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New York’s New Tenant Protection Laws Will Impact Residential Property Owners

On June 14, 2019, Governor Cuomo signed the Housing Stability and Tenant Protection Act of 2019. This package of legislation will significantly affect all aspects of New York’s housing industry.  Public discussion of the new law has primarily focused on the residential rental market, and it is important for all landlords to familiarize themselves with the law, which has provisions applicable to both rent-stabilized and market-rate units.  However, important provisions may affect cooperatives as well.

Among other things, the law adds a new section to the Real Property Law which prohibits the “landlord of a residential premises” from refusing to offer a lease to a potential tenant on the basis that the tenant was involved in prior or pending landlord/tenant litigation.  In addition, the law prohibits landlords from relying on tenant screening databases in deciding whether to offer a lease.  Because a cooperative board is a landlord, this provision may be interpreted as precluding cooperatives from requesting information about, considering, or relying on an applicant’s history of litigation with prior landlords in rejecting a purchase application.  In addition, the provisions of the new law will also apply to individual owners of condominium or cooperative units who wish to lease or sublease their units.

Another section of the law prohibits landlords from charging a fee of more than $20 for processing a purchase application or background check.  Again, this may be interpreted to preclude cooperatives from imposing application fees or passing on even the actual cost of background checks.  Similarly, the law now precludes landlords from charging late fees in excess of $50, or 5% of the monthly rent, whichever is less.  The provision may not have been written with cooperatives in mind, but may very well be applied to them.

Still other provisions will increase the cost and expense associated with evicting residential tenants who fail to pay their rent, including by increasing the length of notice requirements. These provisions will affect cooperatives that bring summary proceedings against defaulting tenant-shareholders.  Another provision that may be applied to cooperatives limits any required security deposit to the amount of one month’s rent.

The new law also modifies the requirements for cooperative and condominium conversions.  Under prior law, for a non-eviction offering plan to take effect, the sponsor was required to enter into contracts covering 15% of the units, in which tenants or purchasers represented that they or an immediate family member intended to occupy the unit.  For offering plans filed after the effective date of the legislation, this threshold is increased to 51% of actual tenants, a change that may make future conversions difficult or impossible.

We will be monitoring the new law’s implementation and implications as well as court challenges that have been threatened by industry groups, and will report on them in future issues of this Client Advisory.