Office of the NYS Attorney General Charities Bureau 28 Liberty

Office of the NYS Attorney General

Charities Bureau

28 Liberty Street

New York, NY 10005

(212) 416-8401

www.charitiesnys.com

A GUIDE TO SALES AND OTHER DISPOSITION OF ASSETS

BY NOT-FOR-PROFIT CORPORATIONS

A GUIDE TO SALES AND OTHER DISPOSITION OF ASSETS

PURSUANT TO NOT-FOR-PROFIT CORPORATION LAW §§ 510, 511 and 511-a

Attorney General

Charities Bureau

www.charitiesnys.com

Issue date: December 2018

Table of Contents

INTRODUCTION………………………………………………………………………3

WHAT TRANSACTIONS ARE COVERED.………………………………………...4

ROLE OF THE ATTORNEY GENERAL……………………………………………5

STATUTORY STANDARD……………………………………………………………6

THE CORPORATION'S PREPARATION FOR THE TRANSACTION………….6

PREPARING TO PETITION FOR APPROVAL OF TRANSACTION…………...7

VERIFIED PETITION FOR ATTORNEY GENERAL OR COURT

APPROVAL……………………………………………………………………………..9

REQUIREMENTS FOR THE COURT ORDER OR ATTORNEY GENERAL

APPROVAL……………………………………………………………………………12

REGISTRATION WITH THE ATTORNEY GENERAL'S

CHARITIES BUREAU………………………………………………………………..13

GOVERNMENT AGENCY APPROVALS………………………………………….13

CONCLUSION…………………………………………………………………………13

APPENDIX A - CHECKLIST FOR PETITION TO THE ATTORNEY GENERAL

OR THE COURT………………………………………………………………………14

APPENDIX B - SAMPLE PETITION FOR COURT APPROVAL OF SALE OF

ASSETS…………………………………………………………………………………16

APPENDIX C - SAMPLE PETITION FOR ATTORNEY GENERAL APPROVAL

OF SALE OF ASSETS…………………………………………………………………18

APPENDIX D - SAMPLE COURT ORDER APPROVING SALE OF ASSETS….20

APPENDIX E - SAMPLE ATTORNEY GENERAL'S APPROVAL OF

TRANSACTIONS……………………………………………………………………..21

APPENDIX F - OFFICES OF THE ATTORNEY GENERAL AND THE

COUNTIES COVERED BY EACH:…………………………………………………22

A GUIDE TO SALES AND OTHER DISPOSITION OF ASSETS

PURSUANT TO NOT-FOR-PROFIT CORPORATION LAW §§ 510, 511 and 511-a

INTRODUCTION

The New York State Attorney General’s Charities Bureau has prepared this

guidance to assist not-for-profit corporations and the attorneys who represent them when

seeking approval of the Attorney General and/or the court for sales and other dispositions

of their assets, including real and/or personal property, as well as intangible property such

as bonds, stocks or certificates of deposit. Not-for-Profit Corporation Law (“N-PCL”).

N-PCL §§ 510, 511 and 511-a. Please consult “Religious Corporations: Sales and other

Disposition of Assets,” posted at www.charitiesnys.com, for guidance concerning

property transactions by religious corporations.

New York law governing not-for-profit corporations provides certain protections

against the inappropriate transfer of assets of such corporations, including internal

procedural rules for authorizing transfers. The law also provides for review by the

Attorney General and/or by New York State Supreme Court for certain transactions.

Because of the important and unique role and responsibility of not-for-profit

corporations in the lives of our citizens and communities, and because of their legal

responsibility to safeguard their assets and provide for the interests of their members and

beneficiaries, the law requires the court’s or the Attorney General’s approval of certain

transactions by such corporations.

The procedures described in this guidance reflect amendments to the

N-PCL that were included in the Nonprofit Revitalization Act of 2013 ("the Act" or

“NPRA”) and 2015 and 2016 amendments to the Act. The Act amended the N-PCL and

sets forth procedures to be followed when transferring or mortgaging property and gives

corporations the option of submitting a petition to the Attorney General OR the Supreme

Court on notice to the Attorney General for approval of the transaction. As more fully

described below, in an application solely to the Attorney General, the Attorney General

may determine that court review of a particular application is appropriate. In such cases,

the verified petition must be submitted to the court and to the Attorney General, even

though court approval is sought.

This guidance is not a substitute for legal advice from an attorney but is intended

to provide guidance to not-for-profit corporations that are seeking to sell or otherwise

dispose of their assets and to the lawyers who represent them.

