The Rent Code Amendments Of 2014

Transcript

N S T I T U T E I C L E N Y C L A T HE R ENT C ODE A MENDMENTS OF 2014 Prepared in connection with a Continuing Legal Education course presented at New York County Lawyers’ Association, 14 Vesey Street, New York, NY scheduled for March 5, 2014 Program Co-sponsors: Faculty: Robin A. Bernstein, Rent Stabilization Association; David Cabrera, Borah, Goldstein, Altschuler, Nahins & Goidel, P.C.; Joseph Condon, Community Housing Improvement Program, Inc.; David Feuerstein, Herrick, Feinstein, LLP; Magda Cruz, Belkin, Burden, Wenig & Goldman LLP; Mitchell Posilkin, Rent Stabilization Association; Niles Welikson, Horing, Welikson & Rosen P.C. Moderators: Mitchell Posilkin, RSA; Joseph Condon, CHIP, Robin Bernstein, RSA This course has been approved in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 3 Transitional and Non-Transitional credit hours:3 Professional Practice. This program has been approved by the Board of Continuing Legal education of the Supreme Court of New Jersey for 3 hours of total CLE credits. Of these, 0 qualify as hours of credit for ethics/professionalism, and 0 qualify as hours of credit toward certification in civil trial law, criminal law, workers compensation law and/or matrimonial law. ACCREDITED PROVIDER STATUS: NYCLA’s CLE Institute is currently certified as an Accredited Provider of continuing legal education in the States of New York and New Jersey. Information Regarding CLE Credits and Certification The Rent Code Amendments of 2014 Wednesday, March 5, 2014 9:00 AM to 12:00 PM The New York State CLE Board Regulations require all accredited CLE providers to provide documentation that CLE course attendees are, in fact, present during the course. Please review the following NYCLA rules for MCLE credit allocation and certificate distribution. i. You must sign-in and note the time of arrival to receive your course materials and receive MCLE credit. The time will be verified by the Program Assistant. ii. You will receive your MCLE certificate as you exit the room at the end of the course. The certificates will bear your name and will be arranged in alphabetical order on the tables directly outside the auditorium. iii. If you arrive after the course has begun, you must sign-in and note the time of your arrival. The time will be verified by the Program Assistant. If it has been determined that you will still receive educational value by attending a portion of the program, you will receive a pro-rated CLE certificate. iv. Please note: We can only certify MCLE credit for the actual time you are in attendance. If you leave before the end of the course, you must sign-out and enter the time you are leaving. The time will be verified by the Program Assistant. Again, if it has been determined that you received educational value from attending a portion of the program, your CLE credits will be pro-rated and the certificate will be mailed to you within one week. v. If you leave early and do not sign out, we will assume that you left at the midpoint of the course. If it has been determined that you received educational value from the portion of the program you attended, we will pro-rate the credits accordingly, unless you can provide verification of course completion. Your certificate will be mailed to you within one week. Thank you for choosing NYCLA as your CLE provider! New York County Lawyers’ Association Continuing Legal Education Institute The Rent Code Amendments of 2014 CUNY Graduate Center -- 365 5th Avenue at 34th St., New York, NY March 5, 2014; 9:00 AM to 12:00 PM Program Co-sponsors: Panelists: Robin A. Bernstein, RSA; David Cabrera, Borah, Goldstein, Altschuler, Nahins & Goidel, P.C.; Joseph Condon, CHIP; David Feuerstein, Herrick, Feinstein LLP; Magda Cruz, Belkin Burden Wenig & Goldman, LLP; Mitchell Posilkin, RSA; Joseph Strasburg, RSA CHIP; Niles Welikson, Horing Welikson & Rosen, P.C. Program Moderators: Mitchell Posilkin, General Counsel, RSA Joseph Condon, General Counsel, CHIP Robin A. Bernstein, Deputy Counsel, RSA AGENDA 8:30 AM – 9:00 AM Registration 9:00 AM – 9:15 AM Welcome and Announcements Bari Chase, NYCLA; Joseph Strasburg, RSA CHIP The Rent Code Amendments of 2014 9:15 AM – 9:40 AM Overview Mitchell Posilkin; Magda Cruz; David Feuerstein 9:40 AM –10:05 AM Four Year Rule; Preferential Rents; Default Formula Niles Welikson Individual Apartment Improvement Rent Increases; Rent Stabilization Rider; Major Capital Improvement Rent Increases David Cabrera 10:05 AM – 10:30 AM 10:30 AM – 10:45 AM BREAK 10:45 AM – 11:10 AM Deemed Leases; Service Complaints; Harassment Niles Welikson 11:10 AM – 11:45 AM Rent Registration; Deregulation David Cabrera 11:45 AM – 12:00 PM Questions and Answers 1 TABLE OF CONTENTS RSC Amendment Summary PAGE 3 NYC Rent Code Amendments 6 Consolidated Regulatory Impact Statement Summary 20 Advisory Opinion 2014(1) 61 How to Amend Registrations – Issued January 8, 2014 62 Annual Rent Registration Procedure – Issued January 8, 2014 63 Administrative Determination Procedure – Issued January 8, 2014 64 Fact Sheet #3 - Required and Essential Services 65 Fact Sheet #4 - Lease Renewal in Rent Stabilized Apartments 68 Fact Sheet #6 - Fair Market Rent Appeals 72 Fact Sheet #17 - Harassment 75 Fact Sheet #20 - Special Rights of Disabled Persons 77 Fact Sheet #21 - Special Rights of Senior Citizens 81 Fact Sheet #36 - High Rent Vacancy Deregulation and High Rent, High Income Deregulation 84 Notice of Apartment Deregulation Pursuant to High Rent Vacancy 88 Information and Instructions for “Notice of Apartment Pursuant to High Rent Vacancy 90 Fact Sheet #40 - Preferential Rents 91 Draft Lease Rider 95 OB 2005-1 Sup. No. 2 109 PAGE NUMBERS REFERRED TO ARE LOCATED ON THE TOP OF EACH PAGE 2 3 Darryl C. Towns Commissioner Andrew M. Cuomo Governor New York State Division of Housing and Community Renewal Office of Rent Administration Gertz Plaza 92-31 Union Hall Street Jamaica, NY 11433 RSC Amendment Summary 9 NYCRR §2520.5 paragraphs (o) and (p) are re-lettered (p) and (q) and a new paragraph (o) is added to designate the Tenant Protection Unit (TPU) as a distinct unit under DHCR 9 NYCRR §2520.11 new paragraph (u) is added to provide that an owner will be required to provide the first tenant of a deregulated unit an exit notice explaining how the unit became deregulated, how the rent was computed and what the last regulated rent was. A copy of the rent registration indicating deregulated rent must be provided to the tenant. 