Raising the Bar: New Rent Laws

New York’s rent-stabilized apartments were set to expire on June 15, 2019, but on Friday, June 14th, New York State Governor, Andrew Cuomo signed a bill into law that guarantees “the strongest tenant protections in history.” A month later, are the new rent law doing enough to prevent landlords from abusing their power? Raising the Bar hosts Jason Clark, President of the Metropolitan Black Bar Association and Attorney Adeola Adejobi are joined by Candace C. Carponter, Managing Partner of The Law Firm of Candace C. Carponter, PC, and Hon. David J. Bryan, Judge of the Housing Court, Civil Court of NYC to discuss new rent laws in New York.

Aired Sunday, July 28th, 2019

TRANSCRIPT:

Raising the Bar: New Rent Laws
Aired: July 28th 2019
Host: Adeola Adejobi and Jason Clark

DISCLAIMER:  Please be advised that this transcription was done from an audio recording by an out of house service; therefore the accuracy of the transcript may be impacted.  If there is an issue please contact MNN info@mnn.org. 

Jason Clark: For those of you who are unfamiliar with our organization, the MBBA is the largest association of predominantly African American attorneys in New York. Our goal is to advance equality and the pursuit of justice, assist in the professional development of our members, and address legal issues affecting New Yorkers.

Adeola Adejobi: The goal of Raising the Bar with the MBBA is to foster a substantive conversation about justice issues in our community and try to identify a couple of solutions in the process.

Jason Clark: Today we're going to take a look at the new rent laws in New York that on June 14, 2019 Governor Andrew Cuomo signed off on, the housing stability and tenant protection act of 2019. A package of rent laws which represent a large number of significant changes in rent regulations and a shift in the power dynamic between landlords and tenants in New York.

Adeola Adejobi: Joining us today are Candace Carpenter of the law firm of Candace C Carpenter, PC and the honorable David J. Bryan judge of the housing court. Welcome and let's get to it.

Jason Clark: Well thank you for the two of you are joining us and coming back so recently. But given that things have changed so much, it was definitely important that we get into some of these things. So, obviously as we were saying at the beginning there have been some changes especially with the the enactment of the Housing Stability and Tenant Protection Act of 2019. And I think what most folks who are watching this show really want to know is what does that mean? What are some of the main changes that the law enacts and how is that going to affect them?

Candace Carpent: Well, I think the primary and most important change was that rent stabilization has become basically permanent. Landlords, if you are rent stabilized landlords cannot decontrol your apartment and the law is permanent. It is not going to be revoked, it doesn't have to be renewed. That is extremely important for people who are rent stabilized but also for people who may be living in apartments that were previously decontrolled if it's determined that in fact it was improperly decontrolled. Which I'll get into in a second. But along with keeping rent stabilization as a permanent feature landlords are also not entitled to get vacancy increases of which used to be 18 to 20% when a new tenant comes in and they are extremely limited in terms of the amount of money they can collect for improvements in the apartment. So, what used to be several hundred dollar increases in rent is now at most under the new statute $90 a month. So, the the increase in the rents over time is going to be substantially less.

Candace Carpent: The other feature I think that is really important is that they have taken almost all of the restrictions off on a tenant's ability to claim overcharge and then coincidentally their ability to say that the apartment was properly decontrolled. It used to be that the lookback period was only four years and as long as the landlord had a registration that was proper four years ago and didn't charge anything, any illegal increases, since then that rent was permanent. Now they are allowed to go all the way back even though many landlords probably don't have those records anymore and if the tenant can show that there was an illegal increase six, or eight, or 10 years ago, then the rent is going to get rolled back all the way to that point.

Candace Carpent: If that results in the fact that the apartment should not have been decontrolled in the first place then you actually could create a rent stabilized tenancy. In addition, the overcharge penalties are basically mandatory. It used to be that a landlord could get out of the penalty by quickly fixing the problem. That is no longer permitted and triple damages are what you're entitled to collect. So, if you've been overcharged over three years in the total amount of $15,000 the amount that you will get back from your landlord is $45,000 and it's pretty much there are no exceptions to that rule so it's huge. And that it used to be that that was only a four year period, now it's a six year period to get the overcharges. So, there's a whole lot of changes that change the landscape in terms of what tenants leases look like and and how protected they're going to be going forward.

