Gallet Dreyer & Berkey, LLP | New Tenant Protection Legislation May Also Impact Cooperatives and Condominiums
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New Tenant Protection Legislation May Also Impact Cooperatives and Condominiums

July 2019 | By: David L. Berkey| GDB 2019 Summer Newsletter
The New York State Legislature in June enacted tenant protection legislation that significantly changes New York’s rent laws and impacts the City’s many cooperatives and condominiums. The Housing Stability and Tenant Protection Act of 2019 (S. 6458 and A. 8281) (a) makes the rent regulation system permanent (unless re­pealed by later act of the Legislature), (b) eliminates luxury and vacancy decontrol provisions of current law, (c) limits “owner use” decontrol to one unit per building where the owner or its immediate family uses such unit as their primary residence and only where the tenant was in resi­dence for less than 15 years; and also limits the amount of major capital improvement increases to two percent in New York City and lengthens the amortization period for such increases, effectively reducing such increases further, among other changes.
Cooperative and Condominium conversions are affected by eliminating “eviction” plans and requiring for “non-eviction” plans that 51 percent of tenants in occupancy agree to purchase their apartments before the conversion can be declared effective.  In addition, market rate senior citizens and disabled tenants who do not purchase their apartments may not be evicted unless there is “good cause” and the legislation states that failure to pay an “unconscionable” rent increase does not constitute “good cause.”  Non-purchasing tenants in conversions to cooperatives or condominiums will now be given, in addition to their 90 day exclusive period to purchase the shares or unit in which they live, during the six month period measured from the end of the 90 day period, an additional exclusive right to purchase the shares or unit on the same terms and conditions as are contained in an executed contract to purchase the shares or unit entered into by a bona fide purchaser.

Many other tenant benefits are included in the legislation.  For example, “tenant blacklists” will now be banned, rent security deposits will be limited to one months’ rent, and landlords will have to notify tenants if their rent will be increased by more than five percent or if they do not intend to renew a tenant’s lease.

The days of “three day” rent demands will be gone. Now, a written notice must be sent to the tenant by certified mail at least five days after the rent due date ad­vising the tenant that the rent is late. If a summary proceeding is to be brought to collect the rent, a written fourteen day notice requiring the payment of rent must be sent to the tenant demanding pay­ment or possession of the premises. Answers in summary proceedings may contain any legal or equitable defense or counterclaim, and the court may render an affirmative judgment on the counterclaim.  Requests for adjournment of such proceedings by tenants are more freely granted and payment of use and occupancy during the proceeding is more restricted. A tenant’s failure or inability to pay use and occupancy ordered by the court shall not be the basis to dismiss any of the tenant’s defenses or counterclaims.

Rent is now defined in the statute to mean the monthly or weekly amount charged in consideration for the use and occupation of a dwelling.  No fees, charges or penalties other than rent may be sought in a summary proceeding.

In cases where a landlord obtains a default judgment against a tenant in a landlord-tenant proceeding, the landlord is prohibited from recovering attorneys’ fees.

In summary proceedings, payment to the landlord of the full amount of rent due prior to the date of the hearing renders the entire proceeding moot.  The landlord must accept the payment when tendered.

Courts will now have the authority to permit a tenant to remain in occupancy for up to one year if the tenant cannot find, after making reasonable efforts, a similarly suitable dwelling in the same neighborhood.  Fortunately, this provision will not apply to objectionable conduct holdover cases where the landlord established that the tenant’s conduct was objectionable.

Landlords are prohibited from charging any late fees to a tenant unless the rent is not paid within five days of the date due.  A late fee may not exceed fifty dollars or five percent of the monthly rent, whichever is less.

Landlords may not charge fees for the processing, review or acceptance of a rental application, before or at the beginning of a tenancy, except background checks and credit checks, and then such fee cannot exceed the lesser of the actual cost of such search or twenty dollars.

Such limitations on late fees and processing fees will also apply to cooperatives and condominiums, and will likely apply to fees charged in connection with the review of purchase or leasing applications.  Sublet fees not related to background or credit checks may not be permitted.

The new law also makes it a crime to evict or attempt to evict an occupant of a dwelling unit who has lawfully occupied the dwelling unit for thirty consecutive days or longer, or who has a lease for the dwelling unit, except as permitted by law pursuant to a warrant of eviction or other order of court.  The use of or threats to use force or harassment to accomplish an eviction is a class A misdemeanor, that can subject the violator to imprisonment for up to a year and civil penalties from $1,000 to $10,000 for each violation.

There will be much commentary on the new law as cases testing or applying its provisions wend their way through the court system.  We will keep you advised of major developments.