Articles Posted in Landlord and Tenant

courthouse-300x159A recent blog post discussed sweeping changes to New York State’s regulations for rental units.  These changes were recently passed by the state legislature, and signed into law by Governor Cuomo.  While a full discussion of the new law is beyond the scope of this post, suffice it to say that the law makes it more difficult for landlords to remove apartments from rent stabilization, as well as removing the right of a landlord to increase the regulated rent after a tenant vacates and a new tenant moves into the unit.

One effect of this change is to remove the incentive for a landlord to “buy out” a rent regulated tenant.  Prior blog posts have discussed transactions where a landlord would pay a tenant a significant sum of money to vacate a rent regulated apartment.  The reason for these transactions is that the landlord would then be permitted to significantly increase the rent for a new tenant, once the last tenant vacated.  Under the new regulations, the landlord would not be permitted the large “vacancy increase” that was allowed previously.  Therefore, landlords no longer would have an incentive to pay an existing tenant to move out, because the regulated rent would remain the same for a new tenant.

Landlords were not expecting the new regulations, as they were introduced very late in the legislative session.  The new regulations also make it more difficult to evict tenants who do not pay their rent.  As tenant-favorable laws will always be easier to pass in large cities, due to the simple fact that many tenants vote, and they are always more numerous than landlords, the question becomes whether these rent regulations can pass muster under the United States Constitution.

trap-300x225Prior blog posts have discussed the operational aspects of a holdover landlord-tenant eviction proceeding.  Holdover proceedings, unlike non-payment proceedings, occur when a tenant’s lease term has expired, or when a tenant does not have a lease, and either party decides to terminate the tenancy on thirty day’s notice, which is their legal right.  This is in contrast to a non-payment proceeding, which is when a tenant with a valid lease fails to make his rent payments.

For example, a tenant has a lease with a term that ends on December 31.  On January 1, the tenant remains in the premises.  If they make a rent payment for January, they are now considered a month-to-month tenant for as long as the landlord continues to accept the monthly rent under the same terms as the expired lease.  The lease is now considered to be extended on a month-to-month basis as long as the parties agree.

But what happens if the landlord does not want the tenant to remain after the expiration of the lease, even if the tenant continues to pay rent?  The landlord must terminate the month-to-month tenancy by serving a “Notice to Quit” on the tenant.  The Notice to Quit must state that the tenancy will be terminated on no less than thirty days notice.  New York law has held that the termination date should follow the end of the lease term date contained in the original lease.  If the original lease term occurred on the last day of the month, the termination date in the Notice to Quit should also be on the last day of the month.  This may result in the tenant receiving slightly more than thirty days notice, for example, if the Notice to Quit is served on February 15, and the lease term ended on December 31 of the prior year, the Notice will have a termination date of March 31, which is at least thirty days notice, but at the end of the month as legally required, mirroring the original lease term.

rent-300x200Recently in the news is that state representatives in Albany are considering sweeping changes to New York State’s regulations for rental units. Prior blog posts have discussed past revisions to the rent regulations.  While some of the changes only affect apartments in New York City, others may apply to apartments statewide.  As of this writing, Governor Cuomo has stated that he will sign any bill that the lawmakers pass.

As most New Yorkers are aware, rental prices in New York City are among the highest in the nation.  Whether having the government attempt to control the prices of rental units will result in lower rents overall remains to be seen.  Rent regulation by the government has existed in some form since the World War II years, and keeping rental prices low has not been achieved.  While some regulated tenants benefit, others, whose units are unregulated, may see larger increases. In addition, forcing landlords to charge regulated rents may discourage both the building of new units and investment by landlords in improving existing apartments.  Why spend money on repairs or renovations if rent rates remain fixed by regulation?  Obviously, our representatives do not think that this is a factor.

Of course, not all apartments are subject to rent stabilization.  In Westchester County, where our offices are located, each municipality has the option of adopting the Emergency Tenant Protection Act (ETPA).  A list of these villages, cities, and towns can be found here.  If the units are in a village, city or town which has not adopted the ETPA, then the units are not rent regulated.  In addition, the law only applies to buildings of six or more units.  Therefore, if one owns a three unit apartment building in Westchester, it would not be subject to rent regulations.

apartment-300x150Prior blog posts have discussed the difference between the two types of landlord-tenant eviction proceedings.  To summarize, non-payment proceedings occur when a tenant fails to pay rent or other charges due to the landlord.  Holdover proceedings, which will be discussed in this post, happen when a tenant’s lease term has expired, or, in certain situations, when a tenant does not have a written lease.

