By: Akanksha A. Panicker
The “Housing Stability and Tenant Protection Act” has seen significant changes be enacted into landlord-tenant rights and obligations in New York. Modifications have been made to the substantial bulk of the NY legal matrices. The Act has been controversial and can seem to have a chilling effect on pre-existing real estate and landlord-tenant laws.
[1.0] CHANGE IN STATUTE FOR NOTIFICATION
Provide Rent Receipts and Late Payment Notices.
From July 2019, the onus of requesting a residential tenancy receipt was shifted from the tenants to the landlords themselves. Rather than repeatedly request receipts, it becomes necessary for a landlord to provide receipts for the lease term after an initial receipt. This might be done immediately upon personal delivery or within fifteen days of payment in case of indirect or online payment. Landlords further expected to maintain records of cash receipts for at least three years, available upon tenant’s request, or if rent is paid in any form other than a personal check.
Additionally, notice to tenants late in paying rent by five days or more must be sent in writing. Service by mail is required through certified mail herein, with omission being considered affirmative defense in a non-payment proceeding. However, summary proceedings like non-payment or holdover under the Act can have a different connotation.
For cooperative housing, the Act creates a requirement of 120 days’ written notice served on the tenant if there is a 5% increase when a renewal is offered. This is not considered applicable with a maintenance increase of more than 5% but has not been specifically laid down under the provisions and is ambiguous regarding applying the same.
Notices of Eviction
Upon the court ruling in favor of the landlord in a summary proceeding, the notice of the same must be posted by a Marshal on a business day on the property. This notice must be executed fourteen days before warrant execution, extending the same from three days. Issuance of warrant no longer cancels the landlord-tenant relationship.
However, the Act also judges the power of deferral in an eviction based on ‘extreme hardship.’ Determination of extreme hardship is on a case-wise basis but often includes the occupants’ health, children’s education requirement, etc. A stay period of one year could also be granted herein. However, any such relief granted must be balances with the hardships that a landlord conversely will face during such interim relief. Consequently, any order to stay would require that the tenants make efforts to secure other housing. If an eviction is for a lease violation, the court must grant 30 days for the tenant to resolve the violation. For evictions, the process must be served between 10-17 days before the day of appearance, allowing for around fourteen (14) days of adjournment for the factual cause.
Landlords are required under the Act to charge application fees based on the cost of a credit or background check. A capped amount of USD20 may also function as a yardstick depending on which condition is less. Furthermore, a copy of the results and receipt of the inquiry must be provided to collect the fee. The charge may be waived if the tenants have copies of a background check that they have run within the last 30 days before application.
This also has ramifications for late fees being charged. Residential landlords are now required to demand and collect a single fee for late payments with a five-day grace period after the monthly rent is payable. While previously, there was no restriction per se for late fees and lease-breach penalties, the charge cannot exceed USD 50 under any circumstances. No other fees or requirements are permitted as a condition of obtaining a lease.
Landlord’s duty to communicate and mitigate
A completely new provision required the landlord to assist a tenant who has to vacate the premises prematurely without the lease itself expiring. The Act essentially modifies the provision for a residential tenant wishing to vacate before lease expiry to include the landlord’s requirement to make reasonable efforts to re-let the premises at the rate agreed upon with the tenant or the unit’s fair market value, whichever is less. A lease with a new tenant will extinguish the former occupant’s liability for any additional rent payments.
This provision is purely for residential tenants and cannot be seen as applicable to commercial leases or tenancies. Furthermore, it is necessary under these provisions that the landlord communicates before lease expiry. Stricter notice rules have been set up, wherein tenants are obligated to be notified whether the lease is to be renewed or even if the rent is to be increased by more than five percent.
The timeframe for communication is to graduate. At least thirty (30) days’ notice is mandated for any agreement that falls short of a year. For a year-long agreement, the notice period climbs up to sixty (60) days. Agreements for two years or more require ninety (90) days’ notice, barring which the tenancy continues as per the renegotiated terms. It must be remembered herein that notification to terminate monthly tenancy outside the city of New York is based on the tenant’s notification to the landlord at least one month before the expiration of the term provided. No notification shall be necessary to terminate a tenancy for a definite term.
The cap for residential security deposits was enacted wherein the deposit cannot exceed a month’s rent. This effectively marks an end for multiple months’ rent being set aside in advance. Under the new provisions, the deposit money must be returned within fourteen days of termination of tenancy accompanied by an itemized statement denoting the basis of deductions. This might include necessary repairs or modifications.
Move-in and move-out inspection procedures have also been enacted. This means that before the unit’s possession, a landlord is obligated to provide the prospective occupant with an opportunity to tour the apartment. Upon conclusion, the landlord and tenant may implement an agreement in writing to delineate any specific defects or damages to the premises, which serve as a reference for the request of any repair costs that the landlord may deduct from the deposit upon vacating the property. Furthermore, another inspection is afforded to the tenant before moving out to accompany the landlord on an inspection to identify the property’s damages, consisting of a deduction to the deposit. This is done to allow the tenant to rectify the issues before moving out.
Severe punitive measures have been included; wherein non-compliance can cause the landlord to be liable for the tenant’s actual damages. Additionally, a willful violation can see punitive damages up to twice the amount of the deposit. The landlord can withhold deposits for non-payment of rent, damages beyond normal wear and tear, non-payment of utilities (included in the rent), and the cost of moving/storing a tenant’s belongings after moving out.
