Itkowitz PLLC Teaching and Publishing

Philadelphia Skyline

Tenant Stopped Paying Rent and Has Not Been Seen – MICHELLE’S MONDAY MANDAMUS!


August 15, 2018

This Q&A post originally appeared in July on the LandlordsNY blog, where Michelle Maratto Itkowitz is the "Legal Expert".

Tenant Stopped Paying Rent and Has Not Been Seen – MICHELLE’S MONDAY MANDAMUS!

Hi, Michelle here. I am the LandlordsNY “Legal Expert”. I answer landlord and tenant questions. My goal is to post in the blog all of the questions I get from LandlordsNY members (keeping the member anonymous) and my answers thereto, when I think that such questions and answers would be of interest to other people. Let me know if this is helpful. These questions are excellent, keep them coming.

Question:  “I have an elderly tenant that has not been seen in over three weeks. She always pays her rent on time but this month she has not paid and has not been seen by anyone. We called the police this past weekend and they entered the premises through the open kitchen window (screen was down). There was no one there. There are no other phone numbers or family members that we can contact. What are our options?”

Answer:

Well, you called the police, who then checked for a dead body or a suffering person, and they did not find one. That is always Step One in these situations. You might also want to call Adult Protective Services at this stage https://www1.nyc.gov/site/hra/help/adult-protective-services.page.

You have also already covered Step Two – attempt to find and then utilize contact information for family of the missing tenant. 

Step Three is to conduct your own deeper investigation.

Ask the neighbors if they know anything.

If there cameras in the common hallways of the building, then you can check to see if the tenant has been coming or going. You should pull the tape immediately, because many systems over-write after thirty days. 

Check the tenant’s file again, especially the rental application for emergency contact information. 

You should google the tenant. Hey, you never know.

You always have the option of having a private investigator run a quick preliminary search. 

You, however, ultimately have to protect the landlord’s rights here. I would wait until the tenant is two months behind, and then have your lawyer serve a statutory Rent Demand. Add extra time to the Rent Demand, give the tenant a full two weeks to pay. If no one pays by the demand date, follow it up with a summary nonpayment proceeding in Housing Court. At the beginning of any nonpayment case, where you are dealing with an elderly person or a person who is physically or mentally impaired, you should call Adult Protective Services again. In any event, before an eviction can be scheduled, APS will be contacted by the Marshal.

It is an unfortunate reality that, at the end of some people's lives, the only person who is watching out for them is their landlord. I see this all the time. I recently was working with a landlord who saved a tenant's life. The tenant had a heart attack and was in no shape to call 911. The landlord suspected something was wrong because the TV was so loud in the apartment. The landlord knocked, and when the tenant's responses were incoherent, the landlord called 911, who found the tenant on the floor. 

Hopefully, the missing tenant here will turn up and pay the rent.



Thank you for this question. Finally, I am obligated to say that this answer is for general informational purposes only, does not constitute legal advice, and does not create an attorney and client relationship between us or between you and LandlordsNY. 

Let me know if you need anything else.

Michelle Maratto Itkowitz
Itkowitz PLLC
26 Broadway, 21st Floor
New York, New York 10004
(646) 822-1805

Labels: ,

Types of Co-Living Businesses and How The Smaller or Medium Owner or Manager Might Encounter Co-Living – and What To Beware Of!

On July 25, 2018, Michelle Itkowitz spoke at a LandlordsNY meet-up at SmartSpace in Brooklyn. Michelle's topic this time was, "Co-Living Defined and Dissected - What it is. What it isn’t. How it’s good for tenants. How it’s good for landlords. And what its limits are." Here is a link to the full materials. Here is an excerpt from the materials:

Types of Co-Living Businesses and How The Smaller or Medium Owner or Manager Might Encounter Co-Living – and What To Beware Of!

A. Co-Living Advertising Platforms

I am encountering many companies (I do not represent any) that have created platforms where landlords can advertise “rooms for rent”.

I think this is very problematic for owners or managers, since, as discussed in detail above, it is strictly illegal to rent rooms in regular buildings in NYC. 