Jason Clark: So, that's definitely a lot but I guess I at least want to make sure we hammer up home with the main point there is, which is that if you're in an apartment, if your landlord was illegally overcharging your apartment, now there are more protections in place to make sure that you can be able to get back to the proper rate that your rent stabilized apartment should have been at to begin with.

Candace Carpent: And in that circumstance, I mean because of that I would suggest every single tenant look at their rent history, go to DHCR and get their rent history, because ...

Jason Clark: DHCR is?

Candace Carpent: Division of Housing and Community Renewal. But there are offices in every borough, and you can go get your rent history, and you can look to see whether or not those increases are legal or not. And I think that every tenant in the city of New York should do that.

David Bryan: Well, if you're going to be the tenant who looks to see whether or not your landlord is charging new or appropriate rent many people may have refrained from that because they were afraid that if they were the squeaky wheel in the building who was constantly creating problems that they were buying themselves an eviction claim. Well, the legislature thought about that too. They have since raised the issue of retaliatory eviction to a real protective status. If you've had any complaint such as a DHCR exploration of the rent, or if you've come to court to get repairs, or anything else where you've tried to assert a right that you should have as a tenant in your building and you've been greeted with a notice of petition and petition. The presumption at this point is that if your action was within a year the landlord's case against you is presumed to be retaliatory and the landlord has to prove that they had a way that they brought this case that stands in and of its own.

David Bryan: Now, by the way, while we're talking about this let's realize that this law is two days away from being 30 days old. Many of the actual provisions have yet to even go into effect and our law in this city in the housing court very often works its way through as time goes. So, right now we're just talking about what's on the paper and over time we will see what develops. The other thing I think a lot of people who are listening to this program will find interesting is the issue of rent deposits. Rent deposits can make a piece of housing very hard to get if you have to come up with multiple months of rent in order to get in and hey the difficulty of getting in is nothing like what you go through trying to get your money back at the end of the tenancy.

David Bryan: So, the legislature thought about this. The legislature basically limited the landlord to one month's rent deposit and before you move in the tenant has the right to do a tour with the landlord so they can establish the baseline of the condition of the apartment at the time it was first rented. And at the end of the tendency when you're moving out you can call the landlord, I believe it's one to two weeks before you're leaving, and the two of you can tour the apartment together and they can point out all the different things that they think happened in this apartment that should impact the deposit that you left with them. If the landlord wants to retain some portion of the deposit they have to show you in writing what the objection is, where they say that you broke that window, or that cabinet, or that toilet. And as such, it gives you a baseline you might be able to contest. Those two things are within the law and as the law says it does help to provide some housing stability intended protection.

Adeola Adejobi: And just to go back in terms of the deposit. So, in New York it seemed to be very big that people would require first months, last months, and a deposit. So, what you're saying that now is that it's only a deposit.

David Bryan: As I read the laws yes.

Adeola Adejobi: I mean and your first month's rent.

Candace Carpent: But not last month and I've read the law off for that purpose and I am fairly certain that it is broad enough to prevent that last month being paid. I'm pretty confident of that. And I also want to point out that most landlords are not following this law in their new leases. And so, but I just looked at a lease this morning for a tenant who's renting and all of these provisions that have changed are not in this lease. I see no harm in signing that lease because the legislation, the law, overrules the lease. And so, you don't want to lose an apartment because you start fighting with the landlord before you move in. And because good apartments are so precious in New York it's really important to limit your wars with a new landlord.

Adeola Adejobi: And really before you say that next statement I would like you to go back to what you said about how the law overrules the lease because I think a lot of tenants don't understand that.

Candace Carpent: In most instances and particularly with regard to all these new provisions the law does override the lease. So, for instance in the lease that I just reviewed it gave certain provisions as to how the security deposit was being treated. That is not true anymore and whatever is in that lease is wrong because you have this protection of requiring the landlord to let you walk through the apartment first. They have a certain number of days to get the deposit back to you and it's a very short period of time. In this lease that I read it said they had 60 days. They don't have 60 days anymore. So, don't fight the things that are already given by the new law. I mean there are going to be a couple of other things that you may have to discuss but in this market I would suggest unless it's a big deal and you really can't live with it and it isn't covered by the law I would say sign the lease and worry about it later.

