Legalities that New York Real Estate Developers Must Know Of

New York Real Estate Laws, Rules and Legalities that New York Real Estate Developers Need to be Aware of

For being a real estate developer in the state of New York, there are certain generalised licenses and permits required. Further, there are certain special permits and licenses as well, required in certain cities or regions of the state. The purpose of this article is to lay down an exhaustive guide for real estate developers in the state of New York.

Contractor’s License

As was described in another article on real estate laws in the state of California, there is a requirement of a contractor’s license in the state of New York as well, for becoming a real estate developer.

Contractor’s license is essential in many states of the United States if someone wants to engage themselves with a business concerning with improving properties. Such a job would include those of construction, plumbing, carpentry, etc. This is why general contractors are also known as home improvement contractors. The license is provided by the Department of Labour, New York.

In the state of New York, though there is a general procedure for becoming a contractor, there do exist deviations with respect to particular cities and counties which are discussed specifically, later on in the article. The general requirements and procedure would be discussed hereafter.

Basic requirements for a contractor’s license in the state of New York

Basic Pre-requisites to get yourself a real estate developer's contractor license in New York
  1. Should have attained at least 18 years of age.
  2. Should be able to read, write and understand the English language.
  3. Should be a person of a good moral character.

Application procedure

The application procedure of becoming a contractor in the state of New York is quite simple and systematized. The procedure consists of a background check and pre-screening, following which, the main application procedure begins.

The procedure is discussed below –

  1. The prospective contractor should first fix an appointment with the local licensing specialist, who is a representative of the Department of Labour, New York.
  2. The prospective contractor should then present the following documents to the licensing specialist in original as copies are not accepted by the office –
    • A typed, signed and notarized General Contractor Registration Form (LIC6).
    • A letter, signed and notarized, indicating the name, home address, social security number, and per cent of share in the company for all officers of the corporation as well as any stockholders.
    • Original copy of Employer Identification Number (EIN) notification from the IRS
    • The last three business bank account statements for the company, showing a minimum balance of $25,000 or a notarized letter from the bank indicating this balance for the past 12 months.
    • Original general liability insurance certificate for $1 million in coverage, and a workers’ compensation and disability insurance certificates.
    • Owner’s or chief officer’s original:
      • State-issued photo ID (or original birth certificate or passport).
      • Original Social Security card.
      • Proof of home address (Must be a utility bill, bank statement, deed, or lease).
      • Original proof of business address (utility bill, bank statement, deed or lease (Mobile phone and credit card bills will not be accepted).
      • $330.00 for the background check fee.

After the licensing officer is satisfied with the background check of the prospective contractor, the contractor would be notified of the next set of procedure, which varies in different cities and counties.

Procedure for getting a Contractor’s license is specific cities and counties in the state of New York

As was discussed earlier, the procedure for getting a contractor’s license in the state of New York is general, but a few counties and cities of the state has their separate procedure for getting the same. The procedure in the specific cities and counties are shown below-

Procedure for Long Island and Nassau County, New York

In the case of Long Island and Nassau County, the contractor’s license is issued by the Nassau County Office of Consumer Affairs. The application forms in relation to the procedure are to be completely notarised. The procedure is described below –

  1. The application is to be downloaded from the website of Department of Consumer Affairs, Nassau County.

The procedure varies a bit depending on the type of business organisation. Such variation has been discussed further in the article.

  1. If the applicant is either a corporation or partnership firm, the application must be filled and notarized by each partner, manager, employee, anyone with the power of attorney, and stockholders of the company.
  2. The following items are to be attached with the application:
  • Two photographs, clicked by a professional photographer, with a size of 2 by 2 inches neither of which should have been taken before 6 months.
  • As was said earlier, the photographs should be clicked by a professional photographer and homemade photographs would not be accepted.
  • The applicants should dress professionally in the photographs and should not be wearing hats or sunglasses.
  • Proof of residence of each applicant is to be provided along with the application. The items which would constitute proof of residence could be any among the below –
    • A driver’s license or any other identification card issued by the State Government along with one of the following –
  1. Current utility bill
  2. Vehicle registration
  3. Copy of current lease (if the property is on lease)
  4. Certain additional documents are required for specific types of business organisations.
    • In the case of sole proprietors,
      • A certified copy of a Nassau County business certificate, from the office of the county clerk.
    • In the case of partnership firms,
      • A certified copy of the partnership a Nassau County partnership certificate, from the office of the county clerk.
    • In the case of corporations,
      • A copy of the Secretary of State’s Filing receipt, from the office of the Secretary of State, New York.
      • A copy of the certificate authorising the assumed name or ‘doing business as’ name.
      • A list, which includes the names of all the officers, management staff, and stockholders of the company.
      • In case the corporate structure of the corporation was changed, the minutes of meetings in which the corporate structure was changed are to be provided.
      • A certificate of insurance from the Department of Consumer Affairs, Nassau County.
      • Necessary documents as proof of workmen compensation reserve or insurance.