9 NYCRR § 2521.1 is amended to add a new subdivision (l) to establish the criteria for setting the initial legal regulated rent for housing accommodations located in properties that were or continue to be owned by housing development fund companies (HDFC). 9 NYCRR 2521.2(b) is amended, 9 NYCRR §2521.2(b)(2) is repealed, and 9 NYCRR §2521.2(c) amended to provide that where a preferential rent is charged, the legal rent can only be preserved by disclosure in a tenant’s lease; a rent registration indicating a preferential rent will not be dispositive. The owner shall be required to maintain and submit where required by DHCR the rental history immediately preceding a preferential rent to the present which may be prior to the four–year period preceding the filing of a complaint. 9 NYCRR § 2522.4(a)(3)(22) is amended to provide there will be no MCI rent increases for conversions from master to individual metering; however, electrical wiring for the building can be subject to an MCI rent increase. 9 NYCRR § 2522.4(a)(13) is amended to provide that when an MCI rent increase application is received, DHCR will initiate its own search to determine if there is an “immediately hazardous” violation in a building and, if there is such a violation, the application will be rejected with leave to renew once the violation is remedied. 9 NYCRR §2522.4(d)(3)(iii) is amended to provide that a tenant receiving DRIE (disabled) benefits will not be subject to electrical sub-metering conversions; this conforms to how SCRIE (senior citizens) tenants are treated. 1 4 9 NYCRR §2522.5(c)(1) and 9 NYCRR §2522.5(c)(3) are amended to provide the following: Required lease riders attached to leases will have greater detail as to how the rent was calculated, including details about how any IAI rent increase was calculated; tenants will be able to request documentation from owners to support an IAI increase; if the lease rider and/or any requested IAI documents are not provided, there can be no rent increase until the rider/documentation is provided unless the owner can prove the rent charged is otherwise legal; if the rent charged is above the legal rent during period when rider/documentation is not provided, there can be a rent overcharge proceeding and no rent increase can be collected until the rider/documentation is provided. 9 NYCRR §2522.6 (b) is amended and 9 NYCRR § 2526.1(g) is re-lettered (h) and new subdivision (g) is added to provide that when the rent on base date for establishing rent under the four-year look-back period cannot be determined or the rent set on the base date was the subject of a fraudulent scheme to deregulate, the 3-part, court-sanctioned default formula for setting rents, e.g., lowest rent for comparable unit in building, will be used and a general catch-all, e.g. data compiled by DHCR or sampling method, will be available. 9 NYCRR §2523.4(a)(1), (a)(2), (c) and (d)(2) are amended to provide: A tenant complaint of a service decrease will not be dismissed if the tenant failed to provide the owner with notice of the problem prior to filing a complaint with DHCR; any decrease in rent based upon a service decrease order will include a bar to future MCI and vacancy bonus rent increases; an owner’s time to respond to a service decrease complaint will be reduced to 20 days if the tenant, in fact, gives prior notice, otherwise the response time is 60 days; if the tenant is forced to vacate, a 5 day response time is required and; if the complaint is for lack/reduction in heat/hot water then a 20 day response time is required. 9 NYCRR §2523.5(c)(2) and (3) are amended to provide that tenants holding over after the lease expires (they failed to renew their lease) will be treated as month-to-month tenants and not held to a new full lease term. 9 NYCRR §2524.3(a), (e), and (g) are amended to amend certain notice requirements. 9 NYCRR § 2525.5 is amended to redefine harassment to include certain false filings and false statements designed to interfere with tenant’s quiet enjoyment or rights. 9 NYCRR § 2526.1(a)(2)(ii) is amended and 9 NYCRR § 2526.1(a)(2) adds new subparagraphs (iii), (iv), (v), (vi), (vii), (viii) and (ix) and 9 NYCRR § 2526.1(a)(3)(iii) is amended to provide a more comprehensive list of exceptions to the rule that when examining rent overcharges the look-back period to determine an overcharge is four years. The list of exceptions includes: when there is an allegation of a fraudulent scheme to deregulate the unit; prior to base date there is an outstanding rent reduction order based upon a decrease in services; it is determined that there is a willful rent overcharge; there is a vacant or exempt unit on the four-year base date, in which case DHCR may also look at the last rent registration, or; there is a need to determine whether a preferential rent exists. 9 NYCRR §2527.9 is amended by adding new subdivisions (c) and (d) to amend certain notice requirements. 2 5 9 NYCRR § 2528.3 (a) is amended to clarify that registration information may be collected as required by DHCR, RSC, or 2527.11. 9 NYCRR § 2528.3 is amended to add paragraph (c) to provide that owners will not be able to amend a rent registration without going through an administrative proceeding with notice to the tenant unless the change is governed by another government agency. 9 NYCRR § 2528.4(a) is amended to clarify that a rent freeze for failing to register will include MCI increases and vacancy bonus increases. 9 NYCRR § 2529.12 is amended to clarify filing requirements for Article 78 proceedings. 9 NYCRR § 2530.1 is amended to clarify the 60 day statute of limitations from date of mailing of an order. 