NYC Council Revives COPA Proposal: What Multifamily Owners, Investors, and Lenders Need to Know

The New York City Council has once again revived the Community Opportunity to Purchase Act ("COPA"), reintroducing legislation that could significantly affect the sale of certain multifamily residential properties throughout New York City. 

Although the latest proposal—Intro. 905-2026—is considerably narrower than earlier versions, it would still create new procedural hurdles that could delay transactions, affect financing, and introduce additional legal risk for owners of qualifying properties.

For owners, purchasers, lenders, and real estate professionals, now is the time to understand which properties may be affected and how the legislation could influence future transactions if enacted.

A Narrower Bill—But One That Could Still Have Significant Consequences

COPA is intended to give qualified nonprofit and mission-driven organizations an opportunity to acquire certain residential buildings before they are sold to private purchasers. A prior version of the legislation was vetoed after drawing widespread criticism from the real estate industry over concerns that it would unnecessarily interfere with private transactions.

The newly introduced bill narrows the universe of covered properties considerably. Rather than applying broadly to most multifamily buildings, Intro. 905-2026 generally targets properties the City considers distressed or at risk of losing affordable housing.

Even so, owners should not assume the legislation is irrelevant simply because their buildings are professionally managed or financially stable. Some of the proposed eligibility criteria are broad enough that otherwise well-maintained properties could unexpectedly fall within the statute's scope.

Which Properties Could Be Covered?

As currently drafted, COPA would generally apply only where both of the following requirements are satisfied:

• the property is a covered Class A residential building containing four or more dwelling units; and

• the property meets at least one statutory trigger.

  
  

Among the proposed trigger conditions are:

• inclusion on certain HPD enforcement lists or programs;

• in rem foreclosure proceedings;

• court orders requiring correction of housing conditions;

• qualifying hazardous violations or municipal arrears; and

• affordability restrictions that have expired or are scheduled to expire.

  
  

One provision deserves particular attention: a building may qualify if it averages three or more HPD violations per dwelling unit. Depending upon how HPD ultimately interprets and administers this standard, owners with recurring maintenance issues—even those who would not consider their buildings "distressed"—could find themselves subject to COPA's requirements.

How Could COPA Affect a Sale?

If a property is covered, an owner would generally be prohibited from simply marketing the building and accepting the highest offer.

Instead, the proposed legislation establishes a multi-step process requiring advance notice to HPD before marketing or selling the property. HPD would then notify qualified entities, which would have an opportunity to express interest and potentially submit an offer before the transaction could proceed in the ordinary course.

If the owner later receives an acceptable third-party contract, certain qualified entities could also receive a right of first refusal.

Although the exact timeline depends upon the circumstances, the statutory process could delay a transaction by at least 90 days, with the potential for additional delays if disputes arise.

For parties negotiating acquisitions, these timing issues could affect:

• purchase contract negotiations;

• financing commitments and rate locks;

• due diligence schedules;

• closing timelines;

• exchange deadlines; and

• overall transaction certainty.

  
  

Potential Liability for Noncompliance

The proposed legislation carries meaningful enforcement provisions.

An owner who transfers a covered property without complying with COPA could face civil penalties of up to 15% of the property's transaction value. In addition, qualified entities would be authorized to seek injunctive relief to prevent or delay a closing.

Whether or not those remedies ultimately survive judicial scrutiny, they create additional uncertainty that buyers, sellers, lenders, and title companies would need to evaluate before closing a transaction.

Why Regulatory Due Diligence May Become Even More Important

One of the more significant practical implications of COPA is that determining whether the statute applies may itself require careful regulatory due diligence.

Unlike traditional zoning or title issues, COPA eligibility may depend upon factors such as HPD violation history, municipal enforcement status, regulatory agreements, affordability restrictions, and other governmental records that are not always apparent from a conventional real estate review.

For purchasers, identifying COPA issues early in the transaction could become an important component of diligence, allowing the parties to properly allocate risk, adjust timelines, and draft appropriate contractual protections.

Likewise, owners considering a future sale may benefit from evaluating their portfolios now. Addressing outstanding violations, resolving municipal compliance issues, and understanding whether a property could satisfy one of the statutory trigger conditions may reduce transaction risk if the legislation ultimately becomes law.

What Happens Next?

COPA remains proposed legislation. It has not been enacted, and its ultimate fate remains uncertain. While the bill reportedly enjoys substantial support within the City Council, it must still proceed through the legislative process before becoming law.

Nevertheless, given the significant operational and transactional implications, owners, investors, developers, and lenders should closely monitor its progress.

At Sandman Malin PLLC, we regularly advise multifamily stakeholders on New York City's complex rent regulation and housing regulatory framework, including transactional due diligence, regulatory compliance, and risk assessment. If you are evaluating the acquisition or disposition of a multifamily property that may be affected by COPA or other housing regulations, we would be happy to discuss how these issues may impact your transaction.

This article is provided for informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. Because every property and transaction presents unique facts, owners, purchasers, and lenders should consult legal counsel regarding their specific circumstances.