Being a landlord in New York State was never an easy job, but it just got a lot harder. As you may be aware, on Friday, June 14 the Governor signed into law a series of reforms regarding residential landlord-tenant law. The bulk of these laws went into effect immediately and apply to all summary judgment (i.e., eviction) proceedings. The laws increase the time-frame for eviction for the nonpayment of rent by up to 31 days. The laws also impact the way landlords may screen tenants, the security and advances they may take, what they may charge as “added rent.”
This blog provides you with an explanation of the recently enacted legislation impacting landlords. In the first section, we break down the changes in the law. In the following section we provide you with strategies you may use to minimize its impact and to recoup extra costs you may incur as a result of this legislation.
CHANGES IN THE LAW
|Former||Under 2019 Legislation|
|Initial Notice of Non-Payment||3 days||14 days (must be served by certified mail|
|Service of Petition||5-12 days prior to date petition is returnable||10-17 days prior to the date the petition is returnable|
|Basis of summary judgment proceeding for monies due||Any monies owed under lease may be basis for proceeding (e.g., late fees, bounced check fees, other fees assessed by lease)||Monies owed must be base rent|
|Timeline for trial||Within 10 days of original appearance date||At least 14 days after original appearance date|
|Tenant’s Answer to Petition||Tenant must answer 3 days prior to the date petition is to be heard||Tenant does not need to answer|
|Notice prior to execution of warrant||72 hours (3 days)||14 days (warrant must be executed on a business day)|
|Payment prior to court appearance||If tenant does not pay during initial 3-day notice to cure period, landlord does not need to accept rent in full and may proceed to court for added rent, attorneys’ fees and costs||If tenant pays base rent due at any time prior to the appearance date the landlord must accept, and the special proceeding is rendered moot.|
|Attorney’s fees upon tenant default (i.e., tenant does not show up for court)||Landlord may collect attorneys’ fees in default judgment||Landlord may not collect attorneys’ fees upon default judgment|
|MISCELLANEOUS PROVISIONS THAT IMPACT SUMMARY PROCEEDINGS||Former||Under 2019 Legislation|
|Added Rent||Lease dictates that any item can be added rent||Rent is defined as monthly or weekly amount charged in consideration, added fees excluded|
|Warrant of Eviction Specificity||Must describe the premises||Must describe the premises and state the earliest day upon which it can be served.|
|Post-hearing rights of tenant||n/a||If tenant pays rent to Court prior to the execution of the warrant, court shall vacate the warrant unless landlord can prove tenant’s bad faith in withholding rent|
|CHANGES IN THE LAW UNRELATED TO SUMMARY PROCEEDINGS||Former||Under 2019 Legislation|
|Security or advance (i.e., last months’ rent)||At landlord’s discretion||1-month max total security or advance|
|Timeline for returning security||Within a reasonable time (case law dictates 30-45 days)||Within 14 days. Failure to do so renders the landlord unable to retain ANY of the security deposit.|
|Receipts for payments of rent||At landlord’s discretion||Landlord must issue receipt immediately|
|Use of escalator clauses (a clause that triggers an automatic increase in rent when certain conditions are met (i.e., rent automatically increases by 2% after 6 months))||At landlord’s discretion||Not permitted|
|Late fees||At landlord’s discretion||The lesser of 5% 1 month’s rent or $50, rent must be at least 5 days late before they can be assessed|
|Basis for rejecting potential tenants||At landlord’s discretion||Landlord may not use former evictions as a basis not to rent to a tenant. Moving forward eviction proceedings will be sealed.|
|Moveout/security refund procedure||At Landlord’s discretion||Prior to termination of the tenancy the Landlord must give the Tenant an opportunity to be present for an inspection and the Landlord must provide a written itemized statement of the proposed repairs.|
|Duty to mitigate damages||Previously, if a tenant broke the lease, landlord could recover the balance (i.e., outstanding months’ rent) without proving he tried to re-let.||Burden is on Landlord to demonstrate that Landlord made effort to mitigate in good faith.|
|Background check||At landlord’s discretion||Limited to $20 or the actual cost of the credit/background check, whichever is less. Cost must be waived if Tenant provides a credit check completed within the last 30 days.|
|Rental application costs||At landlord’s discretion||Other than for a background check, no other rental application fees may be charged.|
|Written Notice for Increase in rent over 5% of monthly rent||At landlord’s discretion||Written notice of the increase must be provided at least 30 days prior to the increase.|
|Month to month tenancy||Landlord or tenant can terminate with 1 months’ notice||Tenant may terminate with 1 months’ notice. Landlord may not (it is unclear how this change will be interpreted by courts).|
Effective October 12, 2019, written notice is required for intention not to renew tenancy in accordance with the following rules:
- If tenant has occupied the unit for less than one (1) year and does not have a lease term of at least one (1) year, landlord shall provide 30 days’ notice.
- If tenant has occupied the unit for more than one (1) year but less than two (2) years, landlord shall provide at least 60 days’ notice.
- If tenant has occupied the unit for more than two (2) years or has a lease term of at least two (2) years, landlord shall provide at least 90 days’ notice.
RECOMMENDATIONS TO MINIMIZE IMPACT
Vet tenants thoroughly. Once a tenant is in your unit, it will be harder than before to evict him or her. Therefore, now more than before it is worth investing time and resources to ensure that your secure tenants who will pay their rent and comply with their obligations under the lease and any community rules. While the new law forbids researching a tenant’s eviction history by a review of the clerk’s minutes, it does not forbid other forms of inquiry as to a tenant’s background. We encourage you to run background checks on all tenants and to request the names of two former landlord (ideally the two landlords immediately prior to the present application). When you speak with references, we recommend you pull up the building’s tax code and inquire as to the relationship between the reference and the building owner to ensure it is a valid reference.
Serve timely notice. Per the new statute, rent is not late until the 5th day after it is due. This is the earliest day you may serve notice. We recommend you serve 14-day notice on the 5th day following the nonpayment of rent. Files should be promptly referred for summary judgment proceedings. The timeline to remove a tenant has been extended by 31 days; in order to minimize the strain on your finances you must be judicious in initiating the removal of nonpaying tenants in a timely manner.
Build fees into your leases up front to recoup lost funds. The law does not prohibit an automatic fee in the event you need to serve a 14-day notice (this fee is separate from a late fee, which is capped by the law). The law does not prohibit a unit cleaning fee upon a tenant’s vacating the unit. These fees may be built into the lease in order to recoup funds. Please note that while you may be able to secure such fees from the tenant, these fees will not be considered added rent under the new law and therefore will not be awarded in a summary judgment proceeding.
We recommend that you promptly review your leases and any operating policies to ensure compliance with the new laws. Should you have any questions please do not hesitate to contact our office at your convenience. Contact our Real Estate team to set up an appointment at 845-298-2000, or emails us here.