First, let’s discuss situations when a tenant’s lease term has expired.  Most, if not all, written leases, contain a specific lease term.  It may be expressed in terms of a set period, such as one year, and can also give the specific date that the lease will expire.  What happens when the lease term expires, but the tenant remains in possession?  Under New York law, the tenant now becomes a month-to-month tenant.  This means that the lease terms remain in effect, but the lease has been extended for an additional monthly period, assuming that the tenant continues to pay the rent due, and continues to comply with the other lease terms.

By accepting the rent for an additional month, the landlord is agreeing to an extension of the lease for that additional month.  Let’s say the lease expires on March 31.  On April 1, the tenant pays an additional month’s rent check to his landlord, and the landlord accepts the rent, by depositing the check.  Under the law, the parties now have a month-to-month tenancy, which either party can terminate on thirty day’s notice.

rentown-300x171There are many opinions regarding whether being a renter or owner of one’s residence is the correct decision in New York.  Many factors, including one’s economic situation, must be considered in whether to rent or buy real property.  One additional possibility is renting the property with an option to buy.  This post will discuss the legal issues related in entering into such an agreement.

Initially, there must be an agreement with the owner of the property regarding the terms of the rental.  This is commonly documented in the form of a lease.  The lease will delineate the monthly rental amount as well as the lease term and other provisions.  If the parties agree, an option to buy the property can be included in the lease, or as a separate agreement.

The most common arrangement is to provide the renter with the option to purchase the premises at a set price during the rental term, or at the expiration of the rental term.  If the renter exercises her option to buy, then the attorney for the property owner should prepare a contract of sale to be executed by all parties.  The signed contract of sale is necessary should the potential purchaser need to apply for a mortgage loan to purchase the premises.  Any institutional lender will need a copy of the fully executed sale contract in order to process a standard loan application.  In addition, a down payment, typically in the amount of ten percent (10%) of the purchase price is usually also necessary to obtain a traditional bank loan.  The lending institution requires proof of the down payment deposit into the escrow account of the seller’s attorney.

flipMany of our readers are familiar with television programs where people purchase properties in terrible condition, conduct renovations and then sell at a handsome price at the end of the show.  While some New Yorkers may be inspired by these programs, reality often differs from the outcome as depicted on television.  This post will examine some of the pitfalls in “flip” transactions and methods to alleviate some of the legal issues that arise.

Traditionally, a flip transaction takes place as follows.  A purchaser locates a property that is a “good deal”.  Perhaps it is purchased at foreclosure auction , without the opportunity to view the interior of the property or to determine whether tenants occupy the property.  The property is a “good deal” because it is priced below other properties in the area, and is perceived by the purchaser as being in a prosperous area in which their ultimate purchaser will want to live.  Once the property is purchased, the owner will renovate the property and market it for sale.  The flipping purchaser does not intend to use the property for his own occupancy and therefore needs to sell the property as quickly as reasonable.

As most flippers ultimately realize, there is no such thing as a “good deal”.  These transactions are often too good to be true, as these properties are acquired “warts and all”.  Often the flip properties are acquired from foreclosing lenders whose attorneys present contracts that are allegedly nonnegotiable, “need” to be signed immediately and contain unduly harsh closing deadlines that could result in the loss of the downpayment or other penalties.  Flippers should not cave to pressure to sign such contracts without attorney review.  An experienced attorney will inform flippers that they are most likely purchasing the property subject to existing property violations, past due real estate taxes, unpaid water bills, another mortgage that may not have been removed by the foreclosure proceeding, occupants that may need to be evicted and the like.  It may be prudent to order a title search prior to signing such a contract and to resist pressure from the seller to use the title company that it recommends.

fancyacuppa-300x158The New York Times recently published an article concerning the beloved business Tea & Sympathy, a British-themed store and restaurant located in Manhattan’s Greenwich Village, and the difficulty that it has encountered meeting its lease obligations.  Closure of this business may occur  unless the landlord is willing to amend the lease terms.  Loyal customers of Tea & Sympathy have rallied in support of the business by contributing to a “Go Fund Me” page to assist the business in meeting its expenses.  This post will examine legal strategies to be employed when a tenant foresees difficulty in meeting its lease obligations.

Some of our clients with commercial leases have contacted us when they have encountered difficulty in meeting their lease obligations.  The cause of such inability can arise from various factors.  Perhaps the tenant did not engage the services of an experienced attorney when the lease was negotiated and inadvertently agreed to terms that were not advisable for a tenant.  Unanticipated factors may have come into play that increased tenant obligations beyond those that may be comfortable,  such as increased fees and real estate tax escalations of the municipality where the leased premises is located, or a major capital improvement conducted by the landlord for which the tenant agreed to pay a percentage of the cost.  Although the tenant agreed to the rent increases when the lease was signed, the tenant may have eventually become unable to sustain the rent increases once other business expenses also increased.  The business climate may have changed since the lease was signed.  For instance, the product or service offered by the tenant may also no longer be desired or is now being offered online at a lower price.  Given that most commercial leases are long-term arrangements, many of these factors can cause a tenant to be unable to meet its lease obligations.

