Most New Yorkers are familiar with New York State Attorney General Andrew Cuomo, but how many people have heard the name Kenneth Demario before? If you’re someone concerned with co-ops, condos or any real estate issues in the city, Demario is someone you need to know.
Demario is the bureau chief in charge of the Investor Protection Bureau in the Real Estate Finance Bureau, known as REFB, whose main function is to protect the public from fraud in real estate offerings, including cooperatives, condominiums, syndications and real estate investment trusts (REITS). The bureau commands a total of 700 attorneys who can be called upon to work on cases involving these housing issues.
According to the Attorney General’s office, “Many complaints received are from tenants in buildings undergoing cooperative or condominium conversion and concern allegations of improper disclosure, tenant harassment and misleading information provided to tenants.”
It’s up to Demario and those on his team to handle the complaints and enforce and mediate any issues that come to light.
History of the REFS
The Bureau began in the early 1970s, when New Yorkers were facing a number of housing issues and Louis J. Lefkowitz, the attorney general at the time, felt it necessary to organize a division in his ranks to help.
Although a lot of good was done through the years, the division’s visibility and influence seemed to fade somewhat in the mid-‘80s as new politicians came into power at the Attorney General’s office. The Bureau has been revived over the past few years however, and Cuomo has made it a priority to make the division a strong power in his administration.
Demario joined the Bureau in May 1987 as a review attorney and became Section Chief of Review in December 2000. In March 2007, he was appointed bureau chief. He has worked on the revision of various sets of regulations promulgated by the OAG, and is currently involved in reviewing the office’s timeshare regulations with the expectation of a comprehensive revision.
Before joining the OAG, Demario served in a number of positions in New York City government, including counsel to the New York City Loft Board and chief of hearings at the Department of Finance.
The AG’s office accomplishes a great deal each year, but something that Demario and company say they are very excited about is a new bill that passed in March of this year that they say will vastly improve the process for converting cooperatives and condominiums. The bill, A9546/S6540, sponsored by Assemblywoman Helene E. Weinstein, D-41 and Senator Owen H. Johnson, R-4, will increase funds for the REFB, which will speed up the processing for co-op and condominium conversions and give tenants access to the sponsor’s offering plan sooner, as well as enhance oversight and enforcement.
According to his office, the new bill is the product of the Real Estate Working Group that Attorney General Cuomo convened in 2007 to address the review process for condominium and cooperative offerings. The group included executive staff from the Attorney General’s office, as well as a broad section of real estate professionals, as well as representatives of sponsors, tenants’ organizations, and cooperative and condominium owners.
“It is critically important to have condo and co-op conversions reviewed speedily so tenants are not left in the dark about what options they have and what choices to make for their housing future,” said Attorney General Cuomo upon offering up the new legislation. “I would like to thank the members of the Real Estate Working Group for coming up with this solution as well as Senator Johnson and Assemblywoman Weinstein for introducing it as legislation. Thanks to their efforts, tenants will be informed of their options and their rights in a faster time frame, and owners will have their plans approved expeditiously.”
The Real Estate Board of New York (REBNY) also was in favor of this bill and sent their support. In a statement they released, REBNY said that their support for the legislation was a good indication of just how difficult the situation has become and how necessary the increased staffing is. “Dedicating the increased fees to additional staffing in the REFB ensures that the additional monies will go where they are needed.”
It is the responsibility of the REFB to review all offering plans for the conversion of rental buildings to cooperative or condominium ownership within six months. This has become increasingly harder over the last five years as the number of offering plans submitted to the REFB has grown by more than 300 percent, rising from under 300 in 2003 to reaching over 1,000 in the past 12 months.
Demario’s office said that under the current ceiling, projects with a total offering price of $5 million or more paid only a $20,000 fee until the new legislation was passed and now that’s up to $30,000. “Increasing the ceiling for the filing fee imposes a minimal burden on sponsors because it applies only to projects with a total offering price of $5 million or more, and has no effect on smaller developments,” they said. The cap had not been raised since 1989.
With so much new construction in the past decade and a division that was understaffed, the REFB had to deal almost around the clock with issues of faulty and defective construction as they were in charge of enforcing and mediating these issues as well.
They also are protecting against fraud with regard to real estate offerings so the help was needed.
To carry out this responsibility, the Bureau requires the filing of prospectuses or offering circulars, which must disclose information concerning all material aspects of the offering. In addition, the Bureau investigates complaints and, where appropriate, initiates civil or criminal actions to enforce the law.
A Helping Hand
In addition to investigating complaints and mediating and enforcing guidelines, the REFB is also there to help and offer plenty of practical guides and tips for New York City homeowners to make use of.
Pamphlets on lead poisoning, protecting yourself from home improvement rip-offs and even timeshare tips are provided. There are also guides for converting co-ops and condos, guidelines to sell or purchase real estate securities on the Internet and advice on how to handle problems with condo boards, a condo manager, co-op boards and a home owner’s association.
“There’s also all the rules and regulations of co-ops, condos, HOAs and timeshares that someone could need,” said a spokesperson inside the press office. “One of the more important things that people should look at is the tenant’s rights guide.”
One visit to the REFB’s website foundatwww.oag.state.ny.us/ realestate/ realestate.html and you will find all the latest bulletins on everything to do with your condo or co-op, and there’s plenty of advice and practical help there as well. If you want to file a complaint, all you need to do is go to the website and download the proper form and then the process will be set in motion.
The Attorney General’s office regulates only the offer and sale of real estate securities (which includes interests in HOAs). It generally does not become involved in owners’ problems with boards of directors after the sponsor is no longer in control of the board. However, the office may be able to help you if the sponsor of the HOA is not keeping the commitments, which it made in the offering plan. If this is the case, owners may contact the Attorney General by sending a letter to: Investment Protection Bureau - Real Estate Financing Section, New York State Office of the Attorney General, 120 Broadway (23rd Floor), New York, NY 10271.
Now that Attorney General Cuomo has made the REFB a priority again, the bureau can go about trying to enact more legislation that will help co-op and condo owners in New York. Demario hopes that they will continue to do a good job and help as many people as they can.
Keith Loria is a freelance writer and a frequent contributorto The Cooperator.