9 NYCRR § 2531.2 is amended to prohibit luxury decontrol filings on SCRIE and DRIE tenants. 3 6 New York City Rent Stabilization Code Amendments 1. 9 NYCRR §2520.5 paragraphs (o) and (p) are re-lettered (p) and (q) and a new paragraph (o) is added as follows: (o) The Office of the Tenant Protection Unit (TPU). The office of the DHCR designated by the Commissioner to investigate and prosecute violations of the ETPA, the RSL and the City and State Rent laws. In furtherance of such designation, the TPU may invoke all authority under the ETPA, RSL, RSC and the State and City rent laws and the regulations thereunder that inures to the Commissioner, DHCR or the Office of Rent Administration. However, nothing contained herein shall limit the mission and authority of the Office of Rent Administration to administer and enforce the ETPA, the RSL, and the City and State rent laws and all such regulations promulgated thereunder. 2. 9 NYCRR 2520.11 new paragraph (u) is added as follows: (u) The owner of any housing accommodation that is not subject to this code pursuant to the provisions of subdivision (r) of this section or of section 2200.2(f)(19) of the New York City Rent and Eviction Regulations, shall give written notice certified by such owner to the first tenant of that housing accommodation after such housing accommodation becomes exempt from the provisions of this code or the city rent law. Such notice shall contain the last regulated rent, the reason that such housing accommodation is not subject to this Code or the city rent law, a calculation of how either the rental amount charged when there is no lease or the rental amount provided for in the lease has been derived so as to reach the applicable amount qualifying for deregulation pursuant to subdivision (r) of this section, (whether the next tenant in occupancy or any subsequent tenant in occupancy actually is charged or pays less than the applicable amount qualifying for deregulation), a statement that the last legal regulated rent or the maximum rent may be verified by the tenant by contacting DHCR and the address and telephone number of DHCR. Such notice shall be sent by certified mail within thirty days after the tenancy commences or after the signing of the lease by both parties, whichever occurs first or shall be delivered to the tenant at the signing of the lease. In addition, the owner shall send and certify to the tenant a copy of the registration statement for such housing accommodation filed with DHCR indicating that such housing accommodation became exempt from the provisions of this code or the city rent law, which form shall include the last regulated rent and shall be sent to the tenant within thirty days after the tenancy commences or the filing of such registration, whichever occurs later. 3. 9 NYCRR § 2521.1 is amended to add a new subdivision (l) as follows: (l)(1) Notwithstanding any other provisions of this code, the initial legal regulated rent shall be established pursuant to paragraph (2) for housing accommodations located in properties that were or continue to be owned by housing development fund companies (HDFC’s) created pursuant to Article XI of the Private Housing Finance Law (whether 1 7 such an HDFC was for rental housing, a mutual company, or subject to cooperative or condominium ownership or had otherwise previously been subject to this code) where such property has been conveyed pursuant to a judgment of foreclosure or pursuant to a stipulation of settlement in a foreclosure action (whichever occurs first). (2) The initial legal regulated rent shall be the highest of: (i) maintenance or carrying charges, common charges, or rent in effect immediately prior to such conveyance; (ii) any minimum standard rent established by either HPD or DHCR as the respective supervising agency of an HDFC that was in effect immediately prior to such conveyance, even if such minimum standard rents had not been implemented for the specific building or housing accommodation; or (iii) the rent specifically set by HPD or DHCR as the respective supervising agency of an HDFC where such HDFC or a successor HDFC continues to own the building. 4. 9 NYCRR 2521.2 (b) is amended to read as follows: Such legal regulated rent as well as preferential rent shall be [“previously established” where: (1) the legal regulated rent is] set forth in [either] the vacancy lease or renewal lease pursuant to which the preferential rent is charged. [; or] 5. 9 NYCRR 2521.2(b)(2) is repealed: [(2) for a vacancy lease or renewal lease which set forth a preferential rent and which was in effect on or before June 19, 2003, and the legal regulated rent was not set forth in either such vacancy lease or renewal lease, the legal regulated rent was set forth in an annual rent registration served upon the tenant in accordance with the applicable provisions of law, except that the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to section 2526.1 or 2522.3 of this Title shall not be examined.] 6. 9 NYCRR 2521.2(c) is amended to read as follows: (c) Where the amount of the legal regulated rent is set forth either in a vacancy lease or renewal lease where a preferential rent is charged, [the amount of the legal regulated rent shall not be required to be set forth in any subsequent renewal of such lease, except that] the owner shall be required to maintain, and submit where required to by DHCR, the rental history of the housing accommodation immediately preceding such preferential rent to the present which may be prior to the four-year period preceding the filing of a complaint [pursuant to section 2526.1 or 2522.3 of this Title shall not be examined]. 2 8 7. 9 NYCRR § 2522.4(a)(3)(22) is amended to read as follows: (22) REWIRING: - new copper risers and feeders extending from property box in basement to every housing accommodation; must be of sufficient capacity (220 volts) to accommodate the installation of air conditioner circuits in living room and/or bedroom; [and] but otherwise excluding work done to effectuate conversion from master to individual metering of electricity approved by DHCR pursuant to paragraph (3) of subdivision (d) of this section. 