RENT STABILIZATION LAWS AND PRIVATE LANDLORD-TENANT AGREEMENT

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New York State has a system of rent regulation known as Rent Stabilization. New York State enacted the Rent Stabilization system in 1969 which intended to protect tenants from illegal and over-excessive increases in rent while permitting a fair return to owners who invest in real property.1 The Rent Stabilization system generally covers: (1) buildings of six or more units built between February 1, 1947, and December 31, 1973; (2) buildings built before February 1, 1947, who moved in after June 30, 1971; and, (3) buildings with three or more apartments constructed or extensively renovated.2 A local body with a mandate in both state and local law called the Rent Guidelines Board investigates the residential real estate industry to establish fair rent adjustments for stabilized rents.3 Under the Rent Stabilization Law, tenants are entitled to receive required services, renew their leases, and may not be evicted except on grounds allowed by law.4 If a landlord violates any of these tenants’ rights, tenants can file a complaint with the Division of Housing and Community Renewal (“DHCR”).5 DCHR is responsible for the supervision, maintenance, and development of affordable and moderate income housing in New York State.6Tenants can file their complaint with DHCR Here. Upon receipt of the complaint, the DHCR investigates and issues a written order subject to appeal.7 If the DHCR finds any tenant rights violated, it may reduce rents and even impose civil penalties against the landlord.8 But does a private agreement between tenants and landlord displace a Rent Stabilization Law?

In a recent City of New York Civil Court case, the court addressed the issue of whether the Housing Stability and Tenant Protection Act (“HSTPA”) superseded an agreement between landlord and tenants. HSTPA made widespread changes to the New York State Rent Stabilization laws and sought to protect applicants seeking housing and tenants throughout the State.9 For instance, HSTPA reforms rent increase system for rent control tenants and establishes rent stabilization as an option for localities statewide. In West Side Marquis, LLC v.

De Jourdan, the landlord, per the Rent Stabilization Law (NYC Administrative Code §26-513(a)) filed an application to adjust rents to the initial Legal Regulated Rents (“LRR”) at the building.10 However, the tenants objected to the LLR, and the parties settled pursuant to an agreement called the West Side Manor Adjustment Dispute Settlement agreement (“WSM Agreement”).11 The WSM Agreement stated that WSM Tenants and certain eligible successor tenants would be permitted to renew their leases for an amount less than the LRR called the Adjusted Collectible Rent (ACR) and “[s]uccessors shall have no right – except as explicitly provided herein -to pay the ACR -or any rent other than the LRR -for any WSM apartment at the time of succession.”12 A couple of years later, the landlord offered Respondent a 1-year term in $2,720.52 per month or a two-year term at $2,747.32 per month (renewal offer).13 “None of the renewal offers were calculated based upon the ACR paid by (the deceased tenant of record) pursuant to the 2017 renewal.”14 Furthermore, because Respondent is the remaining family member/successor to the deceased tenant of record, the renewal lease was a “renewal lease options as the recognized successor of the deceased tenant of record….”15 After Respondent refused to renew, the landlord commenced a holdover proceeding against Respondent, seeking a judgment of possession and warrant of eviction and alleged that Respondent violated the Rent Stabilization Law by failing to sign an offered renewal lease.16 In contrast, Respondent claimed that the renewal leases had not been “properly calculated under the [Rent Stabilization Law].”17 More precisely, the Respondent claimed that HSTPA, the new law, requires the landlord to “offer a renewal based upon the ACR paid by the deceased tenant.”18 The Respondent further contended that the WSM agreement permitting an increase to the LRR “is now invalid after passage of the HSTPA, which preempts any private agreement, regardless of DHCR involvement.”19 In response, the landlord argued that the WSM agreement was ratified by DHCR and has received support from courts.20

The court held that HSTPA authorizes rent increases by RSL; therefore, HSTPA supersedes the WSM agreement.21 The court reasoned that DHCR lacks authority to set rents in rent stabilized apartments.22 Instead, that authority belongs to the Rent Guidelines Board. The court further reasoned that an agreement going against a Rent Stabilization law violates public policy.23 Furthermore, the court concluded that the landlord acting in good faith as to the enforceability of the WSM agreement is not a legitimate defense because “prospective changes to the law, especially the [Rent Stabilization Laws], are to be anticipated and are not so unjust as to make them unenforceable.”24 Accordingly, the court dismissed the landlord’s petition.25

The main goal of Rent Stabilization Laws is to protect tenants by preventing excessive and illegal increases in rent prices. Landlords may not use private agreements to defeat the purpose of these laws. Allowing landlords to circumvent Rent Stabilization Laws through private agreements with tenants goes against the spirit and purpose of protecting tenants and residents. Furthermore, landlords, through these private agreements, can take advantage of tenants who are neither lawyers nor apprised of New York State laws. Therefore, New York Civil Court correctly decided West Side Marquis, LLC v. De Jourdan.