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Procedure for Westchester County, New York

In the case of Westchester County, the contractor’s license is issued by the Department of Consumer Affairs, Westchester County. The following documents are to be attached in the application for getting a contractor’s license –

  1. A filled out application:
  2. A document for proof of the existence of the business organisation is needed to be attached along with the filled form. The document can be any among the list below –
  • Business Certificate.
  • Partnership Certificate.
  • Articles of Organization Filing Receipt, in case of or Limited Liability Companies and Limited Liability Partnerships.
  • Certification of Incorporation Filing Receipt.
  • Certificate of Assumed Name Filing Receipt.
  1. A statement of purpose which includes a self-documented history of works performed by the firm. The statement of purpose shall include the following details as well –
    • Details of work performed in the last five years.
    • Documentation of past employment and training and employing company information.
    • List types of work performed.
  2. In case, the business organisation is a Sole Proprietorship, there would be a need for a notarized child support certification form.
  3. In case the business organisation is a Partnerships, each partner must provide a notarized child support certification form.
  4. Documentation necessary as proof of general liability.
  5. Recent photographs of the proprietor, each partner or every member of the corporation who has the power of attorney. The photos should be passport-sized.
  6. Valid driver’s license as a proof of address; of the proprietor, each partner or every member of the corporation who has the power of attorney.
  7. Registration documents of the vehicle.

Procedure for Buffalo City, New York

In the case of the city of Buffalo, the contractor’s licenses are issued by the Department of Permits and Inspections Services, Buffalo.

Through the general contractor’s license, a business entity could engage in the following works –

  • Handyman Contractor
  • Construction Manager
  • Speciality Contractor
  • Light Commercial Contractor
  • Demolition
  • Sub-Contractor
  • New Housing Contractor
  • General Contractor

Though, for the purpose of getting a general contractor’s license in the city of Buffalo, the business entity should posses ‘extensive experience’ in the allied fields.

Documents required at the time of applying for a contractor’s license in the city of Buffalo

Documents that are required for a real estate developer in Buffalo, New York to get his / her contractor's license

The following licenses are required while applying for a contractor’s license in the city of Buffalo –

  1. Documentation proving that the business entity has workers’ compensation insurance.
  2. $2 million as minimum aggregate coverage for the general contractor.
  3. Documentation for the proof of business name has to be provided. It may be the registration certificate in case of proprietorship; partnership deed in case of a partnership; or Article of Association in case of Limited Liability Company.
  4. The entity should register its business with the Erie County clerk’s office. The registration is done through online means. Please click here for getting your business registered.
  5. Two passport-sized photos of the proprietor, each of the partners or of the members of the Corporation who have power of attorney.

Further, the applicants are required to attend the monthly meeting of the Construction and Home Improvement Advisory Board.

In case of failure to do so, the application form must be notarised by an attorney or registrar before being submitted.

Now that we have dealt with the issue of getting a contractor’s license, let’s return back to-

Additional Licenses and Permits required for a real estate developer in the state of New York

Additional Licensing Requirements for Real Estate Developers in New York

In addition to the contractor’s license, there are certain legal compliances which you would require to fulfil if you are looking forward to joining real estate business as a real estate industry as a developer.

Such legal compliances are discussed below –

Registering your business with the County Clerk

If you are looking forward to entering any kind of for-profit activity in the state of New York, you need to register such activity as a business with your local county clerk. In case, you’re willing to start a business as a sole proprietor or in a partnership and you want to use such a name for your business which does not include your name or the name of the partners.

The business certificate thus issued would be called as the Certificate for Assumed Business Name. The Certificate of Assumed Business name is issued by the Department of State, New York. The application form which is to be filled and submitted to the county clerk for getting the certificate could be found here.

In case of sole proprietorships and partnerships, the application is to be submitted with the local county clerk. Whereas, for corporations, the applications are to be submitted to Division of Corporations, State Records and Uniform Commercial Code, Department of State, New York City.

It is to be noted that the business name shall be a unique one. You can check if someone’s already using your desired business name by clicking here.

Employer’s Identification Number (EIN)

If you have one or more employees working under you, you need an Employer’s Identification Number.

Only Sole Proprietors with no employees working under them are exempted from the requirement of this legal compliance, as they have to use their Social Security Number in place of Employer’s Identification Number.

The Employer’s Identification Number is issued by the Internal Revenue Service (IRS), Cincinnati. You can apply for Employer’s Identification Number online, using telephone, by fax, or through mail. You can initiate the process through online mode by clicking here.

Sales Tax Number

You will need a Sales Tax Number if you are selling anything in the State of New York – let it be a newspaper or a constructed property.

The Sales Tax Number is issued by the New York State Tax Department, Albany. You can download the form for getting a Sales Tax Number by clicking here. The form is to be downloaded, filled and submitted to the New York State Tax Department, Albany.

Certificate of Occupancy

A certificate of occupancy is required in the case, due to constructional activities, there would be created a new building or will result in a change of use, egress, or occupancy to an existing building.

