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Perspectives

Many Tenant Protection Act Provisions No Longer Apply to Co-Ops

In July 2021, we reported that the New York State Legislature had passed a bill to exempt cooperatives from several burdensome restrictions imposed by the New York State Housing Stability and Tenant Protection Act of 2019 (HSTPA).  This law was drafted with rental tenants in mind, but because of the way it was written, many of its provisions applied to cooperatives as well.

On December 22, 2021, Governor Hochul signed the amending legislation into law.  As a result, cooperatives are no longer subject to restrictions that, among other things, (1) limited security deposits or maintenance escrows to one month’s rent or maintenance; (2) capped fees that can be charged to applicants at $20 (the actual cost of processing the application or obtaining a background check may be charged); (3) capped late fees at $50 or 5% of the monthly maintenance (the new limit is 8%); and (4) forbade the Housing Court from awarding attorneys’ fees and costs to a cooperative that prevails in a litigation with a tenant-shareholder.  The new law takes effect immediately and applies in all court proceedings commenced after the effective date.

In a separate legislative development, the Governor has clarified that cooperatives are not covered by new legislation limiting the types of legal fees that landlords of rental buildings may charge their tenants.  In addition, the Governor also signed a bill exempting seasonal rentals from HSTPA provisions prohibiting landlords from requiring a deposit or advance in excess of one month’s rent.  Owners of luxury vacation properties typically seek as much as the entire seasonal rental up-front, and accommodating this practice should have little adverse effect on the HSTPA’s overall goal of protecting tenants in affordable housing.