8. 9 NYCRR § 2522.4(a)(13) is amended to read as follows: (13) The DHCR shall not grant an owner's application for a rental adjustment pursuant to this subdivision, in whole or in part, if it is determined by the DHCR, based upon information received from any tenant or tenant representative or upon a review conducted on DHCR’s own initiative that, as of the date of such application for [prior to the granting of approval to collect] such adjustment that the owner is not maintaining all required services, or that there are current immediately hazardous violations of any municipal, county, State or Federal law which relate to the maintenance of such services. However, as determined by the DHCR, such application may either be granted upon condition that such services will be restored within a reasonable time, or dismissed with leave to refile within sixty days which time period shall stay the two year filing requirement provided in section (a)(8) of this paragraph. [and] In addition, certain tenantcaused violations may be excepted. 9. 9 NYCRR 2522.4(d)(3)(iii) is amended to read as follows: (iii) Recipients of Senior Citizen Rent Increase Exemptions (SCRIE) or Disability Rent Increase Exemptions (DRIE): For a tenant who on the date of the conversion is receiving a SCRIE or DRIE authorized by section 26-509 of the Rent Stabilization Law of Nineteen Hundred Sixty-nine, the rent is not reduced and the cost of electricity remains included in the rent, although the owner is permitted to install any equipment in such tenant's housing accommodation as is required for effectuation of electrical conversion pursuant to this paragraph. (a) After the conversion, upon the vacancy of the tenant, the owner, without making application to DHCR, is required to reduce the legal regulated rent for the housing accommodation in accordance with the Schedule of Rent Reductions set forth in Operational Bulletin 2003-1, and thereafter [the] any subsequent tenant is responsible for the cost of his or her consumption of electricity, and for the legal rent as reduced, including any applicable major capital improvement rent increase based upon the cost of work done to effectuate the electrical conversion. (b) After the conversion, if a tenant ceases to receive a SCRIE or DRIE, the owner, without making application to DHCR, may reduce the rent in accordance with the Schedule of Rent Reductions set forth in Operational Bulletin 2003-1, and thereafter the 3 9 tenant is responsible for the cost of his or her consumption of electricity, and for the legal rent as reduced, including any applicable major capital improvement rent increase based upon the cost of work done to effectuate the electrical conversion, for as long as the tenant is not receiving a SCRIE or DRIE. Thereafter, in the event that the tenant resumes receiving a SCRIE or DRIE, the owner, without making application to DHCR, is required to eliminate the rent reduction and resume responsibility for the tenant's electric bills. 10. 9 NYCRR §2522.5(c)(1) is amended to read as follows and (c)(ii) is renumbered (c)(iv) and a new (c)(ii) and (c)(iii) are added as follows: (1) For housing accommodations subject to this Code, an owner shall furnish to each tenant signing a vacancy or renewal lease, a rider in a form promulgated or approved by the DHCR, in larger type than the lease, describing the rights and duties of owners and tenants as provided for under the RSL including a detailed description in a format as prescribed by DHCR of how the rent was adjusted from the prior legal rent. Such rider shall conform to the "plain English" requirements of section 5-702 of the General Obligations Law[,]. Copies of the form as promulgated by DHCR shall also be available in [Spanish, and] all languages that may be required pursuant to DHCR’s language access plan. The rider shall be attached as an addendum to the lease. Upon the face of each rider, in bold print, in English and any other language as required by the DHCR language access plan, shall appear the following: "ATTACHED RIDER SETS FORTH RIGHTS AND OBLIGATIONS OF TENANTS AND LANDLORDS UNDER THE RENT STABILIZATION LAW." [("LOS DERECHOS Y RESPONSABILIDADES DE INQUILINOS Y CASEROS ESTAN DISPONIBLE EN ESPANOL")]. (i) For vacancy leases, such rider shall in addition also include a notice of the prior legal regulated rent, if any, which was in effect immediately prior to the vacancy, an explanation, and in a format prescribed by DHCR, [of] how the rental amount provided for in the vacancy lease has been computed above the amount shown in the most recent annual registration statement, as well as the prior lease, and a statement that any increase above the amount set forth in such registration statement is in accordance with adjustments permitted by the rent guidelines board and this Code. (ii) Such rider shall also set forth that the tenant may, within sixty days of the execution of the lease, require the owner to provide the documentation directly to the tenant supporting the detailed description regarding the adjustment of the prior legal rent pursuant to paragraph (i) of this subdivision. The owner shall provide such documentation within thirty days of that request. (iii) The method of service of the lease rider, the tenant request for documentation, and the owner’s provision of documentation, together with proof of same, shall conform to the requirements set forth in the lease rider itself or such other bulletin or document rendered pursuant to section 2527.11. [(ii)] (iv) [re-numbered only – text remains the same] 4 10 11. 