Itkowitz PLLC Teaching and Publishing

Philadelphia Skyline

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: , , ,

Structuring a Tenant Buyout – MICHELLE’S MONDAY MANDAMUS!


February 19, 2018:  This Q&A post originally appeared on the LandlordsNY blog, where Michelle Maratto Itkowitz is the "Legal Expert".

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:  “If I am able to negotiate a buyout with my rent regulated tenant, what legal documents will my lawyer and the tenant’s lawyer need to prepare?”

Answer:

First, because you are talking about negotiating a buyout, at the end of this answer, I will be providing you with the NYC regulations on avoiding tenant harassment when negotiating a buyout. READ THE REGULATIONS CAREFULLY. Obey them to the letter.

Second, let me remind you that a tenant cannot be bought out of a valuable rent regulated tenancy if tenant is not represented by competent counsel. Without counsel, the settlement agreement and the warrant of eviction are not worth the paper they are printed on. Grasso v. Matarazzo, 180 Misc.2d 686 (App. Term 2d 1999).

Now to your answer. When a tenant is being “bought out”, a stipulation of settlement is not the proper vehicle to paper that deal. A buyout agreement is very different from a regular Housing Court stipulation of settlement.

When a tenant, represented by counsel (of course), agrees to vacate an apartment in exchange for money, the deal should be memorialized OUTSIDE of a stipulation of settlement in a holdover, in a private and confidential “Surrender Agreement”. Note that the Surrender Agreement will share many characteristics with the non-buyout stipulation of settlement. It should, for example, provide for the deal between the parties on attorney’s fees. It should also, however, do MANY additional things. Here are 10 major characteristics of the Surrender Agreement:

The Surrender Agreement:

1. Should clearly recite the consideration. The tenant is swapping his surrender of the apartment and the tenancy for money.

2. Should have a confidentiality clause. This protects the tenant as well as the landlord. It is no one’s business how much money the tenant got. (Except Mr. Tax Man!)

3. Should have an up-front “Signing Payment”, so the tenant can move.

4. Will have an escrow agent section, because landlord’s lawyer is holding the balance of the buyout money.

5. Will have a representation that tenant knows he has the option of remaining in the apartment and that tenant has been well advised of his options, including by financial advisers. This includes that the tenant understands that the transaction has tax implications.

6. Will make “sole possession” a MATERIAL representation. Tenant cannot leave people in the apartment and cannot fail to tell landlord about anyone out there who might claim a right to the apartment. 

7. Must have a robust default clause, which allows for the recovery of the Signing Payment, a pre-established use and occupancy payment upon default, legal fees, etc.

8. Will provide for a holdover, attendant to the Surrender Agreement (what I have always called a “friendly holdover”). The friendly holdover is just a bare bones pleading. The holdover isn’t being litigated. It is merely a vehicle to get a judgment of possession and a warrant of eviction.

9. Will provide that tenant gets a good letter of recommendation in a pre-agreed upon form, attached as an exhibit to the Surrender Agreement.

10. Outlines a “Surrender Ceremony” – the steps on the final day where the vacatur and inspection occurs. At the Surrender Ceremony, there is a meeting where documents, keys, and money are exchanged. There is a pre-agreed upon Surrender Affidavit attached as an exhibit to the Surrender Agreement.

Ok – now here is the law on no harassment of tenants when attempting to negotiate a buyout. The New York City Housing Maintenance Code (NYC Admin Code 27-2004(a)(48)) prevents owners from harassing tenants regarding buyouts. I think all owners and managers should read it, so I include the relevant parts herein:

Except where otherwise provided, the term “harassment” shall mean any act or omission by or on behalf of an owner that (i) causes or is intended to cause any person lawfully entitled to occupancy of a dwelling unit to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy, and