David Bryan: It may also be that we're just waiting on stuff to come back from the printer. They haven't necessarily printed new leases that comport with the law again. It's new.

Candace Carpent: And it's possible. And so for instance application fees, one of the things that in renting a new apartment is the fee is for a credit report and whatever other investigation. Landlords have charged many amounts including charging a refundable, a nonrefundable deposit if you want the apartment and decide not to take it. Which can be anywhere from $1,000 to the amount of the security deposit which will be the amount of the rent. I don't think that's legal anymore. I believe that that application fee or any fee that you pay up front has to be returned to you if you don't rent the apartment. And I also believe that it is clear in the statute that the fee that they can charge you for the application itself is $20 and that's it.

Jason Clark: And I think this actually goes to a [inaudible 00:11:02] First is we want to make sure, the law went into effect on June 14, 2019 so these changes are immediate, is that correct?

David Bryan: No. There are various changes based upon different portions of the statute that have anywhere from 30 to 120 days before they go into effect. The vast majority of them will go into effect relatively quickly though. I think at the most part practitioners, as Candace was saying earlier, everybody's in a bit in a panic to figure out exactly what applies and when. There are certain issues that we have in court right now where there is a class of cases that are currently underway before the 14th of June that will be treated in a certain way. For example, more discretion is given for cases that begin after the 14th of June to a judge who wants to stay a [inaudible 00:11:59] from evicting someone. We still have discretion on the cases that happened before the 14th of June but it's pretty obvious that the legislature intended to give us a whole different class of discretion for cases that began thereafter and we'll be working that out over time.

Adeola Adejobi: Okay. And Candace, so for someone who is already in a lease right now this law still applies to them?

Candace Carpent: Absolutely. There is and for instance, like I said, any tenant should go and check their rent history because now they are allowed to go back even if they've been in their apartment for 14 years. Absolutely. And also, with regard to the return of the security deposits and all the other protections that were built in that may not have been their lease they are all, the lease changes to match the law basically.

Jason Clark: And one thing that you had mentioned when you were talking about some of these security deposits or these extra fees that maybe some of the landlords either to this point haven't been complying with or let's say they don't comply with them in the future. I think it's always important. What is someone's recourse if they find that their landlord isn't complying with these new changes in the law?

Candace Carpent: Well, it's kind of tricky. So for instance, with regard to a application fee or a security deposit you could deduct it for your rent for instance and I don't know how a court would enforce that if you did that. You could sue them in small claims court. You could sue them in civil court. I would say start by writing a letter and saying, "You obviously didn't know that the law changed. I just learned that this is what's going on and I just thought we could resolve this amicably." That would be my first parlay.

David Bryan: And don't forget the availability of DHCR is a state agency that has offices in every county where you can go in for rent stabilized housing and make a complaint. And given now that the law has the protections that I mentioned earlier against retaliatory eviction your beginning a complaint in that forum can't be held against you. But generally speaking laws are paper, what actually happens in courts and and every day develops over time. We will as time goes on do at least most of what the legislature has asked us to do. It's worthy of note that after the law passed, very shortly thereafter, another set of laws were passed to fix the first set of laws. So, that again is another example of you start with the law for the intent of what you want and then as time goes on you develop a greater understanding of how it achieves what you wanted. Does it truly create housing stability and protect tenants? And if it doesn't, okay, let's tweak it and see if we can make it better.

Candace Carpent: I think another thing that goes hand in hand with what the judge said about the retaliation protection, that if you've complained in the last year and then the landlord institutes a proceeding, you can raise that as a defense. But there's also a prohibition against landlord choosing tenant blacklists and I sense that a lot of tenants are very afraid of those blacklists though I've never seen one. But they apparently exist and landlords have used them. How they're going to enforce that is going to be another question but they cannot refuse to rent to you because you had prior litigation. So, you no longer have to worry, in theory, that a landlord can go and see that you had a claim in court or you didn't pay your rent for whatever reasons and then say they're not going to rent to you because you did that. They're not allowed.

