Contract Terms and Insurance Requirements.
28 RCNY § 2-05
in effect§ 2-05 Contract Terms and Insurance Requirements.
(a) Loan documents. Each loan shall be evidenced by a promissory note executed by the owner of the multiple dwelling in form specified by the Department. The Department in its discretion may require that one or more of the shareholders, officers or directors of a corporate owner co-sign the note or otherwise guarantee or pledge security or provide an acceptable surety for the repayment of the loan. The following additional documents may be required:
(1) Building Loan Contract. A Building Loan Contract between the owner and the City in form specified by the Department.
(2) Mortgage or financing statement. A mortgage executed by the owner in form specified by the Department, shall be required as security for all loans, except that, if the loan is for thirty-five thousand ($35,000) dollars or less, or for a term of seven (7) years or less, the Department may, in its discretion, accept a financing statement as security.
(3) Disclosure statement. A sworn disclosure statement, in form specified by the Department, executed by the owner or his duly authorized agent disclosing the identity of all parties involved or to be involved in the ownership, financing and rehabilitation or improvement of the building.
(4) Such other documents executed by the owner as the City or the Department and its attorneys deem necessary or desirable.
(b) Repayment of the loan by the borrower.
(1) Method of repayment. Debt service consisting of payments of interest on the unpaid principal balance and repayment of the principal amount shall be paid in equal monthly installments so as to be fully amortized by the maturity date of the loan. At its discretion, the Department may require an alternative schedule of loan payments provided the loan is fully paid by its maturity date.
(2) Prepayment privileges. The loan may be prepaid only in accordance with the terms specified in the loan documents.
(3) Refinancing. Any debt in existence prior to the time of the closing of the City loan and secured by a lien against the premises may, without the consent of the Department be refinanced after such closing provided:
(i) the principal amount of the refinanced debt shall not exceed the unpaid principal balance of the debt at the time of the refinancing, except that if such lien is subordinate to that of the mortgage given to secure the City loan, the principal amount shall not exceed the unpaid balance of the debt at the time of the closing of the City loan;
(ii) the rate of interest on the refinanced debt shall not exceed the rate prevailing in the private market at the time of the refinancing;
(iii) after refinancing debt service on the refinanced debt shall be paid in equal and constant periodic installments; and
(iv) at the time of the refinancing the mortgage given to secure the City loan shall not be in default with respect to any payment of principal or interest or any other payment required under the terms of said mortgage or the note secured thereby.
(4) Further encumbrances. Except as otherwise provided in 28 RCNY § 2-05(b)(3), an owner shall not at any time further encumber, mortgage or permit any encumbrance or lien of any kind or nature upon the premises without the prior written consent of the Department nor, shall the premises or any part thereof be conveyed without the prior written consent of the Department. On failure to comply with this paragraph (4), the Department, at its option, may declare the entire loan immediately due and payable.
(c) Insurance requirements.
(1) Fire insurance. Ten days before loan closing the owner shall deliver to the Department prepaid insurance policies issued by companies in form and amounts satisfactory to the Department, insuring the premises against loss or damage by fire, with the usual extended coverage endorsement, and such other hazards as may reasonably be required by the Department. Such policies shall name the City as a mortgagee and provide that losses thereunder shall be payable to the City as its interest may appear.
(2) Workmen's compensation. Each contractor and subcontractor, pursuant to the Workmen's Compensation Law, shall provide adequate Workmen's Compensation Insurance for all employees engaged in work on a building who may come within the protection of said law.
(3) The Department may require the owner or contractor to provide Public Liability, Property Damage and Employer's General Liability insurance.
Source: City of New York, Charter, Administrative Code and Rules (American Legal Publishing XML export, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/newyorkcity/latest/NYCrules/0-0-0-53634Fetched: 10/24/2026