(ii) includes one or more of the following acts or omissions, provided that there shall be a rebuttable presumption that such acts or omissions were intended to cause such person to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy:

a. using force against, or making express or implied threats that force will be used against, any person lawfully entitled to occupancy of such dwelling unit;

b. repeated interruptions or discontinuances of essential services, or an interruption or discontinuance of an essential service for an extended duration or of such significance as to substantially impair the habitability of such dwelling unit;

b-1. an interruption or discontinuance of an essential service that (i) affects such dwelling unit and (ii) occurs in a building where repeated interruptions or discontinuances of essential services have occurred;

***

d. commencing repeated baseless or frivolous court proceedings against any person lawfully entitled to occupancy of such dwelling unit;

d-1. commencing a baseless or frivolous court proceeding against a person lawfully entitled to occupancy of such dwelling unit if repeated baseless or frivolous court proceedings have been commenced against other persons lawfully entitled to occupancy in the building containing such dwelling unit;

e. removing the possessions of any person lawfully entitled to occupancy of such dwelling unit;

f. removing the door at the entrance to an occupied dwelling unit; removing, plugging or otherwise rendering the lock on such entrance door inoperable; or changing the lock on such entrance door without supplying a key to the new lock to the persons lawfully entitled to occupancy of such dwelling unit; or

f-1. contacting any person lawfully entitled to occupancy of such dwelling unit, or any relative of such person, to offer money or other valuable consideration to induce such person to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy, for 180 days after the owner has been notified, in writing, that such person does not wish to receive any such offers, except that the owner may contact such person regarding such an offer if given express permission by a court of competent jurisdiction or if notified in writing by such person of an interest in receiving such an offer;

f-2. contacting any person lawfully entitled to occupancy of such dwelling unit to offer money or other valuable consideration to induce such person to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy, unless such owner discloses to such person in writing (i) at the time of the initial contact, and (ii) in the event that contacts continue more than 180 days after the prior written disclosure, at the time of the first contact occurring more than 180 days after the prior written disclosure:
(1) the purpose of such contact,
(2) that such person may reject any such offer and may continue to occupy such dwelling unit,
(3) that such person may seek the guidance of an attorney regarding any such offer and may, for information on accessing legal services, refer to The ABCs of Housing guide on the department's website,
(4) that such contact is made by or on behalf of such owner, and
(5) that such person may, in writing, refuse any such contact and such refusal would bar such contact for 180 days, except that the owner may contact such person regarding such an offer if given express permission by a court of competent jurisdiction or if notified in writing by such person of an interest in receiving such an offer;

f-3. offering money or other valuable consideration to a person lawfully entitled to occupancy of such dwelling unit to induce such person to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy while engaging in any of the following types of conduct:
(1) threatening, intimidating or using obscene language;
(2) initiating communication with such frequency, at such unusual hours or in such a manner as can reasonably be expected to abuse or harass such person;
(3) initiating communication at the place of employment of such person without the prior written consent of such person; or
(4) knowingly falsifying or misrepresenting any information provided to such person;

f-4. repeatedly contacting or visiting any person lawfully entitled to occupancy of such unit (i) on Saturdays, Sundays or legal holidays, (ii) at times other than the hours between 9 a.m. and 5 p.m. or (iii) in such a manner as can reasonably be expected to abuse or harass such person, provided that if such person has notified such owner in writing that such person consents to being contacted or visited at specified hours or in a specified manner, such owner may also contact or visit such person during such specified hours and in such specified manner, and provided further that an owner may contact or visit such person for reasons specifically authorized or mandated by law or rule; or

g. other repeated acts or omissions of such significance as to substantially interfere with or disturb the comfort, repose, peace or quiet of any person lawfully entitled to occupancy of such dwelling unit and that cause or are intended to cause such person to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy, including improperly requiring such person to seek, receive or refrain from submitting to medical treatment in violation of subdivision b of section 26-1201 [Improperly conditioning residential occupancy on medical treatment.]




  
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: , , ,

Co-Living - What it is. What it isn’t. How it’s good for tenants. How it’s good for landlords. And what its limits are.