David Bryan: That's a very interesting point and I was thinking about it. The legislature was very interested for the first time in landlord and tenant context in protecting some more discrimination. For example, if you are in a house and the house is foreclosed upon and you were a tenant in that house there is now a requirement that if a landlord tenant proceeding is brought against you as the tenant that proceeding has to be kept confidential. That essentially there's not going to be a listing that you were a party to a landlord and tenant proceeding because presumably the legislature wanted to protect you and keep you off of a list that would show that it was necessary to evict you for reasons that were really not your fault.

David Bryan: In much the same way that Candace mentioned also there is a real concern in the tenant community with regards to how their involvement in landlord and tenant court is used against them when they want to find new housing and the legislature really wanted to make sure that didn't happen. Now, the same case is here as it is in any discrimination law. We have principles in the law. People have to actually act to make them happen. There will be a certain amount of deterrence if people are successful in doing it and people make business decisions. If you decide that you're going to use the tenant black list anyway and you end up getting really large judgements against you because of it it'll probably not be a good idea for you to do it in the future. That seems to be the intent of what the legislature wished.

Adeola Adejobi: Yeah. And so, in terms of these changes I mean really they're sweeping and so right now we've talked a lot about what happens before someone gets into an apartment. So, I pose a two part question here. One, are there any other changes that you think that are pretty major before someone gets an apartment that you would like to talk about? And then also, what are some of the changes that apply to tenants that are currently in apartments right now?

David Bryan: Well, I think one of the things that a tenant needs to be aware of when they're going into an apartment is that it's a very tight market and as such all the same pressures still exist. There is of course a certain push back now that it may or may not be profitable to provide as much rental housing as has been provided in the past. That's going to have to be seen over time whether or not this approach makes it more or better for tenants than it has in the past. As to how it is in court right now based upon what's happening in the new law as I mentioned earlier there seems to be a real emphasis on giving the court discretion on how it handles its cases. I mentioned earlier we have more control over the process of when someone gets evicted.

David Bryan: There's also a greater timeline to actually bring somebody to court. There's a new requirement that if you are five days late in your rent there needs to be a certified letter that goes out to you in addition to the notices that are normally necessary to commence a proceeding. Law may develop over time where those two notices are combined together but as I said we're not even 30 days in yet. It's obvious that in holdovers, particularly even in holdovers where it's not rent stabilized, that stability is presumably meant to be achieved by giving a greater period of time for notices so that people are able to make plans and then once the process is underway that it may be that every step along the way is being extended.

David Bryan: A tenant's time when they have to go to trial has been significantly increased that either party can request more time to prepare their case. Very often a landlord can ask for money during the pendency of a trial. The requirements that a landlord has to meet now in order to get that money in the interim of a trial has been significantly increased. They can't get it if the apartment is falling down around the tenants ears. Many of the judges basically wouldn't do it anyway if they knew that was what was going on but it's been codified now. Generally speaking, I find that the title of the act instructive. It's meant to create stability and it's meant to protect tenants. And as you go through each one of the statutes that is what I'm guided by.

Jason Clark: Yeah. And even with that point I think it's worth mentioning that approximately 2.4 million New Yorkers are in rent stabilized apartments now. I believe, if I remember my statistics correctly, that 44% of individuals are in homes that are considered rent burdened which means that over 30% of their income actually goes to paying for their rent. So, it seems to me that a lot of these changes are made in trying to make sure that those folks can be able to stay in their homes. We're already almost done with things but just quickly as we go through it we haven't talked about individual apartment improvements, major capital improvements, or preferential rents. Anything you guys want to say about those things in the last few minutes?

David Bryan: I go back to the theme. In each one of those things think about it from the perspective of what would make the environment more stable for tenants so that in what are called MCI's and IAI's the ability of the landlord to do major work in a building and to substantially increase the rent over a short period of time has been significantly delayed. Preferential rents, which is essentially a mechanism where a landlord can maintain the ability to charge a high rent in the future but to actually charge what the market will bear today has been stabilized. So, that if you moved into an apartment at $1,200 as a preferential rent if the landlord decides two years in that they're going to go back up to the the actual rent which is $2,400 that can't happen now.