1Anna P. Kambhampaty, New York City Rent Increase: What You Need to Know, New York Times, https://www.nytimes.com/2022/06/24/realestate/rent-hike-nyc.html (last visited Oct. 3, 2022); Homes and Community Renewal Office of Rent Administration, Rent Stabilization and Rent Control, https://hcr.ny.gov/system/files/documents/2022/09/fact-sheet-01-09-2022.pdf; (last visited Oct. 3, 2022); New York City Rent Guidelines Board, Main Features of Rent Stabilization, https://rentguidelinesboard.cityofnewyork.us/wp-content/uploads/2020/01/mainfeaturesofrs.pdf (last visited Oct 3, 2022).

2Rent Stabilization and Emergency Tenant Protection Act, Homes and Community Renewal, https://hcr.ny.gov/rent-stabilization-and-emergency-tenant-protection-act (last visited Oct. 3, 2022)

2Rent Guidelines Board, Membership on the Board, https://rentguidelinesboard.cityofnewyork.us/wp-content/uploads/2020/01/membership.pdf (Jan. 2020).

4Id.

5Id.

6Division of Housing and Community Renewal: Overview, Homes and Community Renewal, https://hcr.ny.gov/division-housing-and-community-renewal#:~:text=HCR’s%20Division%20of%20Housing%20and,housing%20in%20New%20York%20State (last visited Oct. 3, 2022).

7Id.

8Id.

9See generally Strengthening New York State Rent Regulations: The Housing Stability and Tenant Protection Act of 2019, Homes and Community Renewal, https://hcr.ny.gov/system/files/documents/2020/02/rent-regulation-hstpa-presentation.pdf (Feb. 19, 2020).

10West Side Marquis, LLC v. De Jourdan, 2022 NY Slip Op 32707(U) (Civ. Ct., New York County, 2022).

11Id. at 2.

12Id.

13Id.

14Id. at 3.

15Id. at 1.

16Id.

17Id. at 3.

18Id.

19Id.

20Id. at 3-4.

21Id. at 4.

22Id.

23Id.

24Id.

25Id.

Impact of Mortgage in Forbearance in post-COVID

Impact of Mortgage in Forbearance, brooklyn real estate broker, brooklyn homes for sale, Dayrel Sewell

When a homeowner is experiencing financial hardship to pay the mortgage, the mortgage servicer or lender allows the homeowner to pause or reduce the mortgage payments for a limited period of time while the homeowner can regain his or her financial footing.1 Such temporary pause or reduction in mortgage payments is forbearance. Since Congress has passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March 2020, a homeowner is eligible for forbearance for up to 12 months.2

It is no doubt that many families are experiencing financial hardships during the covid-19 crisis. According to the Pew Research Center, as of late March, about half of Americans considered the pandemic to be a major threat to their personal finances.3 In response to such large-scaled financial hardships experienced by all Americans, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) in March 2020. Under the CARES Act section 4022, a homeowner would be entitled to a forbearance up to 12 months, if his mortgage is federally owned or backed.4

Impact of Mortgage in Forbearance
Source: GETTY

However, what is not being told to the borrowers asking for forbearance is that signing up for mortgage forbearance could potentially set them up for serious problems in the not-too-distant future. Although CARES Act requires the lenders or servicing companies to allow payment delays for up to 360 days on federally backed mortgages, the CARES Act does not set up rules for lenders and the servicing companies when it comes to what happens once the forbearance period ends. Therefore, once the forbearance period ends, individual lenders and servicers can set up their own rules to demand how their borrowers must make up the delay payments. According to John Ulzheimer, an Atlanta-based credit expert formerly of FICO and Equifax, the lender or servicer could demand that the borrowers pay back the deferred amount all at once or in an otherwise expedited manner and indeed, borrowers from multiple national banks have reportedly been informed of the need to repay any delayed payments in a lump sum at a future date.5

Forbearance during the COVID-19 crisis might also impact borrowers’ credit. Section 4021 of the CARES Act amends Section 623(a)(1) of the Fair Credit Reporting Act by instructing the lenders to report that borrowers are “current” on their credit obligations when a special payment accommodation (like a forbearance) is in place specific to COVID-19.  Therefore, borrowers would not need to worry that delaying their payment may affect their credit in a negative way by entering into a forbearance agreement with their mortgage lender. However, there is a notable exception to such credit protection. If a borrower’s credit obligation or account has already been delinquent before s/he requests a payment accommodation, then her/his credit obligation would still be maintained as delinquent even if during the period in which the accommodation is in effect.6

Therefore, although Congress passed the CARES Act as a tool to help the borrowers get over their financial hardships caused by the COVID-19 crisis, borrowers should still keep in mind that such mortgage forbearance is not mortgage forgiveness and also monitor their credit rating profile.  According to the Federal Trade Commission, you’re entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies.7  Borrowers should take a more proactive role to ask their lenders or servicing companies about their individual rules of forbearance under the scheme of the CARES Act, and lenders should also provide transparent forbearance disclosure to borrowers up front and throughout the entire forbearance.