If you, as an owner or manager, advertise a room on such a platform, and subsequently get in trouble for it with the City, the State, or a court, then I doubt you could look to the co-living advertising platform for relief. See La Park La Brea A LLC v. Airbnb, Inc., 285 F.Supp.3d 1097 (USDC CD California, 2017) (Apartment owners and operators brought a putative class action against online housing marketplace asserting state law causes of action alleging that the rentals of their properties on the online marketplace's website purportedly violated their own lease agreements with their tenants. Online marketplace moved to dismiss. The District Court held that an online marketplace was not an information content provider so that it was not precluded from asserting the Communications Decency Act's (CDA) grant of immunity, and owners and operators' claims treated marketplace as a publisher or speaker of the information that tenant users provided on its website, and thus the CDA's grant of immunity preempted the claims.)

B. Co-Living Companies that Manage Your Asset

There are co-living companies that will manage an asset for an owner. The owner is still the landlord, and the co-living company is the property manager.

C. Co-Living Companies that Net Lease Your Asset

There are co-living companies that will net-lease a whole building. In this case, the owner is the landlord and the co-leasing company is the only tenant. Then the co-leasing company becomes to sub-landlord to the occupants of the apartments, the sub-tenants.

D. Risks When Working with Co-Living Management Companies or Net Leasing to a Co-Living Tenant

Co-living, if done improperly, can lead to serious consequences for an owner. I list them here:

If the City inspects and finds, as per HMC § 27-2004(a)(15), that you are renting rooms, then there could be a finding of illegal SRO use, which could result in violations, fines, and vacate orders.

If the building has less than six units, and co-living creates six or more units, and the building was building before 1974, then the building could be found to be Rent Stabilized. If a Building was built before 1974 and contains six or more units, then the apartments therein are Rent Stabilized. This is so, however, even if the building in question had less than six units in 1974, but after to 1974, six units were created in the building. This is so, even if the extra units were (a) illegally created, and (b) subsequently eliminated! See Wilson v. One Ten Duane Street Realty Co., 123 AD2d 198 [1stDept 1987]; Robrish v. Watson, 48 Misc3d 143(A)[App Term, 2nd Dept, 2nd, 11th & 13th Jud Dists 2015]; Joe Lebnan, LLC v Oliva, 39 Misc3d 31 [App Term, 2nd Dept,2nd,11th & 13th Jud Dists 2013] ; Rashid v. Cancel, 9 Misc 3d 130(A) [App. Term 2ndDept, 2nd & 11th JudDists 2005], 124 Meserole, LLC v. Recko, 55 Misc 3d 146(A) [App Term, 2nd Dept,2nd,11th & 13th Jud Dists 2017].

The Tenants of such units could refuse to pay rent if the use of the subject building does not conform to the building’s certificate of occupancy by reason of the break-up of the apartments. Multiple Dwelling Law § 302(b).

E. The Owner-Operator Who Runs the Building with Co-Living

I have a client that is buying and renovating buildings for its branded co-living model. This client is already a big player on the national multi-family scene. 

There is nothing to prevent a small operator from trying a co-living experiment! You can start small and work with just one apartment.

itkowitz.com 

Labels:

A Landlord’s Right to Access a Tenant’s Apartment in Emergencies and for Repairs and The Laws Regarding Keys and Key Fob Systems

On June 20, 2018, Michelle Itkowitz delivered an interactive lecture at a LNY Meetup, entitled "A Landlord’s Right to Access a Tenant’s Apartment in Emergencies and for Repairs and The Laws Regarding Keys and Key Fob Systems - Laws and Best Practices". This program came with a twenty-page booklet. Here is a link to the full materials. 



Here is an excerpt:

II.  AN OWNER’S RIGHT TO ACCESS A RESIDENTIAL APARTMENT IN A MULTIPLE DWELLING

In this section, we explore the basic rules about an owner’s right to access a residential apartment in a multiple dwelling (a building with three or more units).