9 NYCRR §2522.5(c)(3) is amended to read as follows: (3) [Upon complaint by the] Where a tenant, permanent tenant or hotel occupant [that he or she was] is not furnished, as required by the above provision, with a copy of the lease rider pursuant to paragraph (1), [or] the notice pursuant to paragraph (2) [of this subdivision], or the documentation required on demand by paragraph (1)(ii) of this subdivision, the owner shall not be entitled to collect any adjustments in excess of the rent set forth in the prior lease unless the owner can establish that the rent collected was otherwise legal. In addition to issuing an order with respect to applicable overcharges, [the] DHCR shall order the owner to furnish the missing rider, [or] notice, or documentation. [In addition to such other penalties provided for pursuant to section 2526.2 of this Title, if the owner fails to comply within 20 days of such order, the owner shall not be entitled to collect any guidelines lease adjustment authorized for any current lease from the commencement date of such lease.] The furnishing of the rider, [or] notice, or documentation by the owner to the tenant or hotel occupant shall result in the elimination, prospectively, of such penalty. With respect to housing accommodations in hotels, noncompliance by the owner shall not prevent the hotel occupant from becoming a permanent tenant. 12. 9 NYCRR §2522.6 (b) is amended to read as follows: (b) (1) Such order shall determine such facts or establish the legal regulated rent in accordance with the provisions of this Code. Where such order establishes the legal regulated rent, it shall contain a directive that all rent collected by the owner in excess of the legal regulated rent established under this section for such period as is provided in section 2526.1(a) of this Title, or the date of the commencement of the tenancy, if later, either be refunded to the tenant, or be enforced in the same manner as prescribed in section 2526.1(e) and (f) of this Title. Orders issued pursuant to this section shall be based upon the law and Code provisions in effect on March 31, 1984, if the complaint was filed prior to April 1, 1984. (2)Where either (i) the rent charged on the base date cannot be determined, or (ii) a full rental history from the base date is not provided, or (iii) the base date rent is the product of a fraudulent scheme to deregulate the apartment, or (iv) a rental practice proscribed under section 2525.3 (b), (c) and (d) has been committed, the rent shall be established at the lowest of the following amounts set forth in paragraph (3). (3) These amounts are: (i) the lowest rent registered pursuant to section 2528.3 of this Code for a comparable apartment in the building in effect on the date the complaining tenant first occupied the apartment; or 5 11 (ii) the complaining tenant’s initial rent reduced by the percentage adjustment authorized by section 2522.8 of this Code; or (iii) the last registered rent paid by the prior tenant (if within the four year period of review); or (iv) if the documentation set forth in (i) through (iii) of this paragraph is not available or is inappropriate, an amount based on data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations. (4) However, in the absence of collusion or any relationship between an owner and any prior owner, where such owner purchases the housing accommodations upon a judicial sale, or such other sale effected in connection with, or to resolve, in whole or in part, a bankruptcy proceeding, mortgage foreclosure action or other judicial proceeding, and no records sufficient to establish the legal regulated rent were made available to such purchaser, such orders shall establish the legal regulated rent on the date of the inception of the complaining tenant's tenancy, or the date four years prior to the date of the filing of an overcharge complaint pursuant to section 2526.1 of this Title, whichever is most recent, based on either: (i) [(1)] documented rents for comparable housing accommodations, whether or not subject to regulation pursuant to this Code, submitted by the owner, subject to rebuttal by the tenant; or (ii) [(2)] if the documentation set forth in subparagraph (i[1]) of this [subdivision] paragraph is not available or is inappropriate, data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations; or (iii) [(3)] in the event that the information described in both subparagraphs (i) [(1)] and (ii) [(2)] of this [subdivision] paragraph is not available, the complaining tenant's rent reduced by the most recent guidelines adjustment. (5) This subdivision shall also apply where the owner purchases the housing accommodations subsequent to such judicial or other sale. [Notwithstanding the foregoing, this subdivision shall not be deemed to impose any greater burden upon owners with regard to record keeping than is provided pursuant to RSL section 26516(g). In addition, where the amount of rent set forth in the rent registration statement filed four years prior to the date the most recent registration statement was required to have been filed pursuant to Part 2528 of this Title is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge any time thereafter.] 6 12 13. 9 NYCRR §2523.4(a)(1), (a)(2), (c) and (d)(2) are amended to read as follows: (a)(1) A tenant may apply to the DHCR for a reduction of the legal regulated rent to the level in effect prior to the most recent guidelines adjustment, subject to the limitations of subdivisions (c)-(h) of this section, and the DHCR shall so reduce the rent for the period for which it is found that the owner has failed to maintain required services. The order reducing the rent shall further bar the owner from applying for or collecting any further increases in rent including such increases pursuant to section 2522.8 of this Title until such services are restored or no longer required pursuant to an order of the DHCR. If the DHCR further finds that the owner has knowingly filed a false certification, it may, in addition to abating the rent, assess the owner with the reasonable costs of the proceeding, including reasonable attorney’s fees, and impose a penalty not in excess of $250 for each false certification. (a)(2) Where an application for a rent adjustment pursuant to section 2522.4(a)(2) of this Title has been granted, and collection of such rent adjustment commenced prior to the issuance of the rent reduction order, the owner will be