cure. A certification of no harassment is required in certain circumstances before the New York City Department of Buildings will issue permits for demolition or material alterations, and HPD will deny the certification if it finds that tenant harassment occurred during the look-back period. A denial prevents the owner from obtaining any permits to materially alter or demolish the building for a period of years or, depending on the applicable program, the owner may be required to, or have the option of, constructing a certain percentage of low-income housing units to address the harassment finding; or
6. It has no more than 100 dwelling units and is subject to an income-based occupancy restriction under a regulatory agreement with HPD (excluding restrictions imposed under Section 421-a of the New York Real Property Tax Law and recorded restrictive declarations).

Owner-occupied buildings with five or fewer units are excluded. HPD must publish the criteria, notify qualifying owners annually, and give owners an opportunity to be heard on whether COPA applies.

B. “Qualified Entity”

COPA gives qualified entities certain rights with respect to Covered Properties intended for sale. A “Qualified Entity” is a 501(c)(3) not-for-profit certified by HPD, or a joint venture that includes such a not-for-profit entity that holds a controlling interest in the joint venture, provided that the not-for-profit with the controlling interest is not an affiliate, subsidiary, franchise, or in any other way related to any for-profit entity in such joint venture.

HPD will establish by rule the criteria and process for certification. To be certified, not-for-profit entities must:

1. Be exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code;
2. Demonstrate the capacity, including but not limited to the legal and financial capacity, to effectively acquire, rehabilitate, or manage residential real property;
3. Have the ability to work with governmental organizations and community stakeholders;
4. Demonstrate the ability to manage residential real property with dwelling units that are subject to affordability restrictions, and maintain the affordability of such units; and
5. Have demonstrable experience in and a commitment to the preservation of affordable housing.

Note that the prior version of COPA allowed for-profit entities to be separately certified by HPD, but this provision was deleted in the revised version of COPA.

III. Notice of Intent to Sell and Right of First Offer

An owner of a Covered Property is required to provide notice to HPD and all entities certified on HPD’s website of such owner’s intent to sell such Covered Property prior to taking any action to sell such Covered Property. The notice starts the statutory timeline, and the owner may not take any action to sell to anyone other than a Qualified Entity until the right of first offer is extinguished as to all Qualified Entities.

A notice of intent to sell must include the following information:

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 a sale;
4. The date by which a statement of interest must be submitted;
5. Information relating to such property’s income and expenses; and
6. Such other information as HPD may require.

Upon receipt of a notice of an owner’s intent to sell a Covered Property, a Qualified Entity has 20 calendar days (previously 25 days in the prior version of COPA) from the date of such notice to submit a statement of interest to both HPD and the owner of such Qualified Entity’s interest in exercising a right of first offer to purchase such Covered Property. Failure to timely submit a statement of interest is deemed a waiver of the right of first offer. Also, a Qualified Entity may withdraw its statement of interest by written notice of waiver to the owner and HPD.

Within five calendar days after receiving a statement of interest, the owner must provide:

1. The current rent roll for the Covered Property, including, as applicable, legal rents, preferential rents, and rental assistance;
2. The income and expense report for the preceding 12-month period for the Covered Property, including capital improvements, real property taxes, and other municipal charges;
3. The amount of the outstanding mortgage for the Covered Property;
4. Information concerning open violations for the Covered Property issued by any city agency and any balances owed to the city regarding such Covered Property, which may be given to a Qualified Entity by providing the website address and telephone number of any city agency where the Qualified Entity may access such information;
5. Any pending legal actions involving the Covered Property;
6. Any findings of tenant harassment involving the Covered Property during the preceding five years;
7. The price, terms, and conditions of any open offer to purchase the Covered Property; and
8. Such other information as HPD may require by rule.

A Qualified Entity must keep this information confidential to the extent required by law. The owner may redact sensitive tenant information, and the Qualified Entity may share the information with third parties as needed to obtain financing or financial or legal advice. Until a Qualified Entity’s right of first offer is withdrawn or expires, the owner must also notify the Qualified Entity of the price, terms, and conditions of any offer to purchase that the owner receives.