A.   Statute Regarding Access

1.    The Statute

As always, the best place to start any legal inquiry is by looking at the statute that relates to your question. Owner’s right to access a residential apartment contained within a multiple dwelling is governed by the New York City, N.Y., Rules, Tit. 28, § 25-101 (Owner’s Right of Access and Requirements for Notification) and states:

"(a)(1) Owner to give notice. Where an owner or his or her representative seeks access to a dwelling unit, suite of rooms or to a room, under the provisions of §27-2008 in order to make an inspection for the purpose of determining whether such places are in compliance with the provisions of the multiple dwelling law or the administrative code, such owner or representative shall notify the tenants not less than twenty-four hours in advance of such time of inspection.

(2) Where an owner or his or her representative seeks access to make improvements required by law or to make repairs to a dwelling unit, suite of rooms or to a room, such owner or representative shall give written notice to the tenant not less than one week in advance of the time when the improvements or repairs are to be started, except where otherwise provided in paragraph (3) of this subdivision.

(3) Where an owner or his or her representative seeks access to make repairs

(i) that are urgently needed to a dwelling unit, suite of rooms or a room, as in the case where a class C violation of the Housing Maintenance Code has been issued, except where such class C violation is for the existence of a lead-based paint hazard, or

(ii) in the case of an emergency where repairs are immediately necessary to prevent damage to property or to prevent injury to persons, such as repairs of leaking gas piping or appliances, leaking water piping, stopped-up or defective drains, leaking roofs, or broken and dangerous ceiling conditions,such owner or representative shall not be required to provide written advance notice, but shall be required to notify the tenant or tenants by such actions as telephone, email, or by knocking on the occupant’s door at a reasonable time when he or she would be expected to be present.

(4) Where an owner or his or her representative must make a repair in a public area or other area of a dwelling that may result in an interruption of essential services such as utilities (heat, hot water, cold water, gas, electricity, or elevator) that is expected to continue for more than two hours, the owner or his or her representative shall provide written notice to the tenants by posting a notice in a prominent place within the public part of the building and on each floor of such building at least twenty-four hours prior to such interruption. However, if such interruption is not expected to continue for more than two hours or is due to emergency repairs that were not anticipated and must begin immediately, advance notice is not required, provided that notice shall be posted as soon as possible if such work continues for two or more hours. Such notice shall identify the service to be interrupted, the type of work to be performed, the expected start and end dates of the service interruption, and shall be updated as necessary. Such notice shall be provided in English, Spanish, and such other language as the owner deems necessary to adequately provide notice to the tenants. Such notice shall remain posted until the interruption of essential services interruption ends. A sample notification form is provided in these rules.

(b) Notices to be in writing. Where an owner is required to give notice in advance of seeking access to a dwelling unit, suite of rooms or to a room, as required by subdivision (a) of this section, such notice shall be in writing, dated, and shall contain a statement of the nature of the improvement or repairs to be made, unless specifically stated otherwise in these rules.

(c) Authorization to be in writing. Where a representative of an owner seeks access to a dwelling unit, suite of rooms, or rooms, the authorization of the owner shall be in writing and the representative shall exhibit such authorization to the tenant when access is requested.

(d) Hours when access to be permitted. Except as provided in paragraph (3) of subdivision (a) of this section, access to a dwelling unit, suite of rooms, or rooms, shall be limited to the hours between nine antemeridian and five post-meridian, unless otherwise agreed to by the tenant. Access shall not be required on Saturdays, Sundays or legal holidays, unless otherwise agreed to by the tenant, except as provided in paragraph (3) of subdivision (a) of this section."

[END OF STATUTE.]

I put the full text of long statutes in my materials when I think they are very important and that people – both real estate professionals and tenants – should read them. Sorry, the law is words, not emojis. In any event, now let us unpack this important statute.

2.    Unpacking the Statute – Three Different Types of Access: Inspections, Repairs, Emergencies and Form of Notice

The statute anticipates three different types of access. First, it talks about access for inspections, which require twenty-four hours’ notice. Second, it talks about access for repairs, which requires a week’s notice.