On December 13, 2017, Michelle Itkowitz presented to the LandlordsNY 2017 Winter Property Management Symposium at New World Stages. 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:  

C. Co-Living Defined 

I found that I needed a working definition of co-living for my practice, and this is what I came up with:

An arrangement by which a landlord rents an apartment to a group of tenants, for at least thirty days, where the tenants occupy and share the apartment as roommates, as an arrangement which the landlord consents to and facilitates as an active participant; the tenants have flexible terms, which are often short, and are allowed to vacate the apartment early without liability for the full term of the lease; if a roommate is lost, the landlord assists the remaining tenants with getting a qualified new roommate to take lost roommate’s place and gives the remaining tenants rent-relief while doing so; the landlord frequently provides the tenants with other advantages and amenities, including but not limited to furnishings and personal property, services, and thematic programming, such as dinners or lectures on topics of common interest to the roommates; co-living places a big emphasis on the creation of a community within the apartment; the price per square foot for the apartment is often higher than it would be if the same apartment was not rented for co-living. The advantages of co-living for the tenant are affordability, flexibility, convenience, limited liability for bad roommates, and community. The advantage of co-living to a landlord is a higher price per square foot and greater control of the occupants of an apartment.





II. WHAT CO-LIVING IS NOT

Next, let us go over in detail how co-living is an extremely different thing from other residential rental paradigms. Sometimes the best way to learn what something is, is to learn what it is not.

A. Co-Living is NOT the Classic Roommate Situation

First, the below diagram shows the classic roommate situation:




Under this scenario, a tenant decides she wants an apartment that she probably cannot afford on her own. Therefore, she aggregates a group of roommates on Craig’s List or using social media. That tenant finds the apartment and becomes the contact person for the group of tenants with the landlord. Maybe the landlord puts only the contact tenant on the lease, or maybe all roommates are on the lease[fn1].  After the initial renting, the landlord is done. 

If one of the roommates leaves or stops paying rent then there is tremendous pressure on the remaining roommates to make up the difference. When a landlord calls me up and tells me that one roommate has stopped paying rent, my best practices legal advice is always to sue ALL tenants on the lease, because they are all jointly and severally liable. This makes the nonpayment proceeding more expensive for the landlord, because there are more people to serve with the predicate notice and the nonpayment proceeding. This is a very stressful and burdensome situation for the tenants who paid their share of the rent. Now their names are in the Housing Court records even though they paid their share of the rent. 

If there is only one tenant on the lease, this is all the more burdensome for that tenant. Also, consider the plight of the guarantor of the single tenant. I have often received calls from parents who guaranteed a lease for an adult child in New York City. That guarantor can find themselves pursued for tens of thousands of dollars.

None of this is ideal for the landlord, who just wants the rent, not a Housing Court proceeding or a Guarantor Action.

Furthermore, the classic roommate situation is fraught with other difficulties. If Tenant 1 bought the coffee maker and then leaves and takes it with him, gone is the coffee maker. Tenant-roommates in the classic scenario have to divide responsibility for buying items used by all, like toilet paper. 

Moreover, the classic roommate situation does little in terms of creating community for people who are looking for that as part of a roommate experience. 


B. Co-Living is NOT SRO Usage

Next, the below diagram shows a Single Room Occupancy use (“SRO use”):




In this scenario, a landlord goes out and rents rooms within an apartment directly to individual tenants, people who have nothing to do with one another, although they may share a bathroom and a kitchen. The landlord uses separate leases for each room and each tenant, with separate prices and terms. There are most likely locks on the outside of the individual bedroom doors, as if each bedroom door is the threshold to a separate living unit. 

A landlord may not, however, rent rooms in regular apartments. Multiple Dwelling Law (“MDL”) § 4(16) states:

"“Single room occupancy” is the occupancy by one or two persons of a single room, or of two or more rooms which are joined together, separated from all other rooms within an apartment in a multiple dwelling, so that the occupant or occupants thereof reside separately and independently of the other occupant or occupants of the same apartment."  

