In the world of condominiums and co-ops, the offering plan is a familiar fixture. A creature of the Martin Act and the attorney’s general’s regulations thereunder, this marketing tool provides extensive, regulatorily mandated information about the property, including records of existing facts (such as technical reports and floor plans) and obligations of various parties (sponsor, owners, boards). The central purpose of the Martin Act, and the offering plan by extension, is disclosure; more specifically, the offering plan serves to equip “potential investors, purchasers and participants” with the information needed to “intelligently make their choice and found their judgment” prior to purchasing in the building (Phoenix Tenants Ass’n v. 6465 Realty Co., 119 A.D.2d 427, 431 (1st Dept 1986)).

At first glance, this limited, sponsor-specific objective seems straightforward. Yet an examination of industry practice and case law reveals a more complicated landscape, reflecting decades of inquiry into the offering plan’s relevance to everyday governance long after the sponsor’s exit. Attorneys representing boards may find themselves grappling with questions when provisions of the offering plan conflict with the building’s governing documents, or when offering plans provide for obligations that the governing documents omit.

Recently, the First Department’s decision in Bellstell 7 Park Avenue, LLC v. Seven Park Avenue Corp., 190 A.D.3d 632 (1st Dept 2021) hints at a potential judicial shift toward lesser emphasis on the offering plan. Against this backdrop, the question emerges: when is the era of the offering plan over?

For the covenants in an offering plan to be independently binding on the board and owners, basic principles of contract law require the existence of a law or legal instrument to make those covenants enforceable against the parties they are intended to govern. In other words, there must be an independent “legal hook” between the offering plan and the board and owners.

The nature of such a “legal hook” would depend on the building’s governance structure, as condominiums and cooperatives are subject to fundamentally different legal and organizational frameworks. This article will examine co-ops and condominiums separately to assess whether, and to what extent, an offering plan may be independently binding on the board and owners after the sponsor’s involvement has ended.

Co-ops: Is the Offering Plan a Corporate Document?

In a co-op, an owner’s interest in the apartment is effectuated by acquiring shares and fully executing a proprietary lease with the corporation, which authorizes occupancy subject to the co-op’s certificate of incorporation, by-laws, and house rules. These documents (referred to as the corporate documents), together with the applicable corporate statute, govern the rights and obligations of the board and the shareholders.

The question whether the offering plan should be considered among the corporate documents has been examined by courts for decades. The seminal case Kralik v. 239 East 79th Street Owners Corp., 5 N.Y.3d 54 (2005) sets the stage, where the Court of Appeals held that the regulations promulgated by the attorney general govern only public offering disclosure and thus are not determinative of cooperative governance issues.

How that reasoning applies to the offering plan—a document born of the Martin Act and the Attorney General’s regulations—remains an intriguing question. Kralik establishes that principles of everyday governance should be resolved “solely by applying ordinary contract principles to interpret the terms of the documents defining [the owner’s] contractual relationship with the cooperative corporation.” Calling to mind the elements of a binding contract in New York (see, e.g. Kowalchuk v. Stroup, 61 A.D.3d 118, 121 (1st Dep’t 2009)), the contractual relationship of the co-op and the owners vis-à-vis the offering plan—a disclosure document that is not signed by either party—seems at best unclear.

Nonetheless, three years later, Sassi‑Lehner v. Charlton Tenants Corp., 55 A.D.3d 74 (1st Dept 2008) offered the first clear indication that such a contractual relationship may be held to exist. Sassi-Lehner held that provisions of the offering plan are enforceable to the extent incorporated by reference into the proprietary lease. As the court explained, Kralik did not rule out the relevance of the offering plan altogether; it merely rejected attempts to “read[] the attorney general's regulations into the proprietary lease.” A legal hook was established, but its reach remained limited, since the enforcement of external documents specifically referenced in a contract was hardly a novel concept.

Yet the applicability of Sassi‑Lehner to offering plan provisions not expressly incorporated by reference into the proprietary lease remains ambiguous. In cases where the offering plan and the proprietary lease were seemingly not in conflict (see e.g. Yatter v. Continental Owners Corp, 22 A.D.3d 573, 574–75 (2d Dept 2005) and RFLP, LLC v. 255 West 98th Street Owners Corp., 205 A.D.3d 594 (1st Dep’t 2022)), courts could simply reference both documents as part of their findings without commenting on priority or relevance.

But what if these documents are not in harmony? Courts have drifted toward a broader role for the offering plan. At the trial level, a court in the City of New Rochelle (210-220-230 Owners Corp. v Arancio, No. SP-59-2009 (N.Y.City Ct., July 21, 2009)) breaks from judicial ambiguity, citing Kralik to conclusively deem the offering plan a “seminal corporate document” and one of the “controlling documents,” on the grounds that it is “central to the creation of the cooperative

corporation and its relationship to its shareholders.” However, it should be noted that Kralik defined neither of these terms, but rather emphasized the “contractual relationship” for enforceability—an element not evaluated in the City of New Rochelle decision. Similarly, a First Department decision in Fairmont Tenants Corp. v. Braff, 162 A.D.3d 442 (2018) also refers to the offering plan as a “controlling document,” citing to Sassi-Lehner for support. However, the relevant passage from Sassi-Lehner (i.e. “there are circumstances where the offering plan is to be ‘taken together’ with the controlling documents”) not only falls short of such a universal rule, but may even be read to expressly distinguish the offering plan from the controlling documents.

With Bellstell emerging in 2021, a stricter posture seemed to surface within the First Department. Here, the court considered how strictly a proprietary lease should be interpreted when determining the continued status of “unsold shares.” Intriguingly, Bellstell does not include the offering plan in this analysis; instead, reiterating Kralik’s principle that only “controlling documents” determine the issue at hand, Bellstell proceeds to base its opinion solely on the proprietary lease.