permitted to continue to collect the rent adjustment regardless of the effective date of the rent reduction order, notwithstanding that such date is prior to the effective date of the order granting the adjustment. [In addition, regardless of the effective date thereof, a rent reduction order will not affect the continued collection of a rent adjustment pursuant to section 2522.4(a)(1) of this Title, where collection of such rent adjustment commenced prior to the issuance of the rent reduction order.] However, an owner will not be permitted to collect any increment pursuant to section 2522.4(a)(8) that was otherwise scheduled to go into effect after the effective date of the rent reduction order. (c) Except for complaints pertaining to heat and hot water or other conditions requiring emergency repairs, [B] before filing an application for a reduction of the legal regulated rent pursuant to subdivision (a) of this section, a tenant [must have] should [first] notify[ied] the owner or the owner's agent in writing of all the service problems listed in such application. A copy of the written notice to the owner or agent with proof of mailing or delivery [must] should be attached to the application. Applications should [may only] be filed with the DHCR no earlier than ten [10 and no later than 60] days after such notice is given to the owner or agent. Failure to provide such prior written notice will not be grounds for dismissal of the application. [Prior written notice to the owner or agent is not required for complaints pertaining to heat or hot water, or other conditions requiring emergency repairs.] Applications based upon a lack of adequate heat or hot water must be accompanied by a report from the appropriate city agency finding such lack of adequate heat or hot water. (d)(2) Upon receipt of a copy of the tenant’s complaint from the DHCR, an owner shall have twenty (20) [45] days in which to respond[.] if the tenant provided DHCR with the proof of the written notice to the owner. If the tenant did not provide proof of written notice to the owner, an owner shall have sixty (60) days in which to respond. If the tenant’s complaint indicates that the tenant has been forced to vacate the premises, the owner shall have five (5) days to respond. If the complaint pertains to heat and hot water 7 13 or to a condition which in DHCR’s opinion may require emergency repairs, the owner shall have twenty (20) days to respond. Nothing herein shall preclude DHCR from granting an owner’s request for a reasonable extension of time to respond in order to establish that service problems have been repaired. [the rest of the sections remains the same] 14. 9 NYCRR §2523.5(c)(2) and (3) are amended to read as follows: (2) Where the tenant fails to timely renew an expiring lease or rental agreement offered pursuant to this section, and remains in occupancy after expiration of the lease, such lease or rental agreement may be deemed to be in effect, for the purpose of determining the rent in an overcharge proceeding, where such deeming would be appropriate pursuant to Real Property Law section 232-c. In such event, the expiring lease will be deemed to have been renewed upon the same terms and conditions at the legal regulated rent, together with any guidelines adjustments that would have been applicable had the offer of a renewal lease been timely accepted. Unless otherwise dictated by Real Property Law section 232-c, [T]the effective date of the rent adjustment under the “deemed” renewal lease shall commence on the first rent payment date occurring no less than 90 days after such offer is made by the owner. (3) [Notwithstanding] Where there is no deemed lease pursuant to the provisions of paragraph (2) of this subdivision, an owner may [elect to] commence an action or proceeding to recover possession of a housing accommodation in a court of competent jurisdiction pursuant to sections 2524.2(c)(1) and 2524.3(f) of this Title, where the tenant, upon the expiration of the existing lease or rental agreement, fails to timely renew such lease in the manner prescribed by this section. 15. 9 NYCRR §2524.3(a), (e), and (g) are amended to read as follows: (a) The tenant is violating a substantial obligation of his or her tenancy other than the obligation to surrender possession of such housing accommodation, and has failed to cure such violation after written notice by the owner that the violations cease within 10 days; or the tenant has willfully violated such an obligation inflicting serious and substantial injury upon the owner within the three-month period immediately prior to the commencement of the proceeding. If the written notice by the owner that the violations cease within ten days is served by mail, then five additional days, because of service by mail, shall be added, for a total of 15 days, before an action or proceeding to recover possession may be commenced after service of the notice required by section 2524.2 of this Part. (e) The tenant has unreasonably refused the owner access to the housing accommodation for the purpose of making necessary repairs or improvements required by law or authorized by the DHCR, or for the purpose of inspection or showing the housing accommodation to a prospective purchaser, mortgagee or prospective mortgagee, or other 8 14 person having a legitimate interest therein; provided, however, that in the latter event such refusal shall not be a ground for removal or eviction unless the tenant shall have been given at least five days' notice of the inspection or showing, to be arranged at the mutual convenience of the tenant and owner so as to enable the tenant to be present at the inspection or showing, and that such inspection or showing of the housing accommodation is not contrary to the provisions of the tenant's lease or rental agreement. If the notice of inspection or showing is served by mail, then the tenant shall be allowed five additional days to comply, for a total of ten days because of service by mail, before such tenant’s refusal to allow the owner access shall become a ground for removal or eviction. (g) For housing accommodations in hotels, the tenant has refused, after at least 20 days' written notice, and an additional five days if the written notice is served by mail, to move to a substantially similar housing accommodation in the same building at the same legal regulated rent where there is a rehabilitation as set forth in section 2524.5(a)(3) of this Part, provided: 16. 