MDL § 301 says that every building will be used in conformity with its certificate of occupancy (“CO”). The CO will state whether a building contains apartments or whether it may be rented for SRO use. Therefore, MDL § 301 would be violated if an apartment in a regular building was rented for SRO use.

If MDL § 301 is violated, then, according to MDL § 302, the building’s mortgage goes into default, no rent is due from the tenants, no law suit for rent may be brought against the tenants, and:

"2. The department may cause to be vacated any dwelling or any part thereof which contains a nuisance as defined in section three hundred nine, or is occupied by more families or persons than permitted in this chapter, or is erected, altered or occupied contrary to law. Any such dwelling shall not again be occupied until it or its occupancy, as the case may be, has been made to conform to law." [Emphasis supplied.][fn2] 

The New York City Housing Maintenance Code (“HMC”) applies to all dwellings.[fn3] There is a similar definition of an SRO (to that in the MDL) in the HMC, which calls an SRO unit a “Rooming Unit” at § 27-2004(a)(15) and states:

"Rooming unit shall mean one or more living rooms arranged to be occupied as a unit separate from all other living rooms, and which does not have both lawful sanitary facilities and lawful cooking facilities for the exclusive use of the family residing in such unit. It may be located either within an apartment or within any class A or class B multiple dwelling." 

Under HMC § 27-2004(14), an “Apartment shall mean one or more living rooms, arranged to be occupied as a unit separate from all other rooms within a dwelling, with lawful sanitary facilities and a lawful kitchen or kitchenette for the exclusive use of the family residing in such unit.” Under HMC § 27-2004(4), a “family” is:

"(a) A single person occupying a dwelling unit and maintaining a common household with not more than two boarders, roomers or lodgers; or
(b) Two or more persons related by blood, adoption, legal guardianship, marriage or domestic partnership; occupying a dwelling unit and maintaining a common household with not more than two boarders, roomers or lodgers; or
(c) Not more than three unrelated persons occupying a dwelling unit and maintaining a common household; or…."

Here is an example of a recent Environmental Control Board case. The New York City Department of Buildings (“DOB”) issued violation notices to landlord for converting a two-family house to six SRO units [pursuant to Title 28 of the HMC which has to do with construction]. Landlord claimed that she hadn't changed the building since buying it in 2014. She claimed that she lived on the first floor and landlord's relatives lived on the second floor. But landlord submitted photographs showing that there were locks on room doors. DOB submitted a number of photographs documenting its claim. The Administrative Law Judge  ruled against landlord and fined her $47,400, which included daily penalties. Landlord appealed and lost. Zhao: ECB App. No. 1700674 (8/3/17) [LVT Number: #27928].

C. Co-Living is NOT Short Term Leasing (Like Airbnb)

When a landlord puts her regular apartment building into use as a defacto hotel, on short-term leasing platforms, like Airbnb or VRBO, then the structure is much like the structure in the SRO diagram above, with all the same legal problems. If the terms for such renting are under 30 consecutive days, however, then there are additional legal problems.

The statutory prohibition against short-term occupancy is found in the New York State Multiple Dwelling Law (“MDL”), which applies to buildings with three or more units.  

MDL § 4(8)(a), the relevant statute, states:  

"A “class A” multiple dwelling is a multiple dwelling [3 units] that is occupied for permanent residence purposes…A class A multiple dwelling shall only be used for permanent residence purposes. For the purposes of this definition, “permanent residence purposes” shall consist of occupancy of a dwelling unit by the same natural person or family for thirty consecutive days or more and a person or family so occupying a dwelling unit shall be referred to herein as the permanent occupants of such dwelling unit. The following uses of a dwelling unit by the permanent occupants thereof shall not be deemed to be inconsistent with the occupancy of such dwelling unit for permanent residence purposes:

(1)(A) occupancy of such dwelling unit for fewer than thirty consecutive days by other natural persons living within the household of the permanent occupant such as house guests or lawful boarders, roomers or lodgers; or (B) incidental and occasional occupancy of such dwelling unit for fewer than thirty consecutive days by other natural persons when the permanent occupants are temporarily absent for personal reasons such as vacation or medical treatment, provided that there is no monetary compensation paid to the permanent occupants for such occupancy." [Emphasis supplied.]