New York Cooperative and Condominium Privacy Concerns

New York Cooperative and Condominium Privacy Concerns

Cooperative and condominium boards are privy to a vast amount of confidential personal and financial information concerning their shareholders and unit owners. A typical cooperative and condominium application requires copies of the buyer’s bank statements, tax returns, photo identification, employment verification, and more.1 Most would probably assume that the information collected by your cooperative or condominium boards is kept confidential. Unfortunately, this may not be the case under New York law. New York does not recognize common law claims for invasion of privacy.2 Invasion of privacy is a “tort based in common law allowing an aggrieved party to bring a lawsuit against an individual who unlawfully intrudes into his or her private affairs, discloses his or her private information, publicizes him or her in a false light, or appropriates his or her name for personal gain.”3 Instead, privacy claims in New York are governed by sections 50-51 of New York Civil Rights Law, which prohibits the use of name or likeness of a living person for purposes of trade or advertising without that person’s consent.4 Information held by cooperative and condominium boards technically do not have to be kept confidential because sections 50-51 of New York Civil Rights Law does not prevent the disclosure of personal information. As a result, there is a glaring lack of case law regarding cooperative and condominium boards and disclosure of confidential information. However, there is case law regarding the disclosure of confidential information and defamation.

New York Cooperative and Condominium Privacy Concerns , brooklyn real estate brokers, houses for sale brooklyn

Doormen help create a sense of safety for residences of cooperatives and condominiums

(Source: New York Post)

 

In Galanova v. Safir, a plaintiff brought a defamation lawsuit against her cooperative and its board members for defamation because they distributed two emails asserting that she was in arrears on her maintenance payments and posted a flyer in the building’s lobby listing her apartment number and the alleged amount of her arrears.5 The court granted summary judgment in favor of the cooperative and board members. It held that these communications concerning plaintiff’s alleged arrears were protected by a common interest privilege.6 Common interest privilege extends to a “communication made by one person to another upon a subject in which both have an interest.”7 In this case the emails and flyers were shared with other members of the cooperative who have an interest in the cooperative overall. To overcome the common interest privilege, the plaintiff had to raise a triable issue of fact as to whether the e-mails and the flyers were motivated solely by malice, which she failed to do.8 The Galanova case somewhat demonstrates how cooperative and condominium boards have broad discretion in sharing information with other members of the cooperative or condominium.

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Many NYC cooperatives and condominiums offer amenities like gymnasiums and more

(Source: City Realty)

Overall, New York law does not seem to offer much protection for personal information shared with cooperatives and condominiums. This lack of protection is concerning because boards require that shareholders and applicants disclose certain confidential personal information. Hopefully, new legislation or litigation will come forward to offer more protection for shareholders and unit owners soon. Until then, shareholders and unit owners put their privacy at risk when they decide to live in a cooperative or condominium.


[1]  https://www.hauseit.com/nyc-coop-board-package-purchase-application ;
https://medium.com/@Hauseit/how-do-condo-board-applications-work-in-nyc-real-estate-a0ef5a88b9c9

[2]  Messenger v. Gruner + Jahr Printing & Publ’g, 727 N.E.2d 549, 551 (N.Y. 2000) (“New York does not recognize a common law right of privacy.”).

[3]  https://www.hg.org/privacy.html

[4]  See Howell v. N.Y. Post Co., 612 N.E.2d 699, 703–04 (N.Y. 1993) (The right of privacy in New York is governed exclusively by statute—Civil Rights Law sections 50 and 51—and there is no common law right of privacy in New York). See also N.Y. CIV. RIGHTS LAW § 51 (McKinney 2009) (“Any person whose name, portrait, picture or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained . . . may maintain an equitable action in the supreme court of this state . . .”).
[5]  Galanova v. Safir, 138 A.D.3d 686, 687 (2016).
[6]  Id. at 687.
[7]  Liberman v. Gelstein, 80 N.Y.2d 429, 437 (1992).
[8]  Galanova, 138 A.D.3d at 688.

How a Virus Changed the Market Trend of New York State Real Estate

How a Virus Changed the Market Trend of New York State Real Estate

COVID-19 has forced the world to face challenges never seen before.  Many industries, business, and professions are projecting and planning for the near and far future permanently affected by these long-term challenges.