9 NYCRR § 2525.5 is amended to read as follows: It shall be unlawful for any owner or any person acting on his or her behalf, directly or indirectly, to engage in any course of conduct (including but not limited to interruption or discontinuance of required services, or unwarranted or baseless court proceedings, or filing of false documents with or making false statements to DHCR) which interferes with, or disturbs, or is intended to interfere with or disturb, the privacy, comfort, peace, repose or quiet enjoyment of the tenant in his or her use or occupancy of the housing accommodation, or is intended to cause the tenant to vacate such housing accommodation or waive or not exercise any right afforded under this Code including the right of continued occupancy and regulation under the RSC and RSL. 17. 9 NYCRR § 2526.1(a)(2)(ii) is amended to read as follows: (ii) subject to paragraphs (iii), (iv), (v), (vi), (vii), (viii) and (ix) of this paragraph, the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section, and section 2522.3 of this Title, shall not be examined; [.] and [This subparagraph shall preclude] examination of a rent registration for any year commencing prior to the base date, as defined in section 2520.6(f) of this Title, whether filed before or after such base date shall be precluded. [Except in the case of decontrol pursuant to section 2520.11(r) or (s) of this Title, nothing contained herein shall limit a determination as to whether a housing accommodation is subject to the RSL and this Code, nor shall there be a limit on the continuing eligibility of an owner to collect rent increases pursuant to section 2522.4 of this Title, which may have been subject to deferred implementation, pursuant to section 2522.4(a)(8) in order to protect tenants from excessive rent increases.] 9 15 18. 9 NYCRR § 2526.1(a)(2) new subparagraphs (iii), (iv), (v), vi), (vii), (viii) and (ix) are added as follows: (iii) Except in the case of decontrol pursuant to section 2520.11(r) or (s) of this Title, nothing contained in this section shall limit a determination as to whether a housing accommodation is subject to the RSL and this Code, nor shall there be a limit on the continuing eligibility of an owner to collect rent increases pursuant to section 2522.4 of this Title, which may have been subject to deferred implementation, pursuant to section 2522.4(a)(8) in order to protect tenants from excessive rent increases. (iv) In a proceeding pursuant to this section the rental history of the housing accommodation pre-dating the base date may be examined for the limited purpose of determining whether a fraudulent scheme to destabilize the housing accommodation or a rental practice proscribed under section 2525.3 (b), (c) or (d) rendered unreliable the rent on the base date. (v) An order issued pursuant to section 2523.4(a) of this Code remaining in effect within four years of the filing of a complaint pursuant to this section may be used to determine an overcharge or award an overcharge or calculate an award of the amount of an overcharge. (vi) For the purpose of determining if the owner establishes by a preponderance of the evidence that the overcharge was not willful, examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. (vii) For the purpose of determining any adjustment in the legal regulated rent pursuant to section 2522.8(a)(2)(ii) of this Title, or any adjustment pursuant to a guideline promulgated by the New York City Rent Guidelines Board that requires information regarding the length of occupancy by a present or prior tenant or the rent of such tenants, review of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. (viii) For the purposes of establishing the existence or terms and conditions of a preferential rent under section 2521.2(c), review of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. (ix) For the purpose of establishing the legal regulated rent pursuant to section 2526.1(a)(3)(iii) where the apartment was vacant or temporarily exempt on the base date, review of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this section shall not be precluded. 10 16 19. 9 NYCRR § 2526.1(a)(3)(iii) is amended to read as follows: Where a housing accommodation is vacant or temporarily exempt from regulation pursuant to section 2520.11 of this Title on the base date, the legal regulated rent shall be [the rent agreed to by the owner and the first rent stabilized tenant taking occupancy after such vacancy or temporary exemption, and reserved in a lease or rental agreement; or, in the event a lesser amount is shown in the first registration for a year commencing after such tenant takes occupancy, the amount shown in such registration, as adjusted pursuant to this Code.] the prior legal regulated rent for the housing accommodation, the appropriate increase under section 2522.8, and if vacated or temporarily exempt for more than one year, as further increased by successive two year guideline increases that could have otherwise been offered during the period of such vacancy or exemption and such other rental adjustments that would have been allowed under this Code. 20. 