COPA will add new notice, timing, and matching-right requirements to certain covered multifamily transactions in New York City, with significant implications for acquisitions, dispositions, workouts, and short sales.

On October 22, 2026, the New York City Council passed the Community Opportunity to Purchase Act (COPA), and Mayor Zohran Mamdani signed it into law on November 10, 2026, as Local Law 164 of 2026. The law adds Chapter 9-a to Title 26 of the NYC Administrative Code, Sections 26-851 through 26-867.

COPA gives certain nonprofit organizations certified by the New York City Department of Housing Preservation and Development (HPD), either directly or through qualifying joint ventures, an exclusive opportunity to make an initial offer for certain multifamily properties and, in some circumstances, a later right to match third-party offers. Eligible community land trusts may also participate as described below. For covered properties, the law is expected to affect transaction timelines, distressed-asset dispositions, and certain loan workout strategies.

Under Section 3 of Local Law 164 of 2026, COPA takes effect one year after it becomes law, on November 10, 2027.

Which Properties Are Covered?

COPA applies to Class A multiple dwellings containing four or more units if, when the notice obligation is triggered, the property meets any of the following criteria:

Alternative Enforcement Program: The property participates in HPD’s Alternative Enforcement Program (AEP), pursuant to NYC Administrative Code Section 27-2153, and has done so for at least one year.

In Rem Foreclosure: The HPD Commissioner has determined, pursuant to NYC Administrative Code § 11-401.1, that the building is a distressed property subject to an in rem foreclosure action.

Underlying-Condition Correction Orders: The property is subject to an order to correct an underlying condition pursuant to NYC Administrative Code § 27-2091(c), and has been so subjected for at least one year.

High Violation Volume: The property has a “violation annual daily average” of three or more under NYC Administrative Code Section 26-852(a)(4). Section 26-851 defines that metric as the property’s violation daily average as of the preceding June 1. The daily average is calculated by totaling the number of qualifying violations open on each day during the prior 365 days, dividing by 365, and then dividing by the number of dwelling units. Qualifying violations are hazardous or immediately hazardous housing maintenance code violations that have been open for more than 60 days and have a deadline for certification of correction within the preceding three years.

Harassment History: HPD has denied a Certification of No Harassment (CONH) within the preceding year, with no approved cure.

Active Affordability Restrictions: The building contains 100 or fewer units and is subject to an active, HPD-administered regulatory affordable housing agreement.

Scope, Exemptions, and Eligible Purchasers

The 100-unit limit applies only to the affordability-restriction trigger. A building with more than 100 units may still be covered if it meets any of the other distress- or violation-based triggers.

Under NYC Administrative Code Section 26-852(b), COPA does not apply to a property that is a multiple dwelling with five or fewer units in which the owner of such multiple dwelling occupies a dwelling unit for permanent residence purposes. Standard zoning agreements and private land declarations do not constitute affordable housing restrictions for purposes of the statute.

Participation in standard developer tax programs, such as 421-a or 485-x, also does not by itself make a building subject to COPA if the property does not otherwise satisfy one of the statute’s triggers.

NYC Administrative Code Sections 26-852(d) and (e) require HPD to provide annual written notice to owners of properties meeting the coverage criteria that the property, if offered for sale, may be subject to COPA, and to afford owners an opportunity to be heard on whether the law applies to their property.

Only HPD-certified "Qualified Entities" (QEs), such as community land trusts and housing nonprofits, may exercise COPA rights. For-profit developers may participate only as non-controlling joint venture partners. The certified nonprofit must hold a "controlling interest," defined as 50 percent or more of the voting power, equity, or profits, and must remain fully independent of its for-profit partner.

How the Sale Process Changes

COPA prohibits an owner from taking any "action to sell" a covered property to a person other than a QE until the right of first offer has been extinguished. During the 70-day offer period, the statute expressly reiterates that prohibition. COPA defines "action to sell" as making an offer to sell a property, accepting a bona fide offer to purchase a property, or otherwise effecting the sale of a property. Owners should therefore approach third-party sale discussions, marketing efforts, and transaction documentation with caution during the exclusive QE period.

In practice, COPA imposes a detailed pre-sale process that can materially delay a transaction before a property may be freely marketed to third parties. If a QE elects to participate, the owner must comply with specified notice, disclosure, offer, response, and contract-timing requirements. Even if the initial process does not result in a sale to a QE, the property may remain subject to a trailing right to match third-party offers for up to one year. Parties should therefore assess the statute’s procedural requirements early in any proposed sale, workout, or short-sale transaction.