The notice called for is very specific. The notice must be “in writing, dated, and shall contain a statement of the nature of the improvement or repairs to be made…”. The hours access are permitted are between 9:00 am and 5:00 pm on weekdays, excluding holidays.

Third, the statute talks about emergency situations, which require no written advanced notice. In such cases, the person seeking access “shall be required to notify the tenant or tenants by such actions as telephone, email, or by knocking on the occupant’s door at a reasonable time when he or she would be expected to be present.”

Also, any representative of an owner needs to be able, upon demand by the tenant, to exhibit an authorization by owner, authorize their access.

B.   Rent Stabilized Tenants Have Further Rights Regarding Access

When the landlord seeks access to a Rent Stabilized unit in New York City for the purpose of an inspection or a showing, tenant must first be afforded at least five days’ advance notice (actually ten, if served by mail) so that the parties may attempt to arrange a mutually convenient appointment.[1] Here is the statute:

"RSC § 2524.3. Proceedings for eviction--wrongful acts of tenant.

[A]n action or proceeding to recover possession of any housing accommodation may only be commenced … upon one or more of the following grounds, wherein wrongful acts of the tenant are established as follows:

(e) The tenant has unreasonably refused the owner access to the housing accommodation for the purpose of making necessary repairs or improvements required by law or authorized by the DHCR, or for the purpose of inspection or showing the housing accommodation to a prospective purchaser, mortgagee or prospective mortgagee, or other person having a legitimate interest therein; provided, however, that in the latter event such refusal shall not be a ground for removal or eviction unless the tenant shall have been given at least five days' notice of the inspection or showing, to be arranged at the mutual convenience of the tenant and owner so as to enable the tenant to be present at the inspection or showing, and that such inspection or showing of the housing accommodation is not contrary to the provisions of the tenant's lease or rental agreement. If the notice of inspection or showing is served by mail, then the tenant shall be allowed five additional days to comply, for a total of 10 days because of service by mail, before such tenant's refusal to allow the owner access shall become a ground for removal or eviction."

[END OF STATUTE.]

C.   A Lease Provision Regarding Access

Of course, a lease can always make those requirements more stringent, so check your leases. 

D.   Going into a Tenant’s Apartment without Tenant’s Consent – Just Don’t.

There is always a risk when you enter an apartment without the tenant’s consent. If the tenant is not there, the tenant could say that your vendor took his original Picasso (I am not being facetious; I have actually know tenants who kept original Picassos in their apartments).

Landlords – put yourself in tenant’s position here. Imagine the shock of a stranger opening the door to your home? Under such circumstances, it is not hard to imagine all kinds of bad consequences.

My sincere advice to landlords, after many years in this business, is to never enter an apartment without a tenant’s consent unless there is a serious emergency.

III.        WHEN A RENT STABILIZED TENANT DENIES ACCESS EVEN AFTER PROPER NOTICE IS GIVEN

A Rent Stabilized tenant’s unreasonable refusal to permit the landlord access to the unit to make necessary repairs or improvements required by law, or to show the unit to prospective purchasers or mortgagees, is a ground for termination.[2]

If tenant fails or refuses to provide access, then depending on the terms of the parties’ lease agreement, the landlord may need to serve a ten-day written notice to cure the violation.[3] If the breach continues thereafter, the landlord may issue a termination notice at least seven calendar days prior to the intended termination date.[4]   

Upon the expiration of the termination notice, Landlord can then bring a summary holdover proceeding against tenant in Housing Court. As a practical matter, most such holdovers end with tenant stipulating to provide access, under the scrutiny of the Housing Court judge. If tenant defaults under such stipulation, the stipulation should provide for the case to be restored to the court’s calendar for further relief.

IV.        ATTEMPTS AT ACCESS ASSOCIATED WITH COURT PROCEEDINGS

A.   Tips for Documenting Attempts to Gain Access to an Apartment

The concept of “Access” becomes a big deal in Housing Court – both in residential nonpayment proceedings (where the tenant claims not to be paying the rent due to warranty of habitability issues) and in Housing Part “HP” Proceedings (where the tenant is taking the landlord in to court to get repairs). Landlords must understand the importance of keeping and documenting the circumstances of appointments for access to repair bad conditions in an apartment.