9 NYCRR § 2526.1(g) is re-lettered (h) and new subdivision (g) is added to read as follows: (g) Where the rent charged on the base date cannot be determined, a full rental history from the base date is not provided, or the base date rent is the product of a fraudulent scheme to deregulate the apartment or a rental practice proscribed under 2525.3(c) and (d) has been committed, the rent shall be established at the lowest of the following amounts. (1) the lowest rent registered pursuant to section 2528.3 of this Code for a comparable apartment in the building in effect on the date the complaining tenant first occupied the apartment; or (2) the complaining tenant’s initial rent reduced by the percentage adjustment authorized by section 2522.8 of this Code; or (3) the last registered rent paid by the prior tenant (if within the four year period of review; or (4) if the documentation set forth in paragraphs (1)through (3) of this subdivision is not available or is inappropriate, data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations. However, in the absence of collusion or any relationship between an owner and any prior owner, where such owner purchases the housing accommodations upon a judicial sale, or such other sale effected in connection with, or to resolve, in whole or in part, a bankruptcy proceeding, mortgage foreclosure action or other judicial proceeding, and no records sufficient to establish the legal regulated rent were made available to such purchaser, such orders shall establish the legal regulated rent on the date of the inception of the complaining tenant's tenancy, or the date four years prior to the date of the filing of an overcharge complaint pursuant to this section, whichever is most recent, based on 11 17 either: (1) documented rents for comparable housing accommodations, whether or not subject to regulation pursuant to this Code, submitted by the owner, subject to rebuttal by the tenant; or (2) if the documentation set forth in paragraph (1) of this subdivision is not available or is inappropriate, data compiled by the DHCR, using sampling methods determined by the DHCR, for regulated housing accommodations; or (3) in the event that the information described in both paragraphs (1) and (2) of this subdivision is not available, the complaining tenant's rent reduced by the most recent guidelines adjustment. This subdivision shall also apply where the owner purchases the housing accommodations subsequent to such judicial or other sale. [(g)] (h) [re-lettered only – text remains the same] 21. 9 NYCRR §2527.9 is amended by adding new subdivisions (c) and (d) to read as follows: (c) Unless otherwise expressly provided in this code, no additional time is required for service by mail of any notice, order, answer, lease offer or other papers, beyond the time period set forth in the code and such time period provided is inclusive of the time for mailing. (d) Unless otherwise expressly provided in this code, no additional time is required to respond or to take any action when served by mail with any notice, order, answer, lease offer, or other papers, beyond the time period set forth in this code and the time to respond is commenced upon mailing of said notice, order answer, lease offer or other paper. 9 NYCRR § 2528.3 (a) is amended to read as follows: 22. (a) An annual registration shall be filed containing the current rent for each housing accommodation not otherwise exempt, a certification of services, and such other information as may be required by the DHCR, pursuant to the RSL, RSC or section 2527.11. 23. 9 NYCRR § 2528.3 is amended to add paragraph (c) to read as follows: (c) An owner seeking to file an amended registration statement for other than the present registration year must file an application pursuant to sections 2522.6(b) and Part 2527 of this code as applicable to establish the propriety of such amendment unless the 12 18 amendment has already been directed by DHCR or is directed by another governmental agency that supervises such housing accommodation. 24. 9 NYCRR § 2528.4(a) is amended to read as follows: (a) The failure to properly and timely comply, on or after the base date, with the rent registration requirements of this Part shall, until such time as such registration is completed, bar an owner from applying for or collecting any rent in excess of: the base date rent, plus any lawful adjustments allowable prior to the failure to register. Such a bar includes but is not limited to rent adjustments pursuant to section 2522.8 of this title. The late filing of a registration shall result in the elimination, prospectively, of such penalty, and for proceedings commenced on or after July 1, 1991, provided that increases in the legal regulated rent were lawful except for the failure to file a timely registration, an owner, upon the service and filing of a late registration, shall not be found to have collected a rent in excess of the legal regulated rent at any time prior to the filing of the late registration. Nothing herein shall be construed to permit the examination of a rental history for the period prior to four years before the commencement of a proceeding pursuant to sections 2522.3 and 2526.1 of this Title. 25. 9 NYCRR § 2529.12 is amended to read as follows: The filing of a PAR against an order, other than an order adjusting, fixing or establishing the legal regulated rent, shall stay such order until the final determination of the PAR by the commissioner. Notwithstanding the above, that portion of an order fixing a penalty pursuant to section 2526.1(a) of this Title, that portion of an order resulting in a retroactive rent abatement pursuant to section 2523.4 of this Title, that portion of an order resulting in a retroactive rent decrease pursuant to section 2522.3 of this Title, and that portion of an order resulting in a retroactive rent increase pursuant to section 2522.4(a)(2), (3), (b) and (c) of this Title, shall also be stayed by the timely filing of a PAR against such orders until the expiration of the period for seeking review pursuant to article seventy-eight of the civil practice law and rules [60 days have elapsed after the determination of the PAR by the commissioner]. However, an order granting a rent adjustment pursuant to section 2522.4(a)(2) of this Title, against which there is no PAR filed by a tenant that is pending, shall not be stayed. Nothing herein contained shall limit the commissioner from granting or vacating a stay under appropriate circumstances, on such terms and conditions as the commissioner may deem