Housing Stability and Tenant Protection Act of 2019 and Cooperatives
On Friday, June 14th, Governor Cuomo signed the new Housing Stability and Tenant Protection Act of 2019 into law. While many assumed that this new law related primarily to rent regulated apartments, an examination of the new law reveals that many provisions of the new law apply to all landlord-tenant relationships, including Cooperatives.
We summarize below some of the more sweeping changes in landlord-tenant law which will affect how Cooperatives handle defaults by Shareholders in the payment of maintenance or other lease defaults such as objectionable conduct.
1. NOTICE OF DEFAULT FOR NONPAYMENT OF RENT
2. RENT DEMAND FOR NON-PAYMENT CASES
A Rent Demand must now provide fourteen (14) days’ notice to cure and must be served in the same manner as the notice for landlord-tenant proceedings. This means that landlords/Co-ops must now serve a rent Demand by a process server irrespective of what the terms of a lease/proprietary lease may provide. Oral demands are no longer allowed. It is important for landlords/Co-ops to recognize that this new required method of service will increase the cost for landlords/Co-ops and that while most leases provide a right to recover these costs, other changes made by the new law discussed below suggests that these costs may likely become difficult to recover.
3. ATTORNEYS FEES
When a tenant/shareholder defaults and fails to appear in court for a summary proceeding, a landlord/Co-op can no longer recover attorneys’ fees in that proceeding. Legal fees now need to be recovered in a separate proceeding. In a separate section of the new law, and outside the context of a case where a tenant/shareholder defaults in appearing in a summary proceeding, the new law prohibits the recovery of “fees”, “charges” or “penalties” in a summary proceeding. This wording of the new law prohibits the collection of attorneys’ fees within the summary proceeding.
4. RENT RECEIPTS
A written receipt must now be given for payment made by a tenant/shareholder by any method other than a personal check of tenant/shareholder which receipt must include:
- Identity of the property and period for which paid
- Signature and title of person receiving the rent. This means that a landlord/Co-op must always provide written receipts of rent/maintenance unless the payment is via personal check. This means that a written receipt must be provided to tenant/shareholders who pay rent/maintenance by bank checks, money orders, credit card payments, auto-debits, and cash. It is significant to note that for cash payments, the new law requires that a landlord/Co-op maintain payment/receipt records of same for at least 3 years.The new law permits a tenant/shareholder to request a written receipt when paying by personal check and a landlord/Co-op must comply with this request. Significantly, the new law requires that once a tenant/shareholder makes a request for a written receipt despite paying via personal check, then the landlord must give that tenant/shareholder written receipts for rent/maintenance payments made by personal checks for the duration of the lease term unless the tenant/shareholder expressly states otherwise (we suggest such express statement be obtained by the landlord/Co-op in a writing).
5. TIME REQUIREMENT TO GIVE RENT RECEIPTS
The rent receipts discussed above must be given to the tenant/shareholder within fifteen (15) days, unless payment by the tenant/shareholder is personally delivered to the landlord/Co-op, then, in such case, the rent receipt must be immediately given to the tenant/shareholder at the time of such personally delivered payment.
6. APPLICATION FEES
Under the new law, the only fee permitted to be charged for the processing, review or acceptance of an application is the actual cost of a background check and credit check, or $20 cumulatively, whichever is less. However, if a tenant already has a recent background check which the tenant provides to the Landlord/Co-op dated within 30 days of the application, no fee can be charged. A copy of the background check, and a receipt or invoice from the entity conducting the check, must be provided to the tenant before the fee can be collected. With respect to Co-op apartments specifically,The NYS Department of State issued “Guidance for Real Estate Professionals regarding the Act and has opined that the $20.00 limit does not apply under the following circumstances: (i) When the property being sold is a Co-op; and (ii) With respect to application fees imposed by a Co-op with regard to an apartment owner’s request to sublet their apartment.
7. LATE PAYMENT FEE
Late fees are now limited to $50 or 5% of the monthly rent/maintenance, whichever is less, after nonpayment for five (5) days after the due date irrespective of anything set forth in the lease to the contrary. Leases may not provide for a shorter late payment date, but may provide for a longer payment date.