The information in this guidance is general in nature. Each transaction is

governed by its own facts, and the Attorney General reviews each one on a case-by-case

basis. You are encouraged to discuss the proposed transaction in advance with the

Attorney General’s Charities Bureau in New York City or Albany or with an Assistant

Attorney General in the appropriate Regional Office of the Attorney General to which

you should submit your application. A list of the offices of the Attorney General, their

contact information and the New York counties they serve is in Appendix F. If you

anticipate that members or employees of the organization, members of the public served

by the organization, a public agency with regulatory oversight or contractual relationships

with the organization, or members of the local community may have concerns about the

proposed transaction, it is prudent to advise them of the planned transaction in order to

address their concerns to the extent feasible, consistent with the mission of the

organization, and to document these outreach and consultation efforts.

WHAT TRANSACTIONS ARE COVERED

The sale, lease, exchange or other disposition of all or substantially all of the

assets

of a charitable not-for-profit corporation

requires approval of the Attorney

General or the court, with notice to the Attorney General, pursuant to the procedures set

forth in the N-PCL. N-PCL §§ 510, 511 and 511-a. The assets may be real and/or

personal property, including intangible property such as bonds, stocks or certificates of

deposit. N-PCL § 510(a). Transactions by foreign charitable corporations that do

business in New York are also covered. N-PCL § 103.

There is no fixed numerical or arithmetic measure of “all or substantially all.”

Approval by the Attorney General or the court is required when the transaction involves a

large proportion of the corporation’s total assets or when it may affect the ability of the

corporation to carry out its purposes, regardless of the percentage of the corporation’s

total assets that are the subject of the transaction.

Exceptions to Covered Transactions by Not-for-Corporations

Mortgages are not covered unless a component of the transaction would otherwise

be covered by the N-PCL, such as when there is a conveyance or lease of the property to

the lender.

N-PCL §§ 510 or 511. Non-charitable not-for-profit corporations do not need

Attorney General approval for their transactions.

Non-charitable transactions are defined

at N-PCL § 102(a)(9-a).

ROLE OF THE ATTORNEY GENERAL

The N-PCL requires not-for-profit corporations seeking to sell, exchange or

otherwise dispose of all or substantially all of their assets to submit a verified petition

for approval of such transaction either to the Attorney General or to the court on notice

to the Attorney General.

Whether the petitioner decides to seek approval from the Attorney General or the

court, it is advisable to make sure that the contract for the sale of the property is

Throughout this guidance, the term "transaction" will also be used to refer to the sale, lease, exchange or

other disposition of all or substantially all of a not-for-profit corporation's assets.

See N-PCL §§ 102(a)(3-a) and (3-b) for the definitions of charitable corporation and charitable purposes.

Corporations previously formed as Type B corporations are, effective July 1, 2014, deemed to be charitable

corporations. N-PCL § 201(c).

contingent upon the approval of either the Attorney General and/or the Supreme Court.

This will protect the corporation since the sale may only take place if it is approved.

When court approval is sought, the N-PCL requires that, upon filing the verified

petition with the court, the Attorney General be given a minimum of 15 days’ notice

before a hearing on the application. N-PCL § 511. However, the procedure preferred

by the Charities Bureau and most courts is submission of a verified petition and

proposed order, in draft form with tabs identifying any exhibits, to the Attorney

General for review in advance of filing with the court. This procedure enables the

Attorney General to review the papers to ensure that all statutory requirements are met,

all necessary documents are included as exhibits, and any concerns of the Attorney

General are resolved before submission to the court. A sample petition to the court is

attached as Appendix B, a checklist of documents needed to request approval of a

transaction is attached as Appendix A, and a sample order is attached as Appendix D.

In the case of an application to the court on notice to the Attorney General, if the

Attorney General has no objection to the transaction, the Attorney General’s Office will

provide the petitioner with a “No Objection” endorsement. Such endorsement, typically

provided in a letter to the petitioner or stamped on the proposed order approving the

transaction, will waive statutory service of the petition since the papers will have already

been submitted to and reviewed by the Office of the Attorney General. The signed

petition, which must be exactly the same as the final draft petition and include exactly the

same exhibits reviewed by the Attorney General, may then be submitted to the court.

However, if a hearing or other proceeding is subsequently scheduled, the petitioner must

give notice of such proceeding to the Attorney General. In addition, a copy of the order,

when signed by the judge, must be submitted to the Attorney General.

If the Attorney General does not approve a petition, if the Attorney General

concludes that court review of the petition is appropriate, or if the corporation chooses to

do so, the corporation may apply to the Supreme Court for an order approving the

transaction, on notice to the Attorney General, in the judicial district where the

corporation's principal office is located.

Circumstances in which the Attorney General may determine that court approval,

on notice to the Attorney General, rather than administrative approval of the Attorney

General is appropriate include:

• The corporation is insolvent and must proceed on notice to

creditors pursuant to N-PCL § 511(c).