The First Department further interprets Kralik to reject all proprietary lease inferences that are “not suggested by its terms,” to the point that even subsequent updates in law may not influence the proprietary lease’s meanings. Coupled with Kralik’s demand for a “contractual relationship with the cooperative corporation,” Bellstell’s strict interpretation challenges the relevance of the offering plan (to the extent not incorporated into the proprietary lease by reference) once more.

Condominiums: Restrictive Covenants and Contracts

In condominiums, unit owners hold fee title with an undivided interest in the common elements, and governance rights and obligations stem from restrictive covenants that run with the land through recorded instruments, i.e. the declaration, by‑laws, and tax lot drawings. The offering plan, in contrast, is not recorded against any of the tax lots and otherwise generally falls short of the elements necessary for a covenant to run with title (see Neponsit Prop. Owners' Ass'n v Emigrant Indus. Sav. Bank, 278 NY 248 (1938)).

The application of Kralik’s contract-based cooperative principles to condominiums is not straightforward, since condominiums are governed by restrictive covenants rather than bilateral proprietary leases. However, a First Department decision Pomerance v. McGrath, 124 AD3d 481 (1st Dept 2015) characterized “a violation of bylaws” as “akin to a breach of contract,” which suggests a contractual relationship arising from the restrictive covenants. Even so, how that relationship extends to the offering plan remains uncertain, short of incorporation by reference.

Privity between the building and the offering plan might however be drawn from a statutory source. Real Property Law §339-dd authorizes a condominium board “on behalf of two or more of the unit owners,” to bring actions “relating to the common elements or more than one unit,” and has long been relied upon to support a board’s standing to assert breach-of-contract claims against a sponsor based on promises made in the offering plan (see Residential Bd. of Managers of Zeckendorf Towers v. Union Sq.-14th St. Assoc., 190 AD2d 636 (1st Dept 1993)).

Where a board is statutorily empowered to enforce unit owners’ contractual rights, a reciprocal question emerges: may a unit owner, in turn, enforce a claim against the board arising from the same offering plan? While our research has not identified a generally reported case that addresses this directly, trial-level decisions trend in favor of reading the offering plan and the declaration together (see, e.g. Residential Comm. of Bd. of Managers of the Sycamore v 250 E. 30th St. Owners, LLC, 17 Misc 3d 1139(A) (Sup Ct 2007)).

Jennifer Realty and Privity

While 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144 (2002) is arguably best known for its discussion on sponsor obligations, it also raises a key issue concerning the corporation’s privity under the offering plan. Here, the Court of Appeals found that the plaintiffs—inclusive of the corporation—pleaded a valid breach of contract claim based on Sponsor’s failure to fulfill certain obligations under the offering plan. The court’s willingness to sustain the board’s claims recognizes a contractual relationship between the board and the sponsor under the offering plan. This, in turn, invites the question: does the corporation’s contractual privity under the offering plan give rise to enforceable obligations between the corporation and the shareholders?

The source of the contractual privity between the sponsor and the corporation is not expressly identified in Jennifer Realty. However, it may arise from the “Contract of Exchange” executed during the cooperative conversion, through which the sponsor conveyed its possessory interests in the property to the corporation in exchange for the corporation’s shares. The Contract of Exchange typically incorporates the offering plan by reference, providing a plausible basis for the corporation-sponsor contractual relationship recognized in Jennifer Realty.

That said, the Contract of Exchange is not signed by any individual shareholders, nor incorporated by reference in the proprietary lease. While privity may indeed be achieved between the sponsor and the corporation, the Contract of Exchange provides little foundation for a contractual relationship between the shareholders and the corporation.

The logic becomes even more tenuous when we step back into a condominium world. Because a condominium is formed through the recordation of a declaration, unilaterally signed by the sponsor as declarant, no Contract of Exchange or comparable agreement exists to create privity between the sponsor and the condominium board in the first place. Without that privity, it is difficult to see how Jennifer Realty could have reached the same result on the board’s contractual claims had the case arisen in a condominium context.

Defined Terms Matter

Amid all this ambiguity, one pathway for enforcing offering plan provisions between boards and owners may emerge more often than expected. Practitioners drafting governing documents for both condominiums and cooperatives often employ a defined term—“Condominium Documents,” “Governing Documents,” etc.—to capture the full set of instruments binding on the board and owners. These defined terms typically encompass the governing documents specific to that building, such as the declaration, proprietary lease, certificate of incorporation, tax lot drawings, by-laws, etc. Occasionally, however, “offering plan” is added as well.

The intentionality behind this is not always clear; it is possible that terminology crafted for the offering plan narrative simply finds its way into the governing documents without additional levels of scrutiny. Especially in light of Sassi-Lehner, the consequences may be significant. What begins as a convenient drafting choice can, through incorporation by reference, inadvertently elevate the offering plan to the level of a corporate document (in a co-op) or a covenant running with the land (in a condominium) by way of incorporation by reference—creating precisely the “legal hook” Sassi-Lehner affirmed.

Conclusion

Across both condominiums and co-ops, the offering plan’s significance beyond sponsor sell-out proves more complex than its disclosure-driven origins suggest. As with many things in the legal world, the offering plan’s afterlife is shaped by a complex interplay of doctrine, drafting, and underlying frameworks.

Case law demonstrates that its enforceability depends largely on contractual relationships, yet the applicability of those principles diverges meaningfully between the condominium and co-op regimes. In this uncertain terrain, incorporation by reference remains one of the most concrete ways an offering plan’s provisions may be enforceable against boards and owners.

Reprinted with permission from December 29, 2025 issue of the New York Law Journal© 2025 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.