8. DEFAULT IN PAYMENT OF RENT
If a summary proceeding is commenced in court and the tenant/shareholder pays the full rent due prior to the hearing in court, the summary proceeding must be discontinued. The tenant/shareholder does not have to pay the legal fees incurred in connection with that summary proceeding, or the late fees or interest, in order to have the summary proceeding discontinued. Landlords/Co-ops will now be forced to commence a separate proceeding to recover late fees and legal fees. The new law now provides that if the Landlord/Co-op is successful in a nonpayment summary proceeding and the tenant/shareholder pays the rent at issue before the Sheriff/Marshall completes the eviction, then, in such event, the eviction must be cancelled.
9. THE WARRANT OF EVICTION
Under the new law, even after a Warrant of Eviction is issued by the Court in a non payment proceeding, the Court may vacate the Warrant if the tenant/shareholder pays the full rent/maintenance due at any time prior to execution of the Warrant. Even after the Warrant is executed and the tenant/shareholder is actually evicted, the Court now has the discretion to restore the tenant/shareholder to possession.
10. HOLDOVER PROCEEDINGS
In holdover proceedings, the Court discretion is expanded and now may also stay execution upon a warrant of eviction for a period of up to one (1) year (previously 6 months) if the tenant/shareholder can demonstrate that they cannot find suitable housing in the “neighborhood”. The term “neighborhood” is defined as the same school district (if there are school aged children),or town, village or city.
11. HOLDOVER SUMMARY PROCEEDINGS (Inside NYC)
In situations where there is a month-to-month tenancy, the old Thirty (30) Day Notice of Termination no longer governs. The new law provides that a landlord has to serve a termination notice with a definite date designated in the notice, and the amount of notice that now must be provided varies depending upon the total length of time of occupancy. This notice must be served by a process server.
12. HOLDOVER SUMMARY PROCEEDINGS (Outside NYC)
In situations where there is a month-to-month tenancy, the landlord previously was able to serve a 30-day notice of termination to terminate the tenancy. The new law does not have any provision for a landlord to terminate a month-to-month tenancy; rather, the new law provides that only the tenant may terminate this tenancy. There is an issue as to whether or not the tenant is required to give a landlord notice, and if so, how much notice and how such notice is to be given to a landlord. This section of the new law will undoubtedly be the subject of much immediate litigation which will hopefully clarify the requirements of this new section of the new law.
13. THE HOLDOVER PETITION
The new law changes the time of service of a Holdover Petition to be no more than 17 days, and not less than 10 days, before the Court date. A tenant is now entitled to an adjournment of the first court appearance of the Summary Proceeding of not less than 14 days. Furthermore, there is now no longer any requirement that a tenant provide an Answer 3 days before the court appearance in the holdover proceeding.
14. SHERIFF/MARSHALL NOTICE OF THE EVICTION
The Notice of Eviction must now give fourteen (14) days as opposed to 72 hours (3 days). Changing the notice time from 3 days to 14 days will now give a tenant more time to pay the rent/maintenance and avoid eviction as issuance of the warrant no longer cancels the lease agreement pursuant to which the tenant/shareholder occupies the premises.
15. UNLAWFUL EVICTION
An unlawful eviction is now a crime as a Class A Misdemeanor (punishable by up to 1 year in jail); and each violation is a separate offense. Civil penalty is not less than $1,000 and not more than $10,000 for each offense. If Landlord fails to restore the tenant, there is an additional fine of not more than $100 per day from date reinstatement is requested, not exceed six (6) months.
If a tenant/shareholder files a complaint with the landlord/Co-op, the managing agent, or a governmental authority, there is a rebuttable presumption an eviction proceeding is retaliatory if brought within one (1) year (up from six (6) months) from the filing of the complaint.
17. TENANT’S RENTAL HISTORY
A landlord/Co-op may not deny a tenant/prospective purchaser based upon prior court proceedings against the proposed tenant/shareholder. If a landlord/Co-op reviews court records and denies the prospective tenant’s/shareholder’s application, it is a rebuttable presumption that the landlord/Co-op violated this provision of law and the Attorney General can enforce this provision in Supreme Court, with a penalty of $500.00 to $1,000.00 per violation.
18. DEATH OF TENANT
If a tenant dies during a lease term and rent has not been paid, a landlord/Co-op may commence a non-payment proceeding as against the estate of the deceased tenant and any occupants of the apartment; however, a landlord/Co-op may only seek a possessory judgment as against the estate, not as against occupants in the premises (who may claim a right to possession in a rent regulated apartment). Any warrant that issues is not therefore effective against the occupants of the apartment. The landlord /Co-op must commence a separate holdover summary proceeding to remove the occupants after service of a ten (10) day notice to quit, and the occupants may raise their right to succession, if any, in that holdover proceeding.