NEW YORK STATE’S NEW HOUSING LAW: THE GOOD, THE BAD AND THE UGLY

Legal Services NYC

The Legal Aid Society

NEW HOUSING LAWS: GOOD CAUSE EVICTION

• Basic contours of this new law:
• Who is covered?
• What protections do covered people have?
• Rent increases
• Causes of eviction
• New notice and petition requirements

WHO IS COVERED?

• New RPL § 6-A
• Effective date (April 20, 2024)
• Section 1 is the substantive law.
• Effective date immediately and applies to proceedings commenced on or after the effective date.
• Section 2, 3, 4 and 5 amend the notice provisions of the RPL and amend RPAPL §§711 and 741.
• Take effect on the 120^th day after the act becomes law
• Law is repealed June 15, 2034.

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WHO IS COVERED

• Coverage under the Act is by housing accommodation.
• The following housing accommodations are not covered
• Premises owned by a small landlord
• Owner occupied buildings with no more than 10 units
• Units where unit is sublet and the sublessor seeks to recover possession for their own person use
• Units rents for more than 245% of FMR
• For 2024 that’s $6004 for a 1 bedroom
• Hospitals, dorms, within a religious facility or institution, hotels

WHO IS COVERED

• The following housing accommodations are not covered (cont)
• Unit where the possession or occupancy is solely incident to employment where the employment is lawfully terminated
• Unit where the unit is otherwise subject to regulation of rents or evictions pursuant to local, state or federal law
• Unit where the unit must be affordable to tenants at a specific income level pursuant to law, restrictive declaration or regulatory agreement
• Unit within a coop or condo
• Unit built after January 1, 2009 for 30 years after C of O is issued.

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SMALL LANDLORD EXEMPTION

• Definition: A landlord of no more than 10 units in the state
• If landlord is a natural person then the landlord is a small landlord if he owns no more than 10 units in the state.
• If more than one natural persons are the landlord, then no one person may own more than 10 units of housing in the state to be a small landlord
• Corporations, LLC and other entities
• Being a small landlord is based on what the natural people behind the corporate entity own. If the corporate entity does not disclose all natural people, it cannot claim to be a small landlord

SMALL LANDLORD EXEMPTION

• Landlords must disclose to tenants “in connection with any eviction proceeding in which the landlord claims” a small landlord exemption:
• The name of each natural person who owns or is a beneficial owners of the housing accommodation
• The number of units owned jointly or separately by each natural person
• The addresses of any such units (excluding the owners principal residence).
• These disclosures must be attached to the petition

SMALL LANDLORD EXEMPTION

• The disclosure rules require LLC to come out of hiding if they want to claim to be a small landlord.
• We don’t know how many landlords will want to tell their tenants who they are.

SMALL LANDLORD EXEMPTION

• Just Fix’s Who owns what in NYC? https://whoownswhat.justfix.org/en/
• https://www.openigloo.com/blogs/what-is-good-cause-eviction-what-does-it-mean-for-new-yorkers
• LLC transparency database (not yet built)
• Subpoenas
• Discovery

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SMALL LANDLORD EXAMPLES

• Building A is 6 units and owned by A LLC. A LLC owned by Joe and Donald. Joe lives in building A.
• Building B is 3 units and is owned by B LLC. B LLC is owned by Donald.
• Building C is 9 units and is owned by C LLC. C LLC is owned by Joe.

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• Are any of these buildings covered by the good cause eviction law

SMALL LANDLORD ANALYSIS

• Joe owns two buildings – buildings A (6 units) and building C (9 units)
• Together Joe owns 15 units. Joe is not a small landlord under the statute.
• Donald owns two buildings – building A (6 units) and building B (3 units)
• Donald together owns 9 units of housing. Donald is a small landlord under the statute.
• Building A might be covered (one of the landlords owns 15 units) but Joe lives in building A. Building A isn’t covered by GCE
• But Building C is covered by GCE because its owner owns 15 and does not live there.

COOP EXEMPTION

• Renters in coops and condos are not protected by this law.
• But remember that in the Second Department, tenants who rent from the sponsors of coops are covered by good cause because of the Martin Act. See Paikoff v. Harris, 185 Misc.2d 372, 713 N.Y.S.2d 109).
• Note that the First Dept does not recognize these protections. Park W. Vill. Assocs. v. Nishoika, 187 Misc. 2d 243, 721 N.Y.S.2d 459 (App. Term 2000).

REASONABLE RENT INCREASE

REASONABLE RENT INCREASE

• HCR says it is 8.82% for NYC.
• https://hcr.ny.gov/system/files/documents/2024/05/good-cause-eviction-law-may-2024-final_.pdf

GOOD CAUSES FOR EVICTION: NONPAYMENT OF RENT

• This is where a tenant can challenge the rent increase as unreasonable.
• Tenants cannot be evicted for nonpayment where any amount of rent due results from an unreasonable rent increase.
• Landlord may rebut the presumption that the rent increase was unreasonable.
• Court may consider all relevant facts including:
• Fuel costs, insurance, maintenance, property taxes
• Completed significant repairs which did not result from the landlord’s failure to maintain the building
• Significant repairs mean replacement or substantival modification of any:
• Structural, electrical, plumbing or mechanical system that requires a building permit
• Abatement of hazardous materials (lead, mold, asbestos)
• Not painting, decorating or minor repairs

OTHER GOOD CAUSES

• Breach of Lease
• 10 day cure notice required
• Can’t be used to circumvent intent of law and the rules/regulations must be reasonable and part of signed lease
• Nuisance
• New language was added to address landlord concerns, including property damage in this housing accommodation or adjacent buildings. Property damage can be either malicious or from gross negligence