• The Attorney General has received complaints or objections from

members, creditors of the corporation or other interested persons

who are entitled to notice pursuant to N-PCL § 511(b).

• The Attorney General has objections to the transaction that have

not been resolved after discussion.

• In addition, there may be circumstances when the Attorney

General has no objection to a transaction but determines that

review by the court is appropriate, including transactions that are

unusually complex or will have an impact on the public.

STATUTORY STANDARD

Under the N-PCL's two-prong test, the court and/or the Attorney General must be

satisfied that (1) that the consideration and the terms of the transaction are fair and

reasonable to the corporation and (2) that the purposes of the corporation or the interests

of its members will be promoted by the transaction. N-PCL §§ 511(d) and 511-a(c).

These statutory standards and other statutory requirements are discussed more fully

below.

THE CORPORATION'S PREPARATION FOR THE TRANSACTION

Approval of the Transaction by the Board

The board of directors or trustees must approve the transaction, and, if there are

members entitled to vote (see Approval of the Transaction by Members below,) the board

must adopt a resolution recommending the transaction. A vote of at least two-thirds of

the corporation’s entire board is required unless the board has 21 or more directors, in

which case a vote of a majority of the entire board is sufficient. A corporation’s

certificate of incorporation or by-laws may provide for greater quorum or voting

requirements.

The resolution must specify the terms and conditions of the proposed transaction,

including the anticipated consideration to be received by the corporation, the eventual use

of the proceeds of the transaction by the corporation, and a statement as to whether or not

dissolution of the corporation is contemplated. N-PCL §§ 510(a)(1) and (2).

If the transaction involves a sale or transfer to a "related party,"

the corporation

must follow the procedures set forth in the N-PCL § 715, including ensuring that the

transaction is in the best interest of, and fair and reasonable to, the corporation and that

any officer, director or key employee who has an interest in the transaction discloses the

facts of that interest.

Where an officer, director, or key employee has such an interest, the officer,

director or key employee must not participate in deliberations or votes of the Board in

"Related party" means (i) any director, officer or key person of the corporation or any affiliate of the

corporation; (ii) any relative of any director, officer or key person of the corporation or any affiliate of the

corporation; or (iii) any entity in which any individual described in clauses (i) and (ii) of this subparagraph

has a thirty-five percent or greater ownership or beneficial interest or, in the case of a partnership or

professional corporation, a direct or indirect ownership interest in excess of five percent. N-PCL § 102

(23).

considering or approving the action. In addition, in certain circumstances, the Board

must explicitly consider reasonable alternatives to the transaction. The abstention of the

officer, director, or key employee, and the consideration of reasonable alternatives to the

transaction must be documented in the minutes of the Board. Corporations planning a

transaction should review and assess their compliance with the requirements of the N-

PCL before entering into the transaction. N-PCL § 715.

Approval of the Transaction by Members

If a corporation has members with voting rights, the membership must approve

the transaction. First, the board must adopt a resolution recommending the transaction.

The resolution must describe the parties to and the terms and conditions of the proposed

transaction, including the consideration to be received by the corporation, an explanation

as to how the proceeds will be used and a statement of whether or not dissolution of the

corporation is contemplated. The board resolution must then be submitted to a vote at an

annual or special meeting of members entitled to vote on it. N-PCL § 510(a)(1).

Each member and each holder of subvention certificates or bonds of the

corporation, whether or not entitled to vote, is entitled to notice of the meeting. The

members may approve the proposed transaction according to the terms of the board

resolution, or authorize the board to modify the terms and conditions of the proposed

transaction, by a two-thirds vote of the members present at the meeting, if the number of

affirmative votes is at least equal to the quorum. N-PCL §§ 510(a)(1) and 613.

The quorum for a membership meeting is a majority of the members, unless the

corporation’s certificate of incorporation or by-laws provides for a greater or lesser

quorum requirement. If the certificate of incorporation or by-laws provide for a lesser

quorum, the quorum may not be less than the number entitled to cast one hundred votes

or one-tenth of the total number of votes entitled to be cast, whichever is less. N-PCL

§ 608(a) and (b) and 615.

Voting by proxy is permitted for members of not-for-profit corporations, if the

by-laws or certificate of incorporation permits proxy voting. N-PCL § 609.

PREPARING TO PETITION FOR APPROVAL OF A TRANSACTION

Fair and Reasonable Consideration: Appraisals

In preparing to petition for approval of a transaction, the corporation must

determine that the proposed consideration is fair and reasonable. To do so, the

corporation must secure an independent appraisal of the property that is the subject of the

transaction. Although the statute does not explicitly require an appraisal, court decisions

have established that fair market value can best be determined by means of an appraisal,

and the court and the Attorney General will generally reject the petition if it is not

supported by an appraisal. A licensed appraiser who is completely independent of both

buyer and seller must do the appraisal. A real estate agent or broker involved in the sale

of the property may not do the appraisal. A real estate agent or broker “fair market

assessment” of a property is NOT the same as an appraisal.