Each Qualified Entity that submits a timely statement of interest then has 70 calendar days, measured from the end of the 20-day statement-of-interest period, to submit a bona fide offer to purchase the property. Upon a Qualified Entity’s written application explaining the need for an extension, HPD must extend that deadline by up to five calendar days, unless HPD has already extended the deadline for that entity more than once. The owner has 10 calendar days from the end of the 70-day period to accept, reject, or counter, and must give written notice of its decision on each offer to HPD and to each Qualified Entity that submitted a statement of interest. If the owner accepts or counters, the parties have 30 calendar days to sign a contract of sale. If no Qualified Entity timely submits a statement of interest or offer, or the owner rejects all offers or no contract is signed in time, the owner may proceed with a sale to a third party, subject to the right of first refusal described below.

An owner may withdraw a notice of intent to sell, subject to the terms of any accepted offer or executed purchase and sale agreement and to applicable legal remedies, by giving notice of withdrawal to HPD and to each Qualified Entity that submitted a statement of interest. The owner must re-notice before any later sale.

IV. Notice of Offer Subject to Match

If an owner of a Covered Property goes through the first opportunity to purchase process described in Section III above, and it does not result in a sale to a Qualified Entity, then the owner is still not completely free to sell the property on the open market; a notice of offer subject to match, followed by a right of first refusal, must still occur.

An offer subject to match is a bona fide offer to purchase a Covered Property made by a bona fide purchaser other than a Qualified Entity within one year of (a) the final date on which the owner of such Covered Property rejected the bona fide offer to purchase such Covered Property made by a Qualified Entity exercising its right of first offer, or (b) the expiration of the time for a contract of sale to be executed after an owner accepted or countered a bona fide offer to purchase made by a Qualified Entity exercising its right of first offer.

If the owner of a Covered Property receives an offer subject to match that the owner intends to accept, the owner is required to provide a notice of such offer subject to match to HPD and to the Qualified Entity that submitted the first bona fide offer to purchase such Covered Property, and such Qualified Entity shall have a right of first refusal with respect to such Covered Property. The owner shall provide such notice no more than 15 calendar days from the date the owner receives such offer subject to match.

V. Right of First Refusal

The Qualified Entity that made the first offer has 15 calendar days from the notice of the offer subject to match to exercise its right of first refusal by submitting a bona fide offer at the identical price, terms, and conditions. If such Qualified Entity matches, the owner must sell the property to such Qualified Entity and such Qualified Entity is then obligated to purchase the Covered Property. If such Qualified Entity fails to match or to perform, the owner’s obligations to sell the Covered Property to such Qualified Entity terminate. A Qualified Entity that purchases through the right of first refusal must notify HPD in writing.

While difficult to estimate a total time frame of potential delays in the sale process to comply with COPA, the initial notice requirements (if any Qualified Entity submits a statement of interest) can add approximately 130 days to the sale process if all notices are sent timely. The match/right of first refusal phase, if exercised, adds approximately 30 additional days. These estimated delays do not take into account delays to compile the notice materials and potential delays that may be occasioned by litigation arising under COPA.

VI. Exclusions

The requirements set forth under COPA do not apply:

