By definition, an IMD building lacks a residential Certificate of Occupancy. The objective of the Loft Law is to bring buildings illegally converted to residential use into compliance with state and city housing laws relating to health, safety, and fire protection. In large part, the requirements of these laws are met after the owner performs construction work on its building to bring the building up to the City's and State’s residential Codes and the owner obtains a revised certificate of occupancy that allows residential use of the building or portions thereof.

To obtain the necessary residential certificate of occupancy, an owner must follow the requirements set forth in the MDL, the Building Code and the Loft Law. The owner must file an alteration application with the Department of Buildings (DOB), obtain an approved alteration permit from DOB, and then perform the work described in the permit to the satisfaction of DOB's inspectors. Finally, the owner must apply for and be issued a residential certificate of occupancy. The Loft Law sets deadlines by which an owner must reach each of these stages in the legalization process.

The Loft Board's rules allow owners to apply for an extension of these deadlines. Generally, extensions are only granted if the owner has shown that it made good faith efforts to meet the deadline and it was unable to comply with the law for reasons beyond its control.

An owner's failure to meet a statutory deadline does not relieve it of responsibility for completing legalization. The Loft Board prosecutes owners for failing to meet these deadlines, and the Board often imposes substantial fines upon owners who have failed to comply with the law.

In addition, prior to obtaining a building permit, owners of IMDs must go through a special mediation process called the Narrative Statement Process.

The Board has concluded that this process, which involves the tenants in the details of legalization, is necessary because the process of legalization generally involves substantial construction and may necessitate basic changes to individual units. Within fifteen (15) days of filing an alteration application at DOB, the owner of an IMD must provide the tenants and the Board with a Narrative Statement, describing the work to be performed and explaining why it is necessary; the Board's rules provide details as to what a narrative statement must contain.

Following the filing, Loft Board staff will schedule an informal conference with the owner and tenants. The purpose of the conference is to help the tenants understand the details of the owner's legalization plan. When necessary, Loft Board staff will mediate disputes arising from the proposal.

If the parties reach an agreement on the details of the legalization plan, the Board will provide certification that the narrative statement process has been completed; DOB will not issue a work permit without this certification. If, however, an agreement cannot be reached on some aspect or aspects of the legalization plan, the tenants may choose to file an alternate legalization plan with DOB.

If DOB approves the tenants' plan, the Board may choose to institute a proceeding to determine which plans should become the basis for the actual work to be performed. The issue in such proceedings is whether the owner's plan would unreasonably interfere with the tenants' use of their units or diminish service. Following resolution of the proceeding, the Board may then certify that the narrative statement process has been completed.

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