If the asset is real property, the appraisal, which should be done no more than 12

months before the date of the contract, should be based on at least three comparable sales,

unless a different valuation method is more appropriate. If the transaction is not an arm’s

length transaction (i.e., if it involves a sale or transfer to a director, officer, employee or

other person with some connection to the corporation), the Attorney General may require

two appraisals. If the proposed transaction is for the development of real property, the

appraisal should be based on full FAR (floor area ratio) and evaluate any unused

development rights (sometimes called “air rights”).

Fair and Reasonable Consideration: Non-cash Consideration

Any non-cash consideration to be received by the corporation in the transaction

needs confirmation of value. Such confirmation may be by submission of a third party

valuation or, in some instances, acceptable evidence of costs associated with the building

and delivery of in-kind consideration such as a new facility. Non-cash consideration may

also include, but is not limited to, anticipated future payments based on a partnership or

joint venture interest. The value of any future payments, including ground lease

payments, should be analyzed showing the net present value using an appropriate

discount rate. Please note that anticipated future payments resulting from a joint venture

or partnership arrangement are considered speculative and should not form the basis of a

seller’s fair and reasonable consideration analysis.

Fair and Reasonable Consideration: Security

If the corporation is entering into a development transaction in which the

purchaser or a third party plans to build and deliver real property back to the seller,

adequate security and assurances need to be evidenced in the documentation. Such

security and assurances can take the form of escrow arrangements, guaranties, letters of

credit, performance bonds, construction timetables with default provisions and adequate

remedies, as well as appropriate provision for conducting the corporation’s activities

during construction.

Option Contracts

Option contracts require Attorney General or court approval at the time the option

is exercised. The Charities Bureau discourages the use of option or other contingent

contracts, especially if they may be exercised over a long term.

Use of Proceeds of a Transaction

The use of the proceeds must be consistent with the corporation’s purposes.

Proceeds cannot be used for the personal benefit of a director, officer, employee, member

or other interested party.

If the property being sold is a not-for-profit corporation’s main premises and, as

of the date of the sale, the corporation has not yet entered into a contract to purchase or

lease new premises, the Attorney General will require, as a condition of approval, that the

sale proceeds be placed in escrow to ensure that funds will be available to obtain new

premises so that the corporation can continue to carry out its corporate purposes.

VERIFIED PETITION FOR ATTORNEY GENERAL OR COURT APPROVAL

The N-PCL requires that charitable not-for-profit corporations seeking to sell,

lease, exchange or otherwise dispose of all or substantially all of their assets must seek

approval of the Attorney General or the Supreme Court. N-PCL § 510(a)(3). A request

for approval of such a transaction must be in the form of a verified petition to the

Attorney General or to the Court.

Verified Petition to the Attorney General or the Court

A verified petition to the Attorney General or to the court must include the

following information:

• The name of the corporation as it appears on its certificate of incorporation or an

amendment. N-PCL § 511(a)(1). A copy of the certificate of incorporation and

all amendments, and a certified copy of the corporation's by-laws must be

attached as exhibits.

• The address of the corporation's principal location.

• The section of the law under which the corporation was incorporated. N-PCL

§ 511(a)(1).

• The names of the corporation's directors and principal officers, and their home

addresses. N-PCL § 511(a)(2).

• A description of the corporation's activities. N-PCL § 511(a)(3).

• A description of the property that is the subject of the transaction. N-PCL

§ 511(a)(4). For sales, a copy of the deed must be attached as an exhibit. Include

a statement as to whether the deed contains restrictions.

• A copy of the contract or lease must be attached as an exhibit. If the contract has

been assigned or will be assigned prior to closing, the assignment agreement must

also be attached as an exhibit.

• A statement of the fair value of the property. N-PCL § 511(a)(4). A copy of the

appraisal must be attached as an exhibit.

• A statement of the amount of the corporation's debts and liabilities and how they

are secured. N-PCL § 511(a)(4). In addition, a copy of the corporation's most

recent annual financial report or audited financial statements must be attached as

an exhibit. If the corporation does not have annual financial reports, it should

prepare a current schedule, certified by its Treasurer, of all assets, liabilities,

income and expenses of the corporation and attach it as an exhibit. In certain

circumstances, the Attorney General may decide that financial statements certified

by an independent accountant are required. If the Petition is brought before the

end of the fiscal year, then a financial report to date should be included.