1. To any existing agreement regarding the transfer of a Covered Property to a Qualified Entity in effect on the effective date of COPA, except that any renewal, modification, or amendment of such agreement occurring on or after the effective date of COPA is subject to COPA requirements;
2. To an owner or purchaser who refinances a Covered Property in order to maintain ownership of such property;
3. To any transfer of real property effected by (a) a government entity implementing its powers of eminent domain, (b) a judicial proceeding, including a judicially supervised sale, (c) a bankruptcy proceeding, or (d) other operation of law;
4. To any transfer of real property or an economic interest therein made under a deed in lieu of foreclosure or related agreement related to the repayment of a loan and avoidance of foreclosure;
5. To any transfer of real property or an economic interest therein held by any governmental body;
6. To any transfer of real property or an economic interest therein to any governmental body;
7. To any transfer of real property pursuant to subdivision b of Section 11-412.1 of the New York City Administrative Code (addressing certain tax foreclosures) or Section 695 of the New York General Municipal Law (addressing certain sales of properties by municipalities);
8. To any transfer of real property or an economic interest therein requiring the consent of a state or local agency or instrumentality;
9. To any transfer of an interest in real property by devise or intestacy, or any other transfer made in connection with a bona fide effort to pass an interest in real property to a person’s devisees or heirs including, but not limited to, such transfers made in connection with a living trust;
10. To any transfer of an interest in real property between or among spouses, domestic partners, siblings including, but not limited to, half-siblings, step-siblings, and adoptive siblings, parents including, but not limited to, step-parents and adoptive parents or guardians and their children, grandparents and their grandchildren, aunts, uncles, nieces, nephews, great-aunts, great-uncles, grand-nieces, grand-nephews, first or second cousins, or any combination thereof;
11. To a transaction the sole purpose of which is to secure a debt or obligation, or a transaction entered into solely for the purpose of returning such security;
12. To any transfer of real property or an economic interest therein from a mere agent, dummy, straw man, or conduit to his principal or from the principal to his agent, dummy, straw man, or conduit;
13. To any transfer of real property or an economic interest therein that effects a mere change of identity or form of ownership or organization to the extent the beneficial ownership of such real property or economic interest therein remains the same;
14. To any transfer of an interest in a partnership or limited liability company that owns a Covered Property as its sole or principal asset, provided that the sole purpose of the transfer is to admit one or more new tax credit investors;
15. To any transfer of an interest in an entity that owns a Covered Property or a transfer of title to a Covered Property, if each of the following conditions regarding low-income tax credits is satisfied:
    1. The credit period, as defined in subsection (f) of Section 42 of the Internal Revenue Code, as amended, for the Covered Property has ended;
    2. Immediately prior to the transfer, the Covered Property is subject to:
       1. An extended low-income housing commitment, as that term is defined in Section 42(h)(6)(B) of the Internal Revenue Code; or
       2. A comparable regulatory agreement as a result of a federal, state, or city program with occupancy, rent, and income requirements at least as restrictive as under Section 42 of the Internal Revenue Code;
    3. Before and after the transfer, the owner of the Covered Property is controlled, directly or indirectly, by the same person; and
    4. Immediately following the transfer, the Covered Property is for a term of not less than 15 years and subject to an existing or new extended low-income housing commitment or a comparable regulatory agreement as a result of a federal, state, or city program with occupancy, rent, and income requirements at least as restrictive as under Section 42 of the Internal Revenue Code;
16. To any transfer of an interest in a partnership or limited liability company that owns a Covered Property as its sole or principal asset, provided that the sole purpose of the transfer is to allow for the exit of one or more tax credit investors;
17. To any transfer of real property at the end of the tax credit period associated with such real property to a not-for-profit entity possessing a contractual right to purchase such real property ahead of any other potential purchaser; or
18. To any transfer of an interest in an entity owning real property provided that before and after the transfer, the controlling interest of such entity is held by the same person.

VII. Penalties for Noncompliance

An owner of a property that was a Covered Property at the time of sale who takes action to sell such Covered Property without submitting to HPD and to all Qualified Entities a notice of intent to sell is subject to a civil penalty in an amount not to exceed 15 percent of the price at which the owner sold the Covered Property.

COPA also creates a private right of action. Any Qualified Entity may sue an owner or prior owner that took action to sell a Covered Property in violation of any provision of COPA, where the action results in a sale to someone other than a Qualified Entity. The action must be commenced within two years after the deed is recorded, and a prevailing Qualified Entity may be awarded compensatory damages, injunctive and declaratory relief, and costs, including reasonable attorney’s and expert witness fees.