OTHER GOOD CAUSES

• Illegal Use
• Unreasonable refusal of access
• Tenant fails to agree to reasonable changes to the lease at renewal so long as written notice of the changes were provided to the tenant between 30 to 90 days prior to the expiration of the current lease

OTHER GOOD CAUSES:�CLEAR AND CONVINCING EVIDENCE

• Owner use for owner, immediate family members (including grandparents and grandchildren) and parent-in-law and sibling-in-law.
• Owner must prove that the accommodation will be “principal residence” of the person who intends to live there.
• This exception doesn’t apply to tenants who are 65 and older or who are disabled persons.
• Demolition of housing accommodation
• Intention to withdraw from the housing rental market
• All three of these good causes allow a tenant who determines that the landlord lied to sue the landlord for damages

OTHER PROVISIONS

NEW NOTICE REQUIREMENTS

• RPL 231-c –”good cause eviction notice.
• Must be provided at time of initial lease, renewal lease, 226-c notice, rent demand and petition.
• States if the unit is subject to GCE and if exempt, why exempt.
• States if the unit is subject to GCE and the landlord is increasing rent above reasonable standard.
• Must state justification for the increase above the reasonable standard
• States if unit is subject to GCE and the landlord is not renewing, basis for non renewal
• Notice is long and mostly requires checking of boxes

NEW NOTICE AND PETITION REQUIREMENTS

• As of August 20, 2024, the new GCE notice will need to be included in 226-c notices, rent demands and petitions
• Small landlord exemption disclosures will have to be attached to or part of the petition

OPEN QUESTIONS

OPEN QUESTIONS

• Good cause for eviction vs reason not to renew the lease.
• The law treats the good causes of eviction as if they were reasons to not renew the lease.
• Non payment of rent is a good cause of eviction
• Is it a reason to not renew the lease? (the notice says yes, the law says it’s a reason to bring a nonpayment case)
• What does it mean to be owner occupied for the small landlord exemption
• Owner vs Owner’s family members
• Can the owner use the apartment as a pied-a-terre or storage unit?

NOT AN OPEN QUESTION

• Landlords will likely sue to overturn this law
• But because of our recent Second Circuit decisions in CHIP v. NYC and 74 Pinehurst v. NYS, the landlords will lose.
• Feel free to provide OPA’s with copies of these cases when they repeat real estate industry talking points.

INDIVIDUAL APARTMENT IMPROVEMENTS

• History:
• From 1980’s to 2011, landlords could do individual apartment improvements and could add 1/40^th of the cost to the rent
• 2011 – 2019, , landlords could do individual apartment improvements and could add:
• If a building was 35 or fewer units, 1/40^th of the costs
• If a building was more than 35 units, 1/60^th of the costs
• Meant to be improvements not repairs

IAI

• In 2019, IAI’s were capped at 15,000 over a 15 year period
• For buildings of 35 or fewer units, landlords could add 1/168^th of the cost ($89)
• For building over 35 units, landlords could add 1/180^th of the cost ($83)
• IAIs could be done three times in the 15 year period
• IAIs were temporary
• Landlords had to submit to HCR
• Itemized list of work performed including a description and/or explanation of the work
• Before and after pictures
• Must resolve all outstanding b and c violations
• Can’t replace the same thing more than once during useful life.

IAI’S 2024

• Two tiers of IAI
• First tier – most apartments – cap raised to 30,000.
• To be expended in a 15 year period that started on or after 6/14/2019
• Can do IAI more than 3 times in the 15 year period
• Permanent increases
• This means that within a 15 year period, landlords can raise rents:
• For buildings of 35 or fewer units, landlords could add 1/168^th of the cost ($179)
• For building over 35 units, landlords could add 1/180^th of the cost ($167)

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NEW 50,000 IAI TIER

• Cap raised to 50, 000
• Two categories of apartments fall into this tier
• The apartment was continuously occupied of at least 25 years or
• The apartment was registered as vacant in 2022, 2023 and 2024.
• Registration must have taken place during each calendar year
• HCR must pre approve these two factors (length of tenancy and registration as vacant)
• Pre approval can not be used as a defense in an overcharge case

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NEW 50,000 IAI TIER

• Different amortization for this new tier.
• For buildings of 35 or fewer units, landlords could add 1/144^th of the cost ($347)
• For building over 35 units, landlords could add 1/156^th of the cost ($321)
• New requirement that landlord submit evidence prior to doing the work that the improvement was necessitated by a sub-standard condition or the subject of the improvement had exceeded its useful life.
• Evidence includes photographs and permits
• New requirement that landlord submit evidence subsequent to doing the work photographs, itemized receipts, proof of payment and a fee of 1% of the amount claimed for the IAI

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NEW 50,000 IAI TIER

• HCR may perform audits
• Landlords and tenants living in the apartment may participate in the audit
• Any overcharge found by HCR will be deemed willful.
• Owners will not be eligible for tier 2 IAIs if within 5 years they have been found to have willfully overcharged their tenants by HCR or the courts or to have harassed their tenants

NEW HOUSING LAWS: SQUATTERS

• Is it really new law?
• Language was added to RPAPL § 711 to define squatter
• “a tenant shall not include a squatter.”
• “a squatter is a person who enters onto or intrudes upon real property without the permission of the person entitled to possession and continues to occupy the property without title, right or permission of the owner, owner’s agent or a person entitled to possession.”
• If this conflicts with §713, §713 controls.