• The consideration to be received by the corporation. N-PCL § 511(a)(5). If the

consideration is less than the appraised value of the property, include a

documented explanation.

• A description of the proposed use of the consideration. N-PCL § 511(a)(5). If the

corporation is purchasing or leasing new premises, a copy of the contract or lease

must be attached as an exhibit. Documentation to support the payment of debts,

expenses or other use of proceeds must be attached as an exhibit (evidence of

debt, invoices and a closing statement.)

• A statement as to whether dissolution of the corporation is contemplated. N-PCL

§ 511(a)(5).

• A statement that the consideration and the terms of the transaction are fair and

reasonable to the corporation and that the purposes of the corporation, or the

interests of its members, will be promoted by the transaction, and a statement of

the reasons for that determination. N-PCL § 511(a)(6).

• A statement that the transaction was recommended or authorized by a vote of the

directors in accordance with law, at a meeting duly called and held. N-PCL

§ 511(a)(7). The statement must also include the total number of directors, the

number of the directors present at the meeting, the vote pro and con, and what

constitutes a quorum. A copy of the board resolution, certified by the secretary,

must be attached as an exhibit. If any board members have voted against the

transaction, provide a brief explanation of the basis for such votes.

• If consent of members of the corporation is required by law, a statement that such

consent was given, in accordance with law, at a meeting of the members duly

called and held. N-PCL § 511(a)(8). The total number of members, the number

of members present at the meeting, the vote pro and con, and the number that

constitutes a quorum must be included. A copy of the membership resolution,

certified by the secretary, must be attached as an exhibit. If any members have

voted against the transaction, provide a brief explanation of the basis for such

votes.

• A statement of any unusual or extraordinary circumstances of the transaction that

will assist in the Attorney General’s and/or court’s review.

• A statement that the transaction is arms-length and none of the directors, officers,

key employees or members of the corporation or their relatives will receive a

direct or indirect financial benefit as a result of the transaction or commitments

for distribution of proceeds. If any exceptions to the prior statement are

necessary, include a statement of how the related party arrangement was approved

by the corporation, including but not limited to, compliance with N-PCL § 715,

and exhibits evidencing such approval.

• A statement as to whether or not an application to the Attorney General or the

court for similar approval was made previously, and, if so, the determination

made concerning the application.

• If the application for approval is made to the Attorney General, a statement that

the corporation is not insolvent and will not become insolvent as a result of the

transaction. N-PCL § 511-a(b).

• If the application for approval is made to the Attorney General, a statement as to

whether any persons or entities have raised, or have a reasonable basis to raise,

objections to the transaction, including a statement setting forth the names and

addresses of such persons, the nature of their interest, and a description of their

objections. N-PCL § 511-a(b).

• A statement of the relief requested (approval to sell real property, approval of

lease, etc.). N-PCL § 511(a)(9).

Venue

If the application for approval of the transaction is made to the court, the verified

petition must be submitted to the Supreme Court of the judicial district or County Court

of the county where the corporation has its office or principal place of carrying out the

purposes for which it was formed, even if the property to be sold is located elsewhere.

N-PCL §§ 510(a)(3) and 511(a).

If the application for approval of the transaction is to the Attorney General, the

verified petition must be submitted to the office of the Attorney General’s Charities

Bureau in New York City or Albany or to the appropriate Regional Office of the

Attorney General that handles such applications in the county where the corporation’s

principal address is located. A list of the offices of the Attorney General, the New York

counties they serve and their contact information is in Appendix F.

Notice to Interested Persons

The court in its discretion may direct that notice of the application be given to any

interested person, such as a member, officer or creditor of the corporation. N-PCL

§ 511(b). The notice must specify the time and place, fixed by the court, for a hearing

upon the application. Any person interested, whether or not formally notified, may

appear at the hearing and show cause why the application should not be granted.

In certain circumstances, the Attorney General may ask the court to give notice to

interested parties (including tenants or other occupants of the premises) and/or hold an

evidentiary hearing. For example, if there is a membership dispute, a dispute as to who

constitutes a duly authorized board or a question about the adequacy of the consideration,

the Attorney General may ask the court to hold an evidentiary hearing to resolve the

dispute.

Notice to Creditors

If the corporation is insolvent or if its assets are insufficient to liquidate its debts

and liabilities in full, all creditors of the corporation must be served with a notice of the

time and place of the hearing. N-PCL 511(c). In such circumstances, notice to creditors

is required by statute, and the petition must be approved by the court on notice to the

Attorney General.

