On June 14, 2019, Governor Andrew Cuomo signed into law the Housing Stability and Tenant Protection Act of 2019. While many of the protections in the new law focus on rent stabilization and rent control for residents in New York City, several key provisions of the Housing Stability and Tenant Protection Act, affect New York landlords with both commercial and residential leases.
Here is a summary of the more notable changes to the rent stabilization law:
Under the Act, a lessor (including coop corporations with proprietary leases) cannot charge any application or processing fee for a new tenant. Cooperative boards are no longer able to charge any fees associated with the sale or lease of a cooperative apartment.
The Act also limits charges for background checks to the actual cost of the background check or $20, whichever is less.
Condominium owners are prohibited under the Act from charging application or processing fees if they decide to lease their unit. However, the Act does not prohibit a condominium board, or its managing agent, from charging a fee to a unit owner that is associated with the unit owner’s application for a waiver of the condominium’s right of first refusal.
Under the Tenant Protection Act (TPA), at the start of a lease, security deposits have been capped at one month’s rent. This could potentially limit the amount co-op shareholders are required to deposit under maintenance escrow agreements. In the past, co-op boards would require some tenants to pay several months or even years of maintenance fees upfront. Under the new tenant protection, co-op and condo board members may no longer require the deposit of a maintenance escrow that is more than one month’s maintenance, which was a standard in the approval of purchase application. However, boards may still determine the approval dependent on the financial responsibility of the guarantor.
Landlords cannot demand rent or charge a late fee until the sixth day after rent is due. Tenants also get more time to pay their rent no matter the terms of the lease under the newly enacted TPA. In addition, any late fees charged for payment on the sixth day may not be more than $50 or five percent of the monthly rent, whichever is less, regardless of the terms of a cooperative’s proprietary lease.
Receipt for Payment of Rent (Maintenance)
Upon the receipt of rent (maintenance) for residential premises in the form of cash or any instrument other than the personal check of the tenant, it shall be the duty of the lessor (cooperative board) to provide the lessee (shareholder) with a written receipt containing the date, the amount, the identity of the premises and period for which paid and the signature and title of the person receiving the rent.
Notice of Non-Payment
If rent/maintenance is not paid by a tenant-shareholder within five days of its due date, the co-op must give written notice by certified mail to the tenant-shareholder. In addition, the late charge shall not exceed $50 or 5 percent of the monthly rent, whichever is less.
Reimbursement of Attorneys’ Fees/Late Fees/Repair Fees/Etc.
When a tenant-shareholder defaults on payment and does not show up to court for a summary proceeding, a co-op can no longer recover attorneys’ fees in that proceeding, which would need to be recovered in a separate proceeding. For the time being, most co-ops can still foreclose the shares attributable to the apartment after the tenant-shareholder is evicted (or sometimes even beforehand).
Definition of Rent (Maintenance)
The Act adds a definition of the term “rent” that excludes fees, charges, and penalties (such as late charges, legal fees, and metered utility charges). Since only “rent” may be the basis of a summary eviction proceeding for non-payment, it may be impossible to evict a shareholder who pays only the basic rent but not any of the other charges.
All information listed above is a summary of the relevant aspects of the Law, which presently impact co-op proprietary leases and subleases as well as leases of condo units. Because of the direct impact on co-op boards, the information is directed to the proprietary lease. However, it is equally applicable to tenant-shareholders and unit owners who are renting their apartment/units.
If you have any questions regarding the Act or how it might affect your building, please contact us.