Here are some tips for documenting attempts at access. Please feel free to add more during the presentation!

  • If there is an online system for tenants to request repairs and the landlord to arrange access and dispatch repair people, then use the system carefully and make sure you keep all the records created by the system.
  • Send letters, certified letters, and/or emails to tenant requesting access as per the above statute; and affix a copy of the request on the door in a sealed envelope and take a picture of the letter taped to the door.
  • Document all your attempts to get in. Take pictures or video of the failed attempts at access.
  • Save contractor receipts that show the attempts as well. 
  • If the matter is very contentious, have your lawyer contemporaneously prepare an affidavit for the super and/or vendor to sign regarding their attempts to gain access.

B.   Frequent Reasons Tenants Give For Not Allowing Access and Their Legality

I get asked often about two excuses for tenants not wanting to allow access, and neither reason is legitimate.

1.    “I’ll do the repairs myself and bill you.”

Sometimes tenant says, “I’ll do the repairs myself and bill you.” Tenant cannot do her own repairs and bill the landlord. The authority for this comes from the contract between the landlord and the tenant – the lease. Most leases will say that tenant cannot build in, add to, change or alter the Apartment in any way.

The above rule might not hold true, however, if landlord refuses to do required work in the apartment. A leading case here is Mengoni v. Passy, 254 AD2d 203 [1st Dept 1998]. In this case, the landlord brought an action seeking to evict rent controlled tenant, based on tenant’s replacement of kitchen and bathroom appliances and fixtures without landlord’s prior consent. The Civil Court, New York County dismissed the petition and awarded tenant punitive damages. The landlord appealed. The appellate court held that tenant’s actions did not constitute substantial breach of no alterations clause of lease because landlord failed to respond to tenant’s repeated complaints and demands to have items fixed, warranting tenant’s actions.

2.    “I need to see the contractor’s license.”

Sometimes tenant says, “I need to see the contractor’s license and/or Identification.” I cannot find any authority that gives tenant a right to ask for a contractor’s license before allowing them to enter the apartment. In fact, I found a DHCR proceeding where a tenant was not allowed to challenge repairs that the landlord did on the basis that the contractor was unlicensed. In The Matter of the Administrative Appeal of Joann Brown; DHCR Admin. Rev. Dckt. No. PK210080RT (3/12/02); LVT Number: 15801.

Endnotes

[1] 9 NYCRR § 2524.3(e).

[2] 9 NYCRR § 2524.3(e).

[3] 9 NYCRR § 2524.3(a); B.A. Associates Equities Corp. v. Baez, NYLJ, Jan. 6, 1993, p. 25, col. 2 [Civ. Ct., Kings County].

[4] 9 NYCRR § 2524.2(c)(2).

itkowitz.com




  

Labels: , , , , ,

How Rent Stabilization Coverage Issues Affect Value in Multi-Family Transactions

Michelle Itkowitz spoke at the Long Island Chapter of the Appraisal Institute on June 13, 2018, on "How Rent Stabilization Coverage Issues Affect Value in Multi-Family Transactions". Here is an excerpt from the materials:

IV. RENT STABILIZATION AND THE NUMBER OF UNITS IN A BUILDING

A. If a Building was built before 1974 and contains six or more units, then the apartments therein are Rent Stabilized, unless certain exceptions apply. This is so, however, even if the building in question had less than six units in 1974, but after to 1974, six units were created in the building. This is so, even if the extra units were (a) illegally created, and (b) subsequently eliminated!

If a Building was built before 1974 and contains six or more units, then the apartments therein are Rent Stabilized. That seems straightforward enough, right? This is so, however, even if the building in question had less than six units in 1974, but after to 1974, six units were created in the building. This is so, even if the extra units were (a) illegally created, and (b) subsequently eliminated!