Your attorney should first determine whether the tenant wishes to continue to conduct business at the leased premises.  If not, a lease surrender should be negotiated prior to “going dark”.  Should the tenant wish to continue at the premises and even be fortunate enough to have sympathetic customers (like those of Tea & Sympathy) who would be disappointed if the business closes, attorneys for the tenant should conduct a negotiation with the landlord towards the goal of modifying the lease so that the current terms are consistent with the tenant’s current abilities and the landlord’s current needs to cover property expenses.  Negotiation of a lease modification avoids yet another vacancy for the landlord and maintains the landlord’s cash flow.

family-296x300Our firm often fields inquiries from clients regarding successor rights in New York residential rental apartments.  The first issue which needs to be determined is whether the premises in question are subject to rent regulation.  Rent regulation in New York State applies to many, but not all, residential units.  It is more prevalent in New York City than in its surrounding suburbs.  However, it does also cover many rental units in Westchester and Nassau Counties.

Whether an apartment is subject to rent regulation depends on many factors.  Defining these factors is beyond the scope of this blog post.  It may depend on the number of units in the building, the age and history of the building, and whether the owner accepted certain government benefits or loans.  A rent regulated unit will generally be subject to the rent stabilization laws of New York State or the local municipality in which the unit is located.  Generally, only cities with large populations will have apartment units subject to rent regulation.

There are local government offices, known as the Division of Housing and Community Renewal (DHCR) which maintain databases allowing for a tenant to determine if their unit is rent regulated.

bucket1So long as one is alive and mentally capable, one is in control of her own financial and legal affairs.  Once a person passes away, a fiduciary needs to be appointed by the Surrogate’s Court  to determine and pay estate debts , collect and distribute assets, file relevant tax returns and pay taxes, vacate a rental property used by the deceased or sell a property owned by the deceased.  Also, if the deceased left minor children surviving, a guardian needs to be appointed to care for the children on a daily basis.  This post will explore the types of fiduciaries that may be involved after a person’s death and how they are appointed.

If a person dies without a will (intestate), the Court will appoint an Administrator to serve.  The Administrator to be appointed will be the same person who will inherit according to the intestacy statute.  For instance, if the closest survivor is a sister, such person will inherit the deceased’s assets and serve as the estate administrator.  Guardians for minor children (under 18 years of age) will need to be appointed by the Court in the event that the person dies intestate.  Since a parent should not leave it to the Court to appoint a guardian for her children, it is prudent for such person to engage the services of a qualified professional to draft a will containing her wishes relative to fiduciaries.

We  have posted previously about the merits of having a will and/or trust.  In either case, fiduciaries are selected by the person making the will or trust.  Executors are formally nominated in wills.  They are charge of paying valid financial obligations and distributing assets that are collected.  The testator (person making the Will) can select the best person in her life for the position of executor.  Perhaps she is estranged from family and would prefer not to have the Court appoint the surviving relative according to statute in the case of intestacy.  Also, the testator may have a friend who is sophisticated with respect to financial matters and is best suited to act as executor.  Trustees of trusts take on similar roles as executors.  Of course, selecting a guardian to raise one’s children in the event of death is a highly personal and important choice to be exercised.

super-bowl-betting-300x180Scheduled for this Sunday is the Super Bowl between the New England Patriots and the Los Angeles Rams for the championship of the NFL.  Recent news stories in the New York metropolitan area involve the possibility of making legal sports bets on the “big game” at casinos or racetracks located in New Jersey.  The reason for this development is a recent decision by the United States Supreme Court which invalidated a federal law prohibiting individual states from making sports betting legal, with limited exceptions.

The Supreme Court, by a seven to two vote, held that it was a violation of the Constitution to prohibit states from making their own decision regarding the legalization of sports betting.  The result is that every one of the fifty states can now legalize sports betting (or decide not to legalize sports betting), and may determine where, when, and how such bets will be made within their state.  The details of such legalization are left up to each state, including whether to allow online betting.

New Jersey, which brought the case before the Supreme Court, has already passed legislation permitting sports betting in racetracks and casinos, such as the Meadowlands Racetrack located just a few miles from New York City.  New York State has lagged behind, and has not yet legalized sports betting or decided on a structure for such potential legalization.  For the time being, New York State residents who wish to bet against the Patriots in the Super Bowl must travel to New Jersey, or to another state such as Nevada, which has authorized legal sports betting.