REQUIREMENTS FOR THE COURT ORDER OR ATTORNEY GENERAL

APPROVAL

If the petition requests court approval, a copy of the proposed order should be

submitted to the Attorney General with the verified petition. The order should set forth

the terms of the transaction and the consideration. For sales, the sale price, the name of

the purchaser and the address of the property must be included. For leases, the amount of

rent, the term of the lease, the name of the lessee and the address of the property must be

included.

The order must also set forth how the corporation will use the proceeds to be

received by the corporation. N-PCL § 511(d). If all or part of the proceeds is to be

placed in escrow, this must be stated in the order. Funds placed in escrow may only be

released by further order of the court on notice to the Attorney General.

In addition, the Attorney General requires that the order contain the following: a

statement that a copy of the signed court order shall be served on the Attorney General,

and that the Attorney General shall receive written notice that the transaction has been

completed (i.e., upon closing), if the transaction has been abandoned, or if it is still

pending 90 days after court approval.

If the verified petition requests approval of the Attorney General, a copy of the

proposed Attorney General Approval should be submitted to the Attorney General with

the petition. The Attorney General Approval should include all of the information

described above that is required to be included in a proposed order.

REGISTRATION WITH THE ATTORNEY GENERAL'S CHARITIES BUREAU

If the corporation is required to register with the Attorney General pursuant to

Executive Law Article 7-A or Estates, Powers and Trusts Law § 8-1.4, the Attorney

General will check to ensure that the corporation is registered and that its annual financial

reports are up to date before completing the review of the transaction. If the corporation

is not registered, or if its reports are delinquent, it will have to register and file all

required annual financial reports before the Attorney General’s review can be completed.

If the purchaser is required to register, its registration and reports must also be current

before the Attorney General’s review can be completed. Note that certain corporations,

such as religious corporations, are exempt from registration.

NOTE – Effective November 1, 2018, registration with the Charities Bureau must

be done online. The instructions and the portal for registration are posted on the Charities

Bureau’s website, www.charitiesnys.com.

GOVERNMENT AGENCY APPROVALS

If other government agency approvals are required for the proposed transaction

(i.e., NYS Department of Health, NYS Public Health and Health Planning Council, NYS

Education Department, US Department of Housing and Urban Development, etc.), the

Attorney General will require that such approvals be obtained before the Attorney

General review is completed. A copy of each government agency approval should be

attached as an exhibit to the petition.

CONCLUSION

If you have any questions about the information contained in this booklet or about

the procedures for obtaining Attorney General review and Court approval of a

transaction, you may contact the Attorney General’s Charities Bureau in New York City

or Albany or any of the Attorney General’s regional offices for assistance. A list of

regional offices and their contact information is included in Appendix F.

Appendix A - Checklist for Petitions for Approval of Property Transactions

Verified Petition to the Attorney General or the Court

• ___ Petition

• ___ Verification of Petition

Attachments to Verified Petition

• ___ Copy of the corporation's Certificate of Incorporation and all amendments

• ___ Copy of the corporation's by-laws or constitution and all amendments

• ___ Copy of the deed to any real property that is the subject of the transaction

• ___ Copy of the contract, lease or other disposition

• ___ If the contract has been or will be assigned, a copy of the assignment

agreement

• ___ If the corporation seeks to use the proceeds to purchase or lease new

premises, a copy of the contract or lease

• ___ If the corporation intends to use any of the proceeds to pay existing

commitments or debts, including closing costs, copies of the evidence of the

commitments or debts (invoices, executed notes, etc.) and proposed closing

statement.

• ___ Copy of the appraisal

• ___ Copy of the corporation’s most recent financial statement and, if not

reflected in the financial statement, a schedule of existing debts and liabilities

(amount, owned to whom, if overdue, if secured).

• ___ Copy of the resolution of the board, certified by the corporation’s secretary,

authorizing or adopting or recommending the key terms of the proposed

transaction and use of proceeds and stating the total number of directors present at

the meeting, the number of votes for and against the resolution and the number of

board members constituting a quorum.

• ___ A copy of the resolution of the members of the corporation, certified by the

corporation's secretary, approving the key terms of the transaction and the use of

the proceeds and stating the total number of members, the number of members

present at the meeting, the number of votes for and against the resolution and the

number of members constituting a quorum.

• ___ If approval of any government agencies is required, copies of such approvals

• Approval of the Attorney General or Order of the Court

• ___ If the Court’s approval is sought, a proposed Order (see Appendix D)

• ___ If the Attorney General's approval is sought, a proposed Attorney General

Approval (see Appendix E)

Appendix B - Sample Petition for Court Approval of Sale of Assets

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF __________________

---------------------------------------------------------------X

In the Matter of the Application of :

(NAME OF CORPORATION) VERIFIED PETITION

For Approval to (type of transaction) :

pursuant to Sections 510 and 511 of the Index No.