In Wilson v. One Ten Duane Street Realty Co., 123 AD2d 198 [1stDept 1987], the appellate court which covers Long Island stated:

"The purpose of the [Rent Stabilization Laws] being to extend the protection of Rent Stabilization in the face of a declared emergency brought about by having shortages and their attendant problems, it is best served by following the plain language of the statute and refraining from supplying an uncalled for base date that would only restrict its purpose."

In Robrish v. Watson, 48 Misc3d 143(A)[App Term, 2nd Dept, 2nd, 11th & 13th Jud Dists 2015] the appellate court stated:

"Landlord commenced this holdover proceeding to recover the “top floor” apartment of a two-family house. At a nonjury trial, landlord conceded that, in 1993 or 1994, he had begun using the house as a “rooming house” and had rented 10 different rooms to 10 different individuals, including tenant. By the time of the trial, tenant was the only individual left living in the house. … The 10 different tenancies entered into by landlord with 10 different individuals for 10 different rooms in his house rendered the house subject to rent stabilization, as housing accommodations in buildings built before January 1, 1974 containing more than six units are subject thereto…The RSC defines a housing accommodation as “[t]hat part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, dwelling unit or apartment”. Under this definition, an individually rented room in a rooming house is a housing accommodation, and therefore, contrary to the Civil Court’s decision, a building with six or more individually rented rooms is subject to rent stabilization, regardless of whether any structural changes were made to the premises… Nor is it of any consequence that the illegal use of the building has ended... Thus, the petition should have been dismissed on the ground that landlord failed to serve the required rent stabilization notices.)"

[Emphasis supplied.]

In Joe Lebnan, LLC v Oliva, 39 Misc3d 31 [App Term, 2nd Dept,2nd,11th & 13th Jud Dists 2013] the court stated:

On this appeal, landlord argues that, notwithstanding that there may have been eight apartments in the building, the apartments are not rent-stabilized. Landlord claims that illegal apartments cannot become rent-stabilized unless the owner knew of and acquiesced in the unlawful conversion of space from commercial to residential use and the owner sought to legalize the conversion. …In Matter of Gracecor Realty Co. v Hargrove (90 NY2d 350 [1997]), the Court of Appeals held that a residentially occupied cubicle in a lodging house was subject to the Rent Stabilization Law. The Court rejected an argument by the Division of Housing and Community Renewal “that the partitioned space . . . cannot be a housing accommodation as a matter of law” … As the Court there noted, the Rent Stabilization Code’s definition of a “housing accommodation” (Rent Stabilization Code [9 NYCRR] § 2520.6 [a]) is that “part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home, dwelling unit or apartment” (Matter of Gracecor Realty Co., 90 NY2d at 355 [emphasis omitted]), and this “functional definition is not limited by any physical or structural requirements” (id.; see also White Knight Ltd. v Shea, 10 AD3d 567 [2004]). Accordingly, we find that the Civil Court correctly held that the apartment is rent-stabilized ….

Then there is also Rashid v. Cancel, 9 Misc 3d 130(A) [App. Term 2ndDept, 2nd & 11th JudDists 2005], where the court held: 

"In our view, the use of the basement as a sixth housing accommodation over a multi-year period brought the entire building under rent stabilization …The alleged subsequent reduction in the number of housing accommodations to fewer than six, even if done, as landlord claims, after the placement by the Department of Housing Preservation and Development of a violation, did not exempt the remaining units from rent stabilization." 

See also Commercial Hotel, Inc. v. White, 194 Misc2d 26 [App Term 2nd Dept 2002].

And 124 Meserole, LLC v. Recko, 55 Misc 3d 146(A) [App Term, 2nd Dept,2nd,11th & 13th Jud Dists 2017], where the court held that a premises was Rent Stabilized because two rooms in a store that were used residentially with landlord’s knowledge for years constituted “housing accommodations” as defined by the Rent Stabilization Code, which refers to “part of any building or structure,” and brought total number of residential units to six.

B. A Cautionary Tale from a Situation Involving No Illegal Units

I represented a tenant in a case involving a five-unit townhouse in Brooklyn. My client was the last of two tenants in the building, and the new owner of the building wanted her out. 