An application for getting a Certificate of Occupancy could only be submitted by a Registered Architect or Licensed Engineer who has been hired by the real estate developer.

Place of Assembly Certificate of Operation

In case due to constructional needs, there are 75 or more people gathered indoors; or 200 or more people outdoors, working on a single project, you need to get the Place of Assembly Certificate of Operation from the local Department of Buildings.

The purpose of this certificate is to ensure that certain fire and building safety regulations are in place.

Construction Permits

It is essential that the real estate developer has obtained certain Construction permits from their local Department of Buildings. The purpose of these permits is to ensure that the new construction complies with the Building Code and zonal requirements of the local laws.

Permit to Install Sewer House Connection

For the purpose of connecting the sewer connections of the construction site, you need the permit for doing the same from your local Department of Buildings.

You could apply for this permit for the city of New York by clicking here.

Real Estate Transfer Tax

Real Estate Transfer Tax is payable by real estate developers in New York

In the State of New York, a real estate transfer tax is charged by the Department of Taxation and Finance, New York, for all real estate transfers exceeding $500 in value. The rate of this tax is 1-1.5%, depending on the type of real estate property in question. The initial responsibility of paying this tax lies upon the seller.

Site Safety Supervision Requirements

It is essential for every building under construction, which have a height of less than or equal to 9 floors, to have a registered Construction Superintendent.

And, for buildings under construction, which have a height of 10-14 floors, to have a certified Site Safety Coordinator; and for every building under construction, which have a height of 15 floors or mere, there need to be a Site Safety Manager. The Site Safety Coordinator and Manager are representatives of the local Department of Buildings and their job is to ensure that the safety protocol and regulations on the construction site are fine.

Air Permits

As has been provided under the New York Air Pollution Control Code, also known as Air Code, an Air Permit is to be obtained from the local Department of Environmental Protection.

The activities which are regulated by the Air Code include, operating fuel-burning equipment, demolishing structures, spraying insulating materials, operating various types of industrial processing equipment, or any activity that may cause smoke, soot, ash, dust, fumes, gas, vapours, and/or odours to occur.

Construction Noise Mitigation Permit

As a part of the permit, the construction sites have to present an exhaustive Construction Noise Mitigation Plan and have it certified from the local Department of Environmental Protection. In case of failure to do so, there are certain penalties which would be imposed on the business entity carrying out the construction work.

The schedule of penalties could be found here.

For the purpose of applying for a Construction Noise Mitigation Permit, please click here.

Industrial Wastewater Discharge Permit

It is essential for construction sites to have an Industrial Wastewater Discharge Permit from the local Department of Sanitation. You could apply for the permit online by clicking here.

Compliance with New York State Wage and Labour Laws

For the purpose of preventing hundreds of thousands or even millions in losses due to compensation paid to employees, the employer must comply with certain wage and labour laws which are necessary for the state of New York.

Employee Disability Coverage

The State of New York requires the Employer to provide New York State requires employers to provide disability benefits coverage to employees. This coverage is for the off the job illness and disabilities and constitutes a part of Corporate Social Responsibility.

It is mandatory for the employer to provide pecuniary compensation to the employees who have become disabled from injuries or illness away from work, and the employer has to provide for disabilities which arise due to pregnancies.

The employer, for the purpose of having enough coverage, may collect contributions from any private insurance company, the New York State Insurance Fund, go with self-insurance or benefit from any legal exemptions, if available.

Workmen Compensation Insurance

It is essential for businesses in New York to have worker’s compensation for all employees. The employers must have an insurance policy, which may have been provided by private insurance companies or the New York State Insurance Fund.

The workmen’s compensation liability is a no-fault liability and thus appropriate insurance policy has to be chosen. The business owners and family members of the business owner, who are engaged in the business also need to be insured by the employer.

Wrapping it Up

Real Estate Business in the state of New York was recently declared as an essential activity during the COVID-19 pandemic. This order of the government makes it evident as to how deeply-rooted and important is real estate development for the economy the New York.

Real Estate development business has emerged as one of the fastest-growing industries of the world and the industry has similar statues in the state of New York, where it has emerged to be very lucrative and interesting. But, the industry comes with its fair share of procedural difficulties and excessive licensing fees.

Despite that, real estate has emerged to be a recession-resistant industry and thus has become an attractive place for investors. 

If you have any questions, drop it down in the comments, or if you want a one-on-one legal consultation or advice, send us an email. You may also check out our list of services to see if there’s any stuff we can help you out in, such as contract drafting, or marketing for your real estate business.

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Adhip Ray
Adhip Ray is the founder of WinSavvy. He has a legal, finance and data analytics background and has provided marketing consultancy to startups for over 5 years. He has been featured at multiple publications in multiple niches including HubSpot, Addicted2Success, Manta, FitSmallBusiness, Databox, IndiaCorpLaw, Bar and Bench and more!

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