David Bryan: The legislature has codified the fact that that tenant has to have any increases based upon the preferential rent. Now will that mean that fewer people get preferential rent? I don't know. I mean, I think that's part of what we're going to have to figure out from a public policy perspective but I'm a judge I don't do that. But I think that's what we're playing with at the moment. Do you agree?

Candace Carpent: I think the IAI issue, which is the Individual Apartment Improvements, is going to have an impact on tenants in their living situation because I think the landlords are going to be less willing to make changes to apartments because they're limited in the amount that they can increase the rent. And because of that you will be living in an apartment where the next door apartment is much nicer than yours and that's not going to make you feel good. But there's not going to be a lot that the landlord is going to be likely to do because he can't recoup that increase. I also think that that whole element is going to prevent these large buyouts that people hear about. That when you want to move that you get a lot of money for moving because it's no longer worth it to the landlord to get a vacancy. They aren't going to get a vacancy increase. They are not going to be able to rehab the apartment and recoup that money to any sort of real levels so that the days of those huge buyouts I think are gone.

Jason Clark: And then another thing is, so when you're mentioning that when it comes to individual apartment improvements it is I think also important to recognize that there are also major capital improvements. And when people are talking about those big things like the boiler is no longer there, there's no longer any heat, or the things that effect the entire building are we saying that those things can't still happen or is it something else?

David Bryan: Absolutely not. The housing maintenance code addresses the issues that you're discussing. There is a certain baseline that has to be provided. New York City is very, very active and always has been in making sure that those basic services are provided. [inaudible 00:23:15] would not cover that sort of thing. But what we are talking about is whether or not you're going to get that pool in the building, or you're going to get the bike room, or you're going to get the gym, or anything of that nature.

David Bryan: And look, it's fair to say that this is responding to what's becoming a very stratified housing market. And is this the best approach? Is this a better approach? I think time will tell. But I do think that the legislature saw the need from their constituents that something had to happen and if this appears to be what they've chosen to do and it's in many different areas. So, the issue with MCIs or IAI's may not hold the test of time. However, rent deposits might, retaliatory evictions might, preferential rents might, those things may work and some things may not so do something.

Candace Carpent: I was going to say that there are very few of us but there are some of us who were here shortly after the first tenant protection laws were put in place and the Emergency Tenant Protection Act of 1974 that's been many times amended. And what happened after that is little by little the overarching protections were whittled away at by changes by the legislature in favor of the landlords. And I think this is a pendulum swing back. And I think what we will see over time is some of these ideas that are really not as helpful as others will be whittled away because there will be an impact on how many landlords want to build affordable housing, how many landlords want to develop it all because of the restrictions on their increases. So, I think we're going to start seeing a little bit of backtracking over time both from the courts and from the legislature.

Jason Clark: Yeah. And I guess another thing that's interesting about this is that for a long time I think it was actually every four years the rent laws would go up and we changed them every four years or they make different tweaks like you're saying. But the difference which I thought was interesting now is that that's no longer the case. That these changes have been essentially codified and there isn't this presumption that four years from now that all of the, we have to renegotiate all these changes. Which is different than than has been I think for the last at least 40 years or what have you or whatever it was.

Candace Carpent: Since 1974.

Jason Clark: Yes. Yeah, exactly. Yeah. And it certainly seems like at least for folks who are in rent stabilized apartments there's going to be a lot more that's available to be able to keep them in there. They may not again be able to have the same type of pressure I guess to maybe get their landlords to put in pools or what have you but if it's certainly about staying in their apartments and being able to raise a family and live there, there's more to be able to keep them and it seems like there's less of an incentive.

David Bryan: Don't underestimate the possibility that there may be new models that develop. One of the most more neglected models was the HDFC model. Which at the time that it was brought about was a way that tenants could come together and own the building and create a management structure by which they would be able to improve it, much like a nonprofit. Where they would do what it is that they wanted in order to have a building that was stable. Now, those buildings have really started to, well not started, they've really been in a decline because of a lack of support. And frankly, you do wonder if they had more support whether or not the model might be a good pushback against the simply profit-driven model. It may be that as time goes along that we see more of that.

Adeola Adejobi: And so, unfortunately we are out of time. So, we want to thank everyone for watching Raising the Bar with the MBBA on the Manhattan Neighborhood Network.

Jason Clark: See you next time.