The recently passed “Housing Stability and Tenant Protection Act,” has drastically overhauled the fundamentals of landlord-tenant law and practice in the State of New York. While we’re still digesting the impact of these changes, here’s a quick overview of just some of the key modifications:
In the not too distant past, landlords had pretty wide latitude to set application fees at whatever rates they wished. And tenants were often left with little choice, but to pay the requested charges. But that has all changed.
Effective mid-June of 2019, landlords may only charge potential tenants an application fee equal to the cost of conducting a credit and background check, or $20, whichever is less. Additionally, landlords may only collect that fee upon providing the applicants with a copy of the results of that inquiry, together with a copy of a receipt or invoice, and must waive this charge if the tenants can provide copies of a credit and background check conducted within a thirty (30) day period prior to the application. (Any provision of a lease or contract modifying or waiving this protection is void.) [Real Prop. Law § 238-a(1)(b), Real Prop. Law § 238(a)(3).]
Similarly, prior to June 2019, outside of the rent-regulation context, a landlord was free to set a security deposit in any amount desired, and it was not uncommon for lessors to demand two months (or more) in rent to be set aside as security, or, for multiple months to be paid “in advance.” There were no move-in or move-out inspection rights. And there were no time limits governing how or when the monies were to be returned to the tenant. Lessors often had a “reasonable” period of time to process a refund, but many abused that privilege; keeping some former tenants waiting for six months or more.
Effective immediately, a cap on residential security deposits is in effect and they may no longer exceed a month’s rent. And once a tenancy ends, the landlord must return that money within fourteen (14) days, along with an itemized statement showing the basis for any deduction(s), such as for necessary repairs and cleaning costs. [G.O.L § 7-108 (1-a)(a), G.O.L § 7-108 (1-a)(e)]
The Act has also implemented an inspection procedure. Now, before a new tenant takes possession of a unit, a landlord must offer the prospective occupant an opportunity to accompany the landlord (or the landlord’s agent) on a tour of the apartment. At its conclusion, the landlord and tenant may execute a written agreement listing any specific defects or damages to the premises. Upon vacating the property, the landlord may not point to, or deduct from the deposit, any repair costs that are associated with those delineated items. [G.O.L § 7-108 (1-a)(e)]
Prior to vacating the apartment, tenants must be allowed yet another opportunity to accompany the landlord (or its agent) on an inspection, which must occur at least a week, but no more than two weeks, prior to the move-out. Thereafter, the landlord must present an itemized statement specifying the damages that are proposed to be the basis of any deductions from the deposit, and the tenant must also be afforded the opportunity to correct or cure those conditions before vacating the premises. [G.O.L § 7-108 (1-a)(c)]
Be forewarned that the new law imposes potentially severe penalties.
Noncompliance with these security deposit procedures can subject a landlord to liability for the former tenant’s actual damages. And, if the landlord is found to have willfully violated the law, punitive damages, which may amount to twice the amount of the deposit, may be assessed. [G.O.L § 7-108 (1-a)(g)]
Residential landlords once had considerable discretion to set late fees and other lease-breach penalties at whatever sums or rates they wished. That, too, is no longer the case.
Landlords may only demand and collect a single fee for a late rent payment, per month, which may not be assessed until five (5) days after the monthly rent is due and payable. And in no event may that charge exceed $50. (Any lease provision modifying or waiving this statutory protection is void.) [Real Prop. Law §238-a(2)]
Nonrenewal and Increased Rent Notices
Because landlords previously had no legal obligation to communicate with their residential tenants prior to a lease’s expiration, tenants were often left with considerable uncertainty as to whether their tenancies would be renewed or extended.
Landlords must now adhere to stricter notice requirements for market-rate leases than ever before. If a landlord does not plan to renew a residential tenant’s lease, or seeks to increase the rent by more than five (5) percent, the tenant must be notified within a delineated timeframe, which will depend on the length of the tenant’s then expiring lease term. If that agreement was for less than a year, the landlord must afford thirty (30) days’ written notice. If that agreement was for at least a year but less than two years, the landlord must give sixty (60) days’ written notice. If that agreement was for two years or more, the landlord must provide ninety (90) days’ written notice. The tenancy will continue on its existing terms until proper notice is given and the governing timeframe has lapsed. [Real Prop. Law § 226-c]
Duty to Mitigate
A landlord formerly had no obligation to assist or otherwise make an accommodation when a tenant sought to vacate an apartment prematurely; that is, in advance of the previously agreed upon lease-expiration date. The lessor was basically free to sit back and do nothing, all while the lessee was obligated to continue remitting monthly rent payments (even if the space wasn’t being used or occupied).
Under the current law, if a tenant wishes to vacate early – that is, prior to the lease’s scheduled expiration -- a landlord now has a duty to “mitigate damages.” In other words, ownership must, in good faith, take reasonable efforts to relet the premises at the rate agreed upon with the tenant or the unit’s fair market value, whichever is less. A lease with a new tenant will extinguish the former occupant’s liability for any additional rent payments. [Real Prop. Law § 227-e]
Prior to June 2019, a tenant’s involvement in a lawsuit (whether it was a nonpayment, holdover, or otherwise), often served as independent basis upon which a landlord could deny housing.
Landlords may no longer refuse to offer a lease to potential tenants based on their involvement in a landlord-tenant dispute. If the Attorney General believes a landlord has violated this law, she may file suit. And if she prevails, the landlord will be subject to civil penalties ranging between $500 and $1,000. [Real Prop, Law § 227-f]
The outline of changes we’ve provided above is only a summary of just a few of the vast and complex modifications that were made to the law.
Should you have any questions about how these new laws impact you, please feel free to reach out to any one of our capable real-estate attorneys, at 212-619-5400.
In the interim, stay tuned for additional analysis and further developments.