Section 26-703. Establishment of reserve fund

a. Within thirty days after
  the closing of a conversion pursuant to an  offering  plan  the  offeror
  shall   establish   and  transfer  to  the  cooperative  corporation  or
  condominium board of managers, a reserve fund to be used exclusively for
  making capital repairs, replacements and improvements necessary for  the
  health  and safety of the residents of such buildings. Such reserve fund
  shall be exclusive of any other funds required to be reserved under  the
  plan  or  applicable  law  or  regulation of the state attorney general,
  except  a  fund  for  capital  repairs,  replacements  and  improvements
  substantially  similar  in purpose to and in an amount not less than the
  reserve fund mandated by this section. Such reserve fund also  shall  be
  exclusive  of  any  working  capital  fund  and  shall not be subject to
  reduction for closing apportionments.
    b. Such fund shall be established in an amount  equal  to  either  (i)
  three  per  cent  of  the total price or, (ii) (A) three per cent of the
  actual sales price of all cooperative shares or condominium  units  sold
  by  the  offeror  at  the time the plan is declared effective, provided,
  however, that if such amount is less than one  per  cent  of  the  total
  price,  then  the fund shall be established as a minimum of one per cent
  of the total price; plus (B) supplemental contributions to  be  made  by
  the  offeror  at  a  rate of three per cent of the actual sales price of
  cooperative shares or condominium units for each unit or  its  allocable
  shares  held  by the offeror and sold to bona fide purchasers subsequent
  to the effective date of the plan and within five years of  the  closing
  of  the  conversion pursuant to such plan notwithstanding that the total
  amount contributed may exceed three per cent of  the  total  price;  and
  provided, further, that if five years from thirty days after the closing
  of  the  conversion pursuant to such plan the total contributions by the
  offeror to the fund are less than three per cent of the total price  the
  offeror  shall  pay  the  difference  between the amount contributed and
  three per cent of the total price. Supplemental contributions  shall  be
  made within thirty days of each sale.
    c.  The  contributions  required  pursuant to this section may be made
  earlier or in an amount greater than so provided. An offeror  may  claim
  and  receive  credit  against  the mandatory initial contribution to the
  reserve fund for the actual cost of capital replacements which he or she
  has begun after the plan is submitted for filing to the state department
  of law and before the plan is  declared  effective;  provided,  however,
  that  any  such replacements must be set forth in the plan together with
  their actual or estimated costs and further provided, that  such  credit
  shall  not  exceed  the  lesser  of  the  actual  cost  of  the  capital
  replacements or one per cent of the total price.
    d. Any building, construction of  which  was  completed  within  three
  years prior to the closing of a conversion pursuant to an offering plan,
  shall be exempt from the requirements of this section.