According to the Department of Finance, the building was built in 1900 and contained nine units and was then classified as, “over 6 families without store”. According to the New York City Department of Buildings (“DOB”), the building’s current certificate of occupancy, dated 1985, states that the building now contains five units (“the CO”). The CO indicates that it was obtained after the building was “altered”, and not pursuant to the construction of a new building. The listings of permits and jobs on DOB did not suggest that the building was substantially rehabilitated prior to obtaining the CO. 

In any event, there was also an earlier certificate of occupancy on file at DOB (“the 1967 CO”). According to the 1967 CO, the building contained six units in 1967. The 1967 CO, therefore, establishes that from 1967 through 1985, the building was a legal six-family! That can be the end of our inquiry. Because if a building was built before 1974 and contains six or more units, then the apartments therein are Rent Stabilized. NYC Admin. Code 26-505(b). This is so even if the building in question had less than six units in 1974, but subsequent to 1974, six units were created in the building. Wilson v. One Ten Duane, 123 AD2d 198 [1st Dept 1987]. I was able to successfully assert a defense of Rent Stabilization coverage on this tenant’s behalf when the landlord attempted to evict her. 

This story is very significant, because this story did NOT involve illegally created units. Rather, in this case, the building had a 1985 CO for only five units and a use consistent therewith. Everything must have looked good to the purchaser. No one bothered, however, to check all the way back to how the building was utilized from 1974 forward. This was a simple lapse in due diligence on the purchaser’s attorney’s part.

C. Determining the Number of Units If There is No Certificate of Occupancy

When there is no CO, we look for a New York City Department of Housing Preservation and Development (“HPD’) “i-card” for information about the building that would typically be contained on the CO. The following is from HPD’s website and explains i-cards:

"HISTORICAL OCCUPANCY RECORDS (INITIAL INSPECTION CARDS)

The Department of Housing and Buildings was an agency of the City of New York responsible for building inspections and maintaining occupancy records. The agency maintained historical occupancy records called Initial Inspection cards (more commonly referred to as 'I-cards') which captured occupancy and arrangement information based on the initial inspection of the property by the agency and any subsequent applications filed with that agency during the late 1800s and early 1900s. For buildings without a Certificate of Occupancy (which was not required until 1938), the 'I-cards' have been accepted as the legal record of existing occupancy as of the last date indicated on the card.  Buildings with I-cards may have more recent legal occupancy records if any lawful alteration or conversion work was performed in the building after the last date on the I-card. For information on alterations or conversions conducted since the last date on the I-card, Department of Buildings records should be consulted, since a Certificate of Occupancy may have been issued or additional plans may have been approved. Pursuant to the New York City Charter, if there is both an I-card and a Certificate of Occupancy for a building, the Certificate of Occupancy controls as to all matters set forth therein."

I-Cards can, “provide evidence of the inspector's observations and thus of the nature of the use or occupancy, whether legal or not, but do not amend or supersede the certificate of occupancy or themselves determine the legality of an existing use or occupancy.”  In re 345 West 70th Tenants Corp. v. New York City Environmental Control Bd., 143 AD3d 654 [2016].

D. Take Aways for Appraisers for Buildings that Allegedly Have Less Than Six Units

Look for evidence of illegally created units that may push the total to six:

o Look for SRO units, such as locks on the outsides of bedroom doors. 

o Look for illegal basement apartments or railroad apartments divided into two. 

o Compare the certificate of occupancy to the use. 

Make sure you check the certificate of occupancy in effect in 1974, and not just the current CO.

If there is no certificate of occupancy, you can check the I-Card on file with HPD.

Look in the online White Pages and see how many people list the building as their home address.

Ask questions of the current owner; sometimes this is the best source of information there is. 

itkowitz.com


Labels: , ,

Altman Ruling Offers Clarity for Tenants and Landlords -- Michelle Itkowitz Interviewed by Holm & O'Hara

May 15, 2018

Michelle Itkowitz was honored to be interviewed by the folks at Holm & O'Hara, the go-to New York City firm for commercial real estate investors, closely-held businesses, corporations and their owners. H&O wanted to know all about the Altman case, so we spent some time talking about it. Here is a link to the interview and the full text is below.


