COPA Changes the Game for NYC Multifamily Transactions

This blog was prepared with the assistance of Gwendolyn Goodyear, a law clerk at Cole Schotz.

With New York City Council’s recent passage of the Community Opportunity to Purchase Act (“COPA”) comes a new statutory framework that grants certain community-based organizations the right to purchase qualifying residential buildings before – or in some cases, in place of – private buyers. Its anticipated implementation in 2027 – absent a veto by the Mayor of New York – will fundamentally alter the process, timing, and risk profile of selling certain properties in NYC.

COPA reflects a significant shift in policy in New York City’s approach to affordable housing preservation and open market transactions. Owners, investors, and developers should understand how the legislation is structured, and COPA’s practical consequences.

How COPA Works

At its core, COPA positions certain “Qualified Entities,” as certified by the New York City Department of Housing Preservation and Development (“HPD”), with leverage to first purchase specified residential properties, each referred to as a “Covered Property” (further described below).

Qualified Entities may include joint ventures between community organizations and private developers, provided the community organization maintains a controlling interest. Upon a sale to a Qualified Entity, HPD and the Department of Finance will be required to waive certain municipal charges, taxes, and fees associated with the transaction.

COPA does not require owners to sell at below-market prices. Rather, the legislation inserts Qualified Entities into the front end of the sale process and, in limited circumstances, provides a right of first refusal if an owner later accepts an offer from a non-qualified buyer. The result is an extended and highly regulated timeline, coupled with new compliance obligations and enforcement risk.

“Covered” Properties

COPA applies to Class A multiple dwellings with four or more dwelling units, subject to several important limitations and timing thresholds. Owner-occupied properties for residential purposes with five or fewer units are expressly excluded.

Within the first year of COPA going into effect, a property becomes a Covered Property if it meets specified distress or regulatory criteria, including participation in HPD’s Alternative Enforcement Program, being subject to certain enforcement orders or foreclosure actions, recent harassment findings, or affordability restrictions set to expire within two years.

Beginning one year after the legislation’s anticipated 2027 effective date, COPA’s scope expands. Properties may qualify as a Covered Property based on hazardous or immediately hazardous housing violations, expiring affordability restrictions, or other criteria established by HPD through future rulemaking.

HPD is required to provide annual notice to owners whose properties are deemed Covered Property and must also provide owners with an opportunity to challenge such determinations.

“Qualified Entity” Requirements

COPA distinguishes between not-for-profit and for-profit Qualified Entities, both of which must be certified pursuant to HPD rules.

Not-for-profit Qualified Entities must generally be 501(c)(3) organizations with demonstrated experience owning and managing residential property, including affordable housing, coupled with requisite financial capacity and commitment to housing preservation, in addition to satisfying other HPD determined criteria.

Similarly, for-profit Qualified Entities must demonstrate the capacity to acquire, rehabilitate, and manage regulated housing, maintain affordability restrictions, and show experience in affordable housing preservation.

Owner Obligations Prior to Sale of Covered Property

Before taking any action to sell a Covered Property, an owner must deliver a formal notice of intent to sell to HPD and all certified Qualified Entities. Such notice must include detailed ownership information, unit counts, income and expense data, and a deadline of no fewer than 25 days for Qualified Entities to submit a statement of interest.

If no Qualified Entity timely responds, the owner is free to proceed with a sale in the open market. However, if a statement of interest is submitted, the owner is prohibited from marketing or selling the property outside of the COPA process during the statutory review period.

The Offer Process and Built-In Delays

Once a Qualified Entity submits a statement of interest, the parties must enter into a confidentiality agreement, after which the owner is required to provide extensive due diligence materials, including rent rolls, financial statements, inspection reports, litigation history, and harassment findings.

The Qualified Entity then has 80 days, subject to extension by HPD, to submit a bona fide offer. During those 80 days, the owner may not pursue other offers. If an offer is made, the owner has a limited 10-day period to accept, reject, or counter. An acceptance or counteroffer triggers an additional 30-day window to enter into a contact of sale.

If all offers are rejected, or if a Qualified Entity fails to timely close, the owner may sell the property on the open market to a non-qualified purchaser under COPA, subject in certain circumstances, to a right of first refusal.

Right of First Refusal

If an owner receives an offer it intends to accept from a non-qualified buyer within one year after rejecting a Qualified Entity’s offer, the owner must provide notice of that offer to HPD and the Qualified Entity that previously submitted a bona fide offer. The Qualified Entity then has 15 days to elect to match the offer and must close on identical terms. If the Qualified Entity declines or fails to close, the owner’s obligations under COPA are satisfied.

Enforcement and Penalties

COPA expressly provides Qualified Entities with a private right of action to enforce its provisions. Owners found to have violated COPA may be subject to uncapped civil penalties, injunctive relief, and liability for the Qualified Entity’s attorneys’ fees and expert costs.

Potential Challenges for Owners

Although COPA narrows its initial application to certain properties, the legislation nevertheless imposes significant restrictions on owners:

• Regulatory Expansion Risk: COPA grants HPD broad authority to expand the definition of “Covered Property” through future rulemaking, raising the possibility of additional buildings becoming subject to the legislation.
• Litigation Exposure: Disputes over compliance, timing or whether an offer is bona fide could result in significant litigation.
• Financing Questions: COPA does not indicate whether Qualified Entities will consistently have access to financing sufficient to acquire market rate or predominately market-rate buildings.
• Impact on Marketability: Mandatory notice and waiting periods, including the Right of First Refusal afforded to Qualified Entities, interfere with traditional marketing efforts and may discourage potential buyers, particularly in time-sensitive sales. 
• Challenges to HPD Determinations: Owners will need to track and, where applicable, challenge HPD determinations that qualify a property as a “Covered Property.”

COPA represents a rebalancing between private property rights and community-based housing preservation. Owners and investors must factor COPA compliance into planning, diligence, and pricing. The true impact of COPA will depend not only on the statutory text, but on how HPD implements and enforces COPA in practice.

Sources:

• N.Y.C. Council Int. No. 0902 (Community Opportunity to Purchase Act) https://legistar.council.nyc.gov/LegislationDetail.aspx?ID=6695280&GUID=17713221-6B17-4AE9-9892-AF107A836713&Options=ID|Text|&Search=0902%5c
• New York City Council, Building on Legacy of Confronting the Housing Crisis, NYC Council Approves Legislation to Advance Affordability and Housing Solutions for All New Yorkers (Dec. 18, 2025)