New York Laws
Article 2 - Limited-Profit Housing Companies
32 - Supervision and Regulation.

§ 32. Supervision and regulation. The commissioner or the supervising
agency as the case may be, may:

1. Examine a company and keep informed as to its general condition,
its capitalization and the manner in which its property is constructed,
acquired, rehabilitated, leased, operated or managed, and to its
compliance with all provisions of law and orders of the commissioner or
the supervising agency.

2. Require every company to file with him or it an annual report
setting forth such information as the commissioner or the supervising
agency may require, verified by the oath of any officer, general manager
or other person in control of the company. Such report shall be in a
form, cover a period, and be filed at a time as prescribed by the
commissioner or the supervising agency.

3. From time to time make, amend and repeal supplementary rules and
regulations for carrying into effect the provisions of this article
provided, however, that such supplementary rules and regulations shall
be strictly limited in their application to the means and methods of
compliance with the provisions of this article to which such power
relates.

4. Make such agreements with bondholders, mortgagees or creditors of a
company to do or refrain from doing any act, not inconsistent with law,
to protect the investment rights of the state of New York, the New York
state housing finance agency, the New York city housing development
corporation or of the municipality.

5 (a) Administer oaths, take affidavits, hear testimony and take proof
under oath at public or private hearings; (b) subpoena and require the
attendance of witnesses and the production of books and papers
pertaining to any investigations and inquiries authorized by this
article and examine them in relation to any matter concerning which the
power to investigate is granted; (c) issue commissions for the
examination of witnesses who are out of the state or unable to attend or
are excused from attendance; (d) investigate into the affairs of a
company and into the dealings, transactions or relationships of such
company with third persons and into the affairs of any person, firm,
corporation or other entity having a financial interest, whether direct
or indirect, in the design, construction, acquisition, reconstruction,
rehabilitation, improvement, financing or operation of any project
undertaken by a company; (e) intervene, as a matter of right, in any
action or proceeding of which notice shall be given affecting the
project of a company; (f) take such steps in such action or proceeding
as may be necessary to protect the public interest.

With regard to duties and liabilities arising out of this article the
state, the commissioner or the supervising agency may be sued in the
same manner as a private person. No costs shall be awarded against the
commissioner, the state, or the supervising agency, as the case may be,
in any such litigation.

6. In the event of a violation by a company of a provision of the
certificate of incorporation or of law or of the loan or mortgage
contract or of any rules and regulations duly promulgated pursuant to
the provisions of this article, the commissioner or the supervising
agency, as the case may be, may remove any or all of the existing
directors of the company and appoint such person or persons who the
commissioner or the supervising agency, as the case may be, in his or
its sole discretion deems advisable, including officers or employees of
the division of housing and community renewal or the supervising agency,
as new directors to serve in the places of those removed. Directors so
appointed need not be shareholders or meet other qualifications which
may be prescribed by the certificate of incorporation or by-laws. In the

absence of fraud or bad faith, directors so appointed shall not be
personally liable for debts, obligations or liabilities of the
corporation. Directors so appointed shall serve only for a period
coexistent with the duration of such violation or until the commissioner
or the supervising agency, as the case may be, is assured in a manner
satisfactory to him or it against violations of a similar nature.
Officers or employees of the division of housing and community renewal
or of the supervising agency who are so appointed as directors shall
serve in such capacity without compensation. No such removal may take
place without written notice and an opportunity for the affected
directors to appear and be heard before the agency or commissioner with
respect to any alleged violation and the respective parties may be
represented by counsel. Notwithstanding any inconsistent provision of
any general, special or local law or any limitation contained in the
provisions of any city charter, the state or a municipality acting by
and through the commissioner or the supervising agency, as the case may
be, shall save harmless and indemnify any officer or employee of the
division of housing and community renewal or the supervising agency so
appointed as a director, from financial loss arising out of any claim,
demand, suit or judgment by reason of alleged negligence or other act by
such director, provided that such director was acting in the discharge
of his duties and within the scope of his employment and that such loss
did not result from the willful and wrongful act or gross negligence of
such director and provided further that this save harmless and
indemnification provision shall not in any way impair, limit or modify
the rights and obligations of any insurer under any policy of insurance
and shall inure only to directors so appointed and shall not enlarge or
diminish the rights of any other party. No action or special proceeding
based on or arising out of alleged negligence or other act by such
director may be commenced against such director, municipality or the
state unless a notice of claim shall have first been served in a manner
consistent with service upon a municipality or the state, as the case
may be.

7. Whenever the commissioner, in the case of a company undertaking or
otherwise operating a state-aided project, or the supervising agency, in
the case of a company undertaking or otherwise operating a
municipally-aided project, shall be of the opinion that such company is
failing or omitting, or is about to fail or omit to do anything required
of it by law or by order of the commissioner or is doing or is about to
do anything, or permitting anything, or is about to permit anything to
be done, contrary to and in violation of law or of any order, regulation
or directive of the commissioner or the supervising agency, as the case
may be, or which is improvident or prejudicial to the interest of the
public, the lienholders, the stockholders, or the tenants, the
commissioner or the supervising agency, as the case may be, may, in
addition to such other remedies as may be available, commence an action
or proceeding in the supreme court of the state of New York in the name
of the commissioner or the supervising agency, as the case may be, for
the purpose of having such violations or threatened violations stopped
and prevented, and in such action or proceeding the court may appoint a
temporary or permanent receiver or both. Such action or proceeding shall
be commenced by a petition to the supreme court, alleging the violation
complained of and praying for appropriate relief. It shall thereupon be
the duty of the court to specify the time, not exceeding twenty days
after service of a copy of the petition, within which the company
complained of must answer the petition. In case of any default or after
answer the court shall immediately inquire into the facts and
circumstances in such manner as the court shall direct without other or

formal pleadings, and without respect to any technical requirements.
Such other persons or corporations as it shall seem to the court
necessary or proper to join as parties in order to make its order or
judgment effective, may be joined as parties. The final judgment in any
such action or proceeding shall either dismiss the action or proceeding
or direct that an order or an injunction, or both, issue, or provide for
the appointment of a receiver as prayed for in the petition, and grant
such other relief as the court may deem appropriate.

8. The commissioner or supervising agency may modify supervision of a
company upon finding that duplicative supervisory functions may impose
an undue regulatory burden or unnecessary expenditure of agency
resources, by taking such actions as are deemed appropriate, including
consolidating supervisory functions associated with different programs,
and entering into memoranda of understanding with other agencies for the
allocation of supervisory functions.

Structure New York Laws