There have been issues with this provision, however. Since the punitive measures are not limited to mere failure to retain the deposit, this holds equal weightage to lesser infractions, like failure to schedule the inspection within the window. Furthermore, the abolition of pre-paid rent could also mean the attraction of liability for individuals who have to pay rent upfront, like foreign residents letting the unit. Continuing the aforementioned practice of charging prepaid rent for an individual, not a New York resident, could attract misplaced liability.
[2.0] CHANGES IN COURT PROCESSES
The adjournment period for the proceedings has been extended to sixty (60) days rather than the previous thirty days from the first appearance. Postponement requests or unrepresented tenant adjournment to seek counsel will not be considered a part of this period. After the lapse, the landlord can file a motion to compel the tenant to pay ‘use and occupancy’ from the date that the motion is granted. However, this can be contested with ‘acceptable defenses’ like the landlord not being a proper party or actual or constructive eviction. A minimum of fourteen days adjournment can be provided unless a shorter period is mutually assented to.
If the full amount of rent is paid before hearing on the petition, the landlord must accept payment, and the proceeding must be dismissed. It must be remembered herein that rent deposit orders are now discretionary and that hearing may be done ‘as soon as practicable.’
The recoverable costs of legal fees have been slashed in the new proceedings. In a holdover proceeding herein, only rent may be collected. Since the act prohibits collecting extraneous fees, residential rent is also construed narrowly to include the amount chargeable for ‘use and occupation’ of the space. This is a surprising turn, but there is no precluding of a separate lawsuit being opened in tandem to recover legal costs. This also holds in a non-payment or holdover proceeding where the tenant defaults, as the landlord is not entitled to recover attorney fees. The same principle is not held for tenants in the Act, wherein courts are mandated to award these reasonable fees and costs. This is especially true during an overcharge case.
[3.0] CHANGES IN RENT REGULATION
Rent-control increases and Overcharge
The Rent Guidelines Board is in charge of determining the adjustment average of the preceding five year period. However, the cap for said adjustment is held at seven and a half percent and is also not held liable for heating fuel costs that might have been accumulated on the monthly rent.
A tenant in a rent-overcharge proceeding has seen an expansion of recovery period from four years to six years of overcharge payments and can seek up to three times the damages for the entire amount if the conduct is determined to be ‘wilful.’ Surprisingly, the conduct might be found ‘wilful’ even if the excess is refunded or adjusted. Records of payments or similar documents dating past four years may be required to be produced for as far as is considered ‘reasonably necessary’ regardless of an indicia of fraud. In this regard, it is conversely improper to request tenant history or landlord letters or any form of court records as a basis for the applicant’s rejection. There is a six-year limitation period on the filing of overcharge claims, after which the treble-damages period expires.
Most deregulation provisions have been repealed. The provisions that held that [A.] lawful rent about a statutory threshold for a unit that a rent-stabilized tenant vacated could see the next tenant charged at the market rate [B.] opportunity to avail a vacancy bonus to see rent increase by 20 percent upon regulated tenant move out and [C.] tenants with household income above USD 200,000 for two years are subject to deregulation have been stricken. Income-based discrimination cannot be enacted by landlords, with rent regulation being held forth barring specific circumstances. In fact, the rent-control and rent-stabilization sunset provisions have been eliminated, and luxury deregulation has been abolished.
Furthermore, preferential rent provisions have been changed insofar as increases are subject to the Rent Guidelines Board’s approval and cannot be changed during the entirety of the tenancy. This does not hold for tenancies that succeed the incumbent once, whereinafter the landlord can then re-let the apartment at a maximum rate.
The HSTPA essentially slashes past provisions of law. Proponents cite the value of the law in terms of strengthening tenant protections. However, landlords have been vocal against the HSTPA, citing that the stringent provisions can very easily deny property owners of incentives to improve buildings. The detailed documentation procedures can prevent a large portion of marginalized groups from obtaining housing due to reluctant landlords.
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1.R.P.L. § 235-e(b); R.P.L. § 235-e(c)]
2. R.P.L. § 235-e(d); R.P.A.P.L. § 702
3. RPL Section 226-C:
4. R.P.A.P.L § 749(2)(a); R.P.A.P.L. § 711(2)]
5. Real Prop. Law § 238-a(1)(b), Real Prop. Law § 238(a)(3).]
6. Real Prop. Law §238-a(2)
7. Real Prop. Law § 227-e
8. Real Prop. Law § 226-c
9. Real Prop. Law § 232-b
10. G.O.L § 7-108 (1-a)(a), G.O.L § 7-108 (1-a)(e)
11. G.O.L § 7-108 (1-a)(e)
12. G.O.L § 7-108 (1-a)(c)
13. R.P.L. § 745(2)(a)]
14. R.P.A.P.L § 702; R.P.L § 234
15. N.Y.C. Admin. Code 26-516(a)(4)
16. N.Y.C. Admin. Code § 26-405(a)(5)
17. N.Y.C. Admin. Code § 26-516(a); N.Y.C. Admin. Code § 26-516(g)
18. RPL Section 227-f:
19. E.T.P.A. § 10(a-2); N.Y.C. Admin. Code § 26-511(c)(14)