Not-for-Profit Corporation Law

---------------------------------------------------------------X

TO: THE SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF _________________

Petitioner, (name of corporation) by (name and title of officer) of the corporation for its

Verified Petition herein respectfully alleges:

TEXT OF THE PETITION (See Appendix A)

WHEREFORE, petitioner requests that the Court approve the (type of transaction) by

(Name of Corporation), a not-for-profit corporation, pursuant to the Not-for-Profit

Corporation Law Sections 510 and 511.

IN WITNESS WHEREFORE, the corporation has caused this Petition to be executed

this day of (Month) , 20 by

__________________

(Name of Officer and Title)

Name of Attorney

Address of Attorney

Telephone Number of Attorney

Email Address of Attorney

**Include the verification set forth on page 17.

Verification

STATE OF NEW YORK )

COUNTY OF _________)

(Name , being duly sworn, deposes and says:

I am the (Title) of (Name of Corporation), the corporation named in the above

Petition and make this verification at the direction of its Board of Directors. I have read

the foregoing Petition and know the contents thereof to be true of my own knowledge,

except any matters that are stated on information and belief and, as to those matters, I

believe them to be true.

________________________

(Signature)

Sworn to before me this

____day of (Month) , 20__.

________________________

Notary Public

Appendix C - Sample Petition for Attorney General Approval of Sale of Assets

ATTORNEY GENERAL OF THE STATE OF NEW YORK

COUNTY OF ___________________

---------------------------------------------------------------X

In the Matter of the Application of :

(NAME OF CORPORATION) VERIFIED PETITION

For Approval to (type of transaction) :

Pursuant to Sections 510 and 511-a of the

Not-for-Profit Corporation Law :

---------------------------------------------------------------X

TO: OFFICE OF THE ATTORNEY GENERAL

(Street Address)

(City/Town) , New York (Zip Code)

Petitioner, (name of corporation) by (name and title of officer) of the corporation for its

Verified Petition herein respectfully alleges:

TEXT OF THE PETITION (See Appendix A)

WHEREFORE, petitioner requests that the Attorney General approve the (type of

transaction) by (Name of Corporation), a not-for-profit corporation, pursuant to the Not-

for-Profit Corporation Law Sections 510 and 511-a.

IN WITNESS WHEREFORE, the corporation has caused this Petition to be executed

this day of (Month), 20 by

________________________

(Name of Officer and Title)

Name of Attorney

Address of Attorney

Telephone Number of Attorney

Email Address of Attorney

**Include the verification set forth on page 19.

Verification

STATE OF NEW YORK )

COUNTY OF _________)

(Name) , being duly sworn, deposes and says:

I am the (Title) of (Name of Corporation), the corporation named in the above

Petition and make this verification at the direction of its Board of Directors. I have read

the foregoing Petition and know the contents thereof to be true of my own knowledge,

except those matters that are stated on information and belief and, as to those matters, I

believe them to be true.

________________________

Signature

Sworn to before me this

____day of (Month) , 20__.

________________________

Notary Public

APPENDIX D - Sample Court Order Approving Sale of Assets

At the Supreme Court of

the State of New York,

held in and for the

the County of __________

on the __ day of (Month) , 20___.

P R E S E N T:

HON.

Justice.

------------------------------------------------------------X

In the Matter of the Application of :

(NAME OF CORPORATION) ORDER

For Approval to (type of transaction) :

Pursuant to Sections 510 and 511 of the Index No.

Not-for-Profit Corporation Law

-------------------------------------------------------------X

ADD BODY OF ORDER WITH RECITATIONS

AND DECRETAL PARAGRAPHS REGARDING THE TERMS OF THE

TRANSACTION AND THE USE OF PROCEEDS

E N T E R:

__________________________

Justice of the Supreme Court

__________________________

Date

APPENDIX E - Sample Attorney General's Approval of Transactions

ATTORNEY GENERAL OF THE STATE OF NEW YORK

COUNTY OF ___________________

---------------------------------------------------------------X

In the Matter of the Application of :

(NAME OF CORPORATION) ATTORNEY GENERAL

for Approval to (type of transaction) : APPROVAL

Pursuant to Sections 510 and 511-a of the

Not-for-Profit Corporation Law :

---------------------------------------------------------------X

1. By Petition verified on (Date) , (Name of Corporation) applied to the Attorney

General pursuant to Sections 510 and 511-a of the Not-for-Profit Corporation Law

for approval of an application to (TYPE OF TRANSACTION)

2. The assets that are the subject of the Petition are (DESCRIBE ASSETS)

3. The terms of the transaction and the consideration are as follows:

Note - For sales, include the sale price, the purchaser and the address of the property. For

leases, include the amount of rent, the term of the lease, the lessee and the address of the

property. For mortgages, include the amount of the loan, the interest rate, the length of

the mortgage and the name of the lender.