At this point, when a landlord calls me about an Airbnb problem in her or his building, my first question is this – am I dealing with real human beings attempting to engage in the “sharing economy” or am I dealing with a de facto hotelier, a “professional operator” – someone who rents a whole bunch of apartments, which he or she never lives in, and which he or she continuously illegally short-term sublets.  

According to the office of the New York State Attorney General, Eric T. Schneiderman, almost half of Airbnb’s $1.45 million in 2010 revenue in the city came from hosts who had at least three listings on the site.[fn4] An analysis of global Airbnb listings in 2014 showed that hosts offering multiple listings made up over 40% of the company's business.[fn5] A 2016 report from Penn State researchers for the American Hotel and Lodging Association determined that $378M of Airbnb's total revenue—nearly 30%—was generated from "full-time operators" listing rentals year-round.[fn6] 

Dealing with a professional operator is completely different from dealing with a regular person. I had a client recently who discovered that one of his tenants, let’s call him “John”, had rented three apartments in the building, using his wife’s name for one unit and his friend’s name for another. John did not live in any of the three units and all three were continuously rented on Airbnb. The landlord was furious. When he confronted John, John said, “When the Marshal comes, I will stop. I have a lawyer and have been in this situation before.” The landlord then made a terrible mistake – (without consulting a lawyer) he hired a security guard to prevent guests of the three units from entering. John took the landlord immediately to court on three illegal lockout proceedings and won. Landlord had to stop blocking access and begin legitimate court cases. You can never use self-help eviction against a residential tenant in New York City. You can NOT lock a tenant out of their apartment. In New York State, in the context of a residential lease, a landlord is forbidden from resorting to self-help under any circumstances and can be subject to compensatory, punitive, and treble damages.[fn7]    

Suffice it to say, a professional Airbnb operator is NOT engaged in co-living, even if the pro-operator tries to dress it up that way.


D. Co-Living is NOT Micro Units

This last section has no law in it, and it contains mostly my opinion, so skip it if you want to.

Co-living is NOT Micro! Micro units, to me, mean that a development has little tiny apartments. Those apartments are not rooms, they have kitchens and baths. To compensate for the tiny apartments, the development will have great building-wide common space amenities. Maybe your kitchen is teeny-tiny, but there is a great barbeque area on the room, complete with tools and stocked with charcoal. Maybe you have almost no living room, but there are party rooms in the building you can rent, and various decks and lounges available for free. This is all great. But it is not co-living. Micro means you have a small apartment in a great building. 

Co-Living has an unmistakable communal aspect to it that the Micro development lacks.

[fn1] There are pros and cons to each approach; See the LNY online lease!

[fn2] In Association For Neighborhood Rehabilitation, Inc. v. Board of Assessors of Ogdensburg, 81 A.D.3d 1214 (3rd dept. 2011), the court found that “SRO tenants have a single sleeping room, with access to a communal kitchen, bathroom and social area.”

[fn3] N.Y. ADC. LAW § 27-2003.

[fn4] http://www.nytimes.com/2014/11/30/magazine/the-business-tycoons-of-airbnb.html?mwrsm=Email&_r=0.

[fn5] https://www.fastcompany.com/3043468/the-secrets-of-airbnb-superhosts.  

[fn6] https://www.bisnow.com/national/news/hotel/report-professional-operators-make-a-killing-off-airbnb-59859. 

[fn7] See Real Property Actions and Proceedings Law (“RPAPL”) § 853; Romanello v. Hirschfeld, 63 N.Y.2d 613, 615 (1984).

[END OF EXCERPT]





Labels: , , , , ,

Go to older posts

Copyright by Itkowitz PLLC.

Sitemap   |   Disclaimer