Altman Ruling Offers Clarity – and Opportunity – for NYC Real Estate Investors

On April 26, 2018, New York State's highest court – the Court of Appeals – unanimously ruled in a case that had created significant uncertainty for owners and tenants of many multifamily buildings in New York City since 2014. In Altman v. 285 West Fourth LLC, tenant Richard Altman asserted that his apartment had been illegally removed from rent stabilization. The core of Altman's argument was that the rent had to pass the destabilization threshold1 during the prior tenant's occupancy in order for the apartment to be deregulated. In a ruling written by Chief Judge Janet DiFiore, the Court of Appeals, New York State’s highest court, ruled against this argument and in favor of the building owner. In order to understand the implications of this ruling, Holm & O'Hara LLP spoke with Michelle Maratto Itkowitz, Esq., Partner in Itkowitz PLLC, a real estate litigation firm that represents both landlords and tenants and has a core practice in rent regulation issues.

What does Altman mean for building owners?

Altman has a couple of key benefits for owners of buildings that are – or were – subject to rent stabilization. First of all, owners no longer have to worry that a large group of tenants might sue them for illegally deregulating their apartments between their occupancy and the prior tenants'. Around 150,000 tenants are believed to be in situations similar to Altman – that is, that their rents passed the threshold for destabilization during their own tenancies and they met certain other conditions. Any of them could have brought suit, so it's a huge relief for owners not to have that hanging over them. Second, the final ruling in Altman frees owners up to resume their normal course of business. During the nearly four years that the case was making its way through the courts, owners had to act very carefully and treat tenants who were in a position like Altman's as if they were entitled to the protections of rent regulations. This ruling provides both clarity and freedom for owners to move forward with plans for their properties.

Is there any upside for tenants in Altman?

Uncertainty has the potential to be as expensive for tenants as for landlords, so tenants benefit from clarity. They won't be spending time and money bringing legal actions that won't yield the results they want. Additionally, I think we will be seeing more buy-out offers now that landlords can be certain that they are actually going to get possession of the units. That could be highly beneficial to people whose life circumstances might make them open to moving.

Should Altman encourage landlords to try to clear out their tenants?

Transitioning any multi-family dwelling to the next stage of its lifecycle is a process that should not be undertaken lightly. Sometimes there are perfectly good financial and strategic reasons to leave a property in the rent regulation system. Building owners – or prospective owners – should evaluate this carefully with their full team of legal, financial and property advisors. If the owners decide to try transitioning out of the rent regulation system, they need to plan it strategically and put the right advance team on the ground to both stay in compliance with the law and take advantage of opportunities to get to know tenants and their needs. Emptying a whole building is both an art and a science and no case is the same. Altmancertainly creates some opportunities that were not present before, but it doesn't change the essential ground rules that govern landlord-tenant interactions.

What's the most important piece of advice you have for owners of buildings with rent regulated units?

Try to find a win-win path; you have priorities and your tenants have priorities. If you treat them as people and take the time to discover what might motivate them to stay in a particular unit or move, you can often uncover some surprising options that will work well for both sides – and it's not always about money. Attempting to harass or strong-arm a tenant into moving is illegal.

Should prospective buyers avoid buildings with rent regulated units?

There is no single answer to that. It depends on the investor's goals and needs, as well as on the property. Above all, though, prospective buyers should be proactive about due diligence. That means getting as much detailed information as they can up front, including leases, DHCR (Department of Housing and Community Renewal) documents and tenant files. Just as buyers will typically hire an engineer to make sure the building is stable, they really should consider hiring a landlord and tenant litigator to assess the tenancies and the ability of those tenancies to create or to stymie revenue generation.

Labels: , , ,

Go to older posts

Copyright by Itkowitz PLLC.

Sitemap   |   Disclaimer