4. The proceeds will be used for the following purposes:

Note - If all or part of the proceeds is to be placed in escrow, this should be set forth.

Funds in escrow may only be released by further approval of the Attorney General.

5. Based on a review of the Petition and the exhibits thereto (and the additional

documents and information requested by the Attorney General), and the verification of

(Name of Certifier) that (Name of the Corporation) has complied with the

provisions of the Not-for-Profit Corporation Law applicable to the sale or other

disposition of all or substantially all of its assets, and neither the Petitioner or any third

party having raised with the Attorney General any objections to the proposed transaction,

the transaction is approved.

6. Petitioner shall provide written notice to the Attorney General that the transaction has

been completed, if it has been abandoned, or if it is still pending 90 days after approval.

Attorney General of the State of New York

By:___________________________________ Date: ___________________

Assistant Attorney General

Appendix F - Offices of the Attorney General

and the counties covered by each:

ALBANY - New York State Attorney General

Charities Bureau

The Capitol

Albany, NY 12224-0341

518-776-2160

Counties: Albany, Columbia, Fulton, Greene,

Hamilton, Montgomery, Rensselaer, Saratoga,

Schenectady, Schoharie,

Warren and Washington (note: Sullivan and Ulster for

trusts and estates matters only)

BINGHAMTON

New York State Attorney General

Binghamton Regional Office

44 Hawley Street, 17th Floor

Binghamton, NY 13901-4433

607-721-8771

Counties: Broome, Chemung, Chenango, Delaware,

Otsego, Schuyler, Tioga and Tompkins

BUFFALO

New York State Attorney General

Buffalo Regional Office

Main Place Tower - Suite 300A

Buffalo, NY 14202

716-853-8400

Counties: Allegheny, Cattaraugus, Chautauqua, Erie,

Genesee, Niagara, Orleans and Wyoming

NASSAU (not for trusts & estates matters)

New York State Attorney General

Nassau Regional Office

200 Old Country Road, Suite 240

Mineola, NY 11501-4241

516-248-3302

Counties: Nassau (note: trusts and estates matters are

handled by NYC)

NEW YORK CITY

New York State Attorney General

Charities Bureau

Transactions Section

28 Liberty Street – 19

Floor

New York, NY 10005

212-416-8401

Counties: Bronx, Kings, New York, Queens and

Richmond

(note: NYC also handles Dutchess, Nassau, Orange,

Putnam, Rockland, Suffolk and Westchester – trusts

and estates matters)

PLATTSBURGH

New York State Attorney General

Plattsburgh Regional Office

70 Clinton Street - Suite 700

Plattsburgh, NY 12901-2818

518-562-3288

Counties: Clinton, Essex and Franklin

POUGHKEEPSIE (not for trusts & estates matters)

New York State Attorney General

Poughkeepsie Regional Office

One Civic Center Plaza - Suite 401

Poughkeepsie, NY 12601-3157

845-485-3900

Counties: Dutchess, Orange, Sullivan and Ulster (note:

Dutchess and Orange County trusts and estates matters

are handled by NYC; Sullivan and Ulster County

trusts and estates matters are handled by Albany)

ROCHESTER

New York State Attorney General

Rochester Regional Office

144 Exchange Boulevard

Rochester, NY 14614-2176

716-546-7430

Counties: Livingston, Monroe, Ontario, Seneca,

Steuben, Wayne and Yates

SUFFOLK (not for trusts & estates matters)

New York State Attorney General

Suffolk Regional Office

300 Motor Parkway

Hauppauge, NY 11788-5127

631-231-2424

Counties: Suffolk (trusts 7 estates matters - NYC)

SYRACUSE

New York State Attorney General

Syracuse Regional Office

615 Erie Blvd. West, Suite 102

Syracuse, NY 13204

315-448-4800

Counties: Cayuga, Cortland, Madison, Onondaga and

Oswego

UTICA

New York State Attorney General

Utica Regional Office

207 Genesee Street, Room 508

Utica, NY 13501-2812

315-793-2225

Counties: Herkimer and Oneida

WATERTOWN

New York State Attorney General

Watertown Regional Office

Dulles State Office Building

317 Washington Street

Watertown, NY 13601-3744

315-785-2444

Counties: Jefferson, Lewis and St. Lawrence

WESTCHESTER (not for trusts & estates matters)

New York State Attorney General

Westchester Regional Office

44 South Broadway

White Plains, NY 10601

914-422-8755

Counties: Putnam, Rockland and Westchester (note:

trusts and estates matters are handled by NYC)