Which Transactions Are Excluded?

COPA’s definition of a covered "sale" expressly includes lender-approved transfers for a value below the outstanding mortgage debt. As a result, consensual short sales are subject to COPA’s timing requirements and matching rights.

The statute does not apply to:

• Refinancings and Loan Security: Refinancing transactions intended to maintain ownership, and transactions entered into solely to secure a debt.
• Involuntary Foreclosures and Deeds in Lieu: Transfers effected through judicial proceedings, including judicially supervised foreclosure auctions, bankruptcy proceedings, and transfers made pursuant to a deed in lieu of foreclosure.
• Note Sales and Affiliate Transfers: Transfers of partnership or LLC interests where the controlling interest remains held by the same person before and after the transfer, as well as transfers admitting or exiting passive low-income housing tax credit (LIHTC) investors under Section 42 of the Internal Revenue Code. Commercial mortgage note sales are also exempt.

Matching Rights and Hardship Relief

If an owner rejects all initial QE offers, or if the 30-day contract execution period expires without a finalized contract, the owner may market the property to third parties. Even then, however, the property remains subject to a trailing right of first refusal.

That right applies to a bona fide third-party offer made within one year after the owner rejected the first bona fide offer submitted by a QE exercising its right of first offer, or within one year after the expiration of the 30-day contract execution period following the owner’s acceptance or counteroffer of a QE’s bona fide offer. Owners may negotiate and execute third-party contracts during that year, but those contracts should expressly account for any applicable QE statutory matching right.

Within 15 calendar days after receiving an offer subject to match that it intends to accept, the owner must deliver a notice of offer subject to match to HPD and the qualified entity that submitted the first bona fide offer to purchase the covered property pursuant to NYC Administrative Code Section 26-856(a). Under Section 26-858(b), the notice must include the purchaser’s name and address, the price, terms, and conditions of the offer, and a statement as to whether a purchase contract exists and, if so, a copy of that contract. Under Section 26-859(a), that QE has 15 calendar days from the date of notification to exercise its right of first refusal by submitting a bona fide offer at the identical price, terms, and conditions of the offer subject to match. If the QE exercises that right, the owner must proceed to sell, and the QE must purchase, consistent with its offer. If the QE waives the right or fails to meet its purchase obligations, the owner may proceed with the private buyer, subject to the applicable provisions of Sections 26-859(a) and (b).

Separately, the Department, or another agency designated by the Mayor, may waive COPA requirements if an owner demonstrates that application of the law would cause undue financial hardship. The practical significance of that waiver authority will depend on future HPD rulemaking.

Enforcement and Closing Risk

An owner that sells a covered property without providing the required notice of intent to sell to HPD and all qualified entities may face a civil penalty of up to 15 percent of the final sale price, enforceable by the City’s corporation counsel. COPA also creates a private right of action for QEs. A certified nonprofit may sue an owner or prior owner within two years of the deed-recording date, and courts may award compensatory damages, reasonable attorney’s fees, and injunctive or declaratory relief.

The statute does not expressly provide that a non-compliant sale is void or voidable, nor does it expressly protect bona fide purchasers. Even so, unresolved COPA issues may create material closing risk. Title insurers, lenders, and purchasers are likely to require affirmative evidence of compliance because an active lawsuit could delay or impede a transaction, impair marketability of title, or create post-closing enforcement risk.

Practical Takeaways

During the one-year implementation period, owners and investors should review portfolios against the June 1 Class B/C violation metrics, identify buildings approaching the 3 violation-per-unit threshold, and monitor HPD eligibility notices and related guidance. Lenders and servicers should update underwriting, workout, and real estate owned (REO) disposition strategies for distressed multifamily assets to reflect mandatory delays and matching-right risk. Transaction documents, including letters of intent, purchase and sale agreements, and loan documents, should also be revised to address COPA compliance through appropriate representations, covenants, timing provisions, contingencies, and other closing protections.

COPA is not a universal right of first refusal applicable to all multifamily sales. Rather, it targets certain distressed, violation-heavy, or affordability-restricted Class A multiple dwellings. For covered properties, however, the law is likely to be consequential. It will slow sale processes, affect short sales and workouts, create a one-year trailing match right, increase title and execution risk, and require more careful diligence and drafting across acquisitions, dispositions, and enforcement matters. For lenders in particular, COPA may materially affect workout timing, short-sale execution, and disposition strategy for distressed multifamily collateral.

This is a short summary and does not contain all aspects of COPA. For additional information about COPA or its implications for a particular transaction, please contact any member of our real estate team.