VIII. Potential Impact on Lenders

While COPA’s most significant impact will be on owners of Covered Properties, the law will also have an impact on lenders that make loans secured by such properties. Lenders seeking to finance the purchase of a Covered Property will encounter extended delays waiting for the seller to comply with COPA’s sale requirements. Title companies insuring the deed transfer and the lender’s mortgage are also expected to insist upon compliance with COPA. As COPA compliance could extend to 130 days or more, lenders may need to adjust a mortgage commitment’s “effective period” and/or provide for a market interest rate at the time of closing to mitigate risks of material changes occurring to the property, to the borrower, or in market conditions. Even if a property is not expected to be a Covered Property, lenders should consider adding clauses to commitment letters providing the lender with the right to terminate the commitment in the event it is determined that the property is or may be a Covered Property under COPA.

Lenders may also want to consider the following:

1. Amend mortgage applications to have the applicant certify if the property is or is not a Covered Property;
2. Require the applicant to confirm whether or not it has received an HPD COPA notice; and
3. Update their “intake” process to search:
   1. Whether HPD has determined if the property is a Covered Property;
   2. The Automated City Register Information System (“ACRIS”), to determine if any regulatory agreement is of record (regulatory agreements should also be disclosed in the title report which will eventually be provided); and
   3. New York City agency websites for violation and harassment records and the AEP.

Lenders should also consider the possible need to adjust appraisals (and loan-to-value ratios) to take into account the potential COPA delays on the market value of a property.

Lenders may also want to review their existing New York City commercial real estate portfolio to identify any properties which will become subject to COPA.

If a lender seeks to avoid lending on Covered Properties, due diligence, as noted above, will be helpful. But note that the broad definition of Covered Property may make that effort difficult. Despite such efforts at the outset of a new loan, a property which is not initially a Covered Property at the time of origination may eventually become a Covered Property at some point during the loan term.

Lenders may want to consider additional covenants in loan documentation, including:

1. A representation that the property is not a Covered Property;
2. A covenant not to permit the property to become a Covered Property;
3. Covenants to cure violations promptly (if not already present in the loan documents);
4. Covenants to provide notice to the lender of an HPD COPA designation;
5. If the property becomes subject to COPA, to comply with COPA in any eventual sale; and
6. An event of default, if the property becomes a Covered Property.

Such additional covenants may provide an incentive for the owner to ensure the property does not become a Covered Property and, thus, become subject to COPA’s requirements.

In addition, lenders should also consider amendments to any non-recourse carve-out guaranty to include additional triggers, such as:

1. A breach of the foregoing covenants;
2. Carrying charges during any COPA delay;
3. The 15 percent penalty for COPA non-compliance; and
4. Damages arising during the two-year look-back period noted above.

Lenders may also want to consider a full-recourse trigger in the event the property becomes subject to COPA.

There is also a potential impact on lenders holding a mortgage loan on a Covered Property where such loan goes into default. COPA has exclusions for transfers by judicial proceeding, deed in lieu of foreclosure (or other agreements related to the repayment of a loan and avoidance of foreclosure), and bankruptcy proceeding. However, COPA does not address the scenario where a lender acquires title to a Covered Property by foreclosure or deed in lieu of foreclosure and then seeks to sell such property. Such subsequent sale of a Covered Property owned by the lender is subject to COPA.

There may also be lenders who may wish to provide a program providing loans to Qualified Entities seeking to purchase Covered Properties. A thorough review of COPA and a commitment letter tailored to such program are recommended for such lenders.

IX. Hardship Waiver

HPD (or another agency designated by the Mayor) may waive any COPA requirement upon an owner’s showing that its application would cause undue financial hardship, under rules to be promulgated.

X. Conclusion

COPA reflects a significant and major shift in policy in New York City’s approach to affordable housing preservation and open market transactions. Owners and lenders should understand COPA’s requirements and practical consequences, especially the notice obligations, mandatory delays, and potential for significant penalties for noncompliance.

If you have any questions about COPA, please feel free to contact Joseph D. Simon at (516) 357-3710 or via email at jsimon@cullenllp.com, Elizabeth A. Murphy at (516) 296-9154, or via email at emurphy@cullenllp.com, David Curatolo at (516) 357-3773 or via email at dcuratolo@cullenllp.com, or Gabriela Morales at (516) 357-3850 or via email at gmorales@cullenllp.com.