When a Rent Stabilized Tenant Fails to Execute a Renewal Lease – Is it Deemed Renewed? – the Changing Law
February 8, 2015: This post originally appeared on the LandlordsNY blog, where Michelle Maratto Itkowitz is the "Legal Expert".
Hi, Michelle here. I am the LandlordsNY “Legal Expert” (you can see my profile on the experts page). 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: “Situation: Stabilized tenant refuses to sign lease renewal for two years in a row. Tenant requests work to be done to apartment and landlord agrees to do work once tenant signs renewal. Tenant decides to sign and work is done. Is landlord entitled to the renewal increases for the last two years?”
Answer: The short answer is, “no”.
I think you are mixing apples with oranges in this question.
The only remedy that you have if a tenant refuses to renew a Rent Stabilized lease is to sue to evict the tenant. See Rent Stabilization Code§ 2524.3(f) and the New York State Division of Homes and Community Renewal (“DHCR) Fact Sheet # 4.
Furthermore, the Tenant’s remedy against you when repairs allegedly do not get done is to initiate a Housing Part Proceeding (an “HP Proceeding”) and seek to enforce the warranty of habitability. Park West Management Corp. v. Mitchell, 47 N.Y.2d 316 (1979).
I say you are mixing together apples with oranges because you did NOT need to hold off on suing the tenant for failing to renew, just because tenant was demanding repairs. Put another way – tenant had no right to hold the lease hostage over the alleged repairs! You did not exercise your muscle when you had the opportunity to, and the moment is now gone.
Now that things are all cleared up between you and the tenant and the tenant is renewing the lease, you cannot unilaterally deem that the lease was previous renewed.
The “Deemed Renewal” doctrine has recently changed. Rent Stabilization Code 2523.5 PREVIOUSLY said that, “Where a tenant fails to timely renew an expiring lease or rental agreement offered pursuant to this section, and remains in occupancy after the expiration of the lease, such lease…may be deemed to have been renewed…at the legally regulated rent, together with any guidelines adjustments that would have been applicable had the offer of a renewal lease been timely accepted.” BUT THIS IS NOT THE LAW ANYMORE.
Samson Management v. Hubert, 28 Misc3d 29 (App. Term 2nd Dept., 2010), aff’d 92 AD3d 939 (2nd Sept. 2012), changed all that. That case says that if a Rent Stabilized tenant does not sign a renewal lease, the lease is not automatically deemed renewed just because the tenant holds over. Subsequently, the Rent Stabilization Code changed too. Rent Stabilization Code § 2523.5. (Notice for renewal of lease and renewal procedure) now states:
"(c) Where the tenant fails to timely renew an expiring lease or rental agreement offered pursuant to this section, and remains in occupancy after expiration of the lease, such lease or rental agreement may be deemed to be in effect, for the purpose of determining the rent in an overcharge proceeding, where such deeming would be appropriate pursuant to Real Property Law section 232-c. In such event, the expiring lease will be deemed to have been renewed upon the same terms and conditions, at the legal regulated rent, together with any guidelines adjustments that would have been applicable had the offer of a renewal lease been timely accepted. Unless otherwise dictated by Real Property Law section 232-c, the effective date of the rent adjustment under the “deemed” renewal lease shall commence on the first rent payment date occurring no less than 90 days after such offer is made by the owner."
Thus, RSC § 2524.3 only applies to determining a rent overcharge, and then only under certain circumstances.
Moreover, Samson creates the necessity of a fresh inquiry every time a situation like yours arises into whether an unsigned Rent Stabilized lease was renewed. The Scherer and Fisher Landlord and Tenant Text, “Residential Landlord and Tenant Law in New York”, at § 4:184 sums it up well:
"[Samson] will require parties to litigate the issue whether an implied or express lease has been entered into by a Rent Stabilized tenant who holds over and has not signed a renewal lease. Attorneys for both parties will have to explore carefully their clients’ actions that may have created an express or implied lease. It will be interesting to see how this question develops in the future."
Indeed, it will. READ MORE