The real estate world is one of many areas hit hard by the pandemic.  However, market prospects and sales continue to rise as a new and diverse demographic of sellers and buyers enter the market.  Home features, structures, and amenities are constantly changing to meet the needs of buyers.  Since the pandemic, certain additions and amenities especially attract successful sales.  Renovations and additions are growing in demand.1

Demand for purchase and property prices continue to rise despite the pandemic and homeowners are benefiting from “record high” home equity incentivizing to invest more on renovations.2  With an increasing number of people working from home, commute times are no longer a priority and buyers are looking into homes in the suburbs or outside Manhattan with bigger lots and outdoor space.  Just in August, the New York real estate market saw sales in Brooklyn go up 38.7% compared to the same month last year.3

For those looking for homes in the City, multifamily residential buildings and bigger apartments are in favor.4 The demand for swimming pools, spas, and well-equipped kitchens are also increasingly popular as people plan to spend more time cooking and enjoying their leisure time at home.5 Buyers also favor adequate office space with built-in bookshelves and desks, and furnished garages or basements. As assisted living facilities or nursing homes are no longer an option for people with elderly parents, multigenerational homes with ground level home suites are also on the rise. Some would like to see sanitation measures implemented into their homes, in the form of bidet toilets or smart bathrooms with smart sensors and bath presets minimizing surface contamination. For better air ventilation, indoor air quality monitoring and air treatment systems are also attractive additions.6

How a Virus Changed the Market Trend of New York State Real Estate, brooklyn real estate brokers, houses for sale brooklyn

Spacious private office space and work areas are important features for future home sales

(Source: Red Oak Remodeling)

During renovations and construction during COVID-19, property owners must follow Phase 1 state guidelines that remain effective to the current phase. State guidelines do not allow more than one worker per 250 square feet, require workers to open windows as much as possible for increased ventilation, conduct daily temperature checks before on-site work, and to cut the number of hours that crew members can stay to work on the property.7

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Workers must follow co-op building procedures for on-site construction or renovation work

(source: The New York Times)

Renovation of condominiums or co-ops face more challenges due to limited and congested space. In addition to the state guidelines the works must also adhere to the building’s own safety protocols set by co-op boards which tend to be more restrictive.8 For example, condominiums or co-ops have the power to limit the scope of alterations, delay start dates for new renovations, and restrict the number of renovations within the same time period.9 The uncertainty caused by the pandemic, there may be no guarantee that projects will be completed in time which results in owners expecting major delays in their plans to sell.

To save money, time, and dealing with the hassles of renovation and construction restrictions, it may be more economic for condominium unit sellers to minimize the renovation and instead add incentives or concessions to the sale price. However, sellers may also benefit from a faster sale for a better purchase price if the home comes renovated with amenities and space to fit the needs of current buyers. The seller’s priority on how much to invest to meet these changes in market favorability will depend on the property type, the extent of needed repairs or reconstruction, and how much time and money the seller is willing to spend.


[1]  Audrey Hoffer, Home Building in the Pandemic, The Washington Post, https://www.washingtonpost.com/business/2020/06/11/business-our-new-normal-pandemics-effect-home-construction-market/?arc404=true (June 11, 2020).
[2]  Diana Olick, Pandemic Home Remodeling is Booming: Here’s What Your Neighbors are Doing, CNBC, https://www.cnbc.com/2020/08/07/pandemic-home-remodeling-is-booming-what-your-neighbors-are-doing.html (Aug. 7, 2020).
[3]  Zachary Kussin, Brooklyn Home Sales Boom as Manhattan Market Struggles, New York Post, https://nypost.com/2020/09/24/brooklyn-home-sales-boom-as-manhattan-market-struggles (Sept. 24, 2020).
[4]  Id.
[5]  Olick, Pandemic Home Remodeling is Booming: Here’s What Your Neighbors are Doing.
[6]  Brittany Anas, This is How Covid-19 Could Affect Homes of the Future, MarketWatch, https://www.marketwatch.com/story/this-is-how-covid-19-could-change-our-homes-in-the-future-2020-06-29 (June 29, 2020).
[7]  New York State Department of Health, Interim Guidance for Construction Activities During the COVID-19 Public Health Emergency, https://www1.nyc.gov/assets/buildings/pdf/ConstructionMasterGuidance.pdf (June 26, 2020).
[8]  Joanne Kaufman, The Return of Home Renovations, The New York Times,
https://www.nytimes.com/2020/07/02/realestate/coronavirus-home-renovations.html (July 2, 2020);
see also Ronda Kaysen, My Co-Op is Letting Workers in Again. How Do I Know They’re Doing it Safely?, The New York Times, https://www.nytimes.com/2020/07/25/realestate/coronavirus-reopening-workers-in-buildings-rules.html (July 25, 2020).
[9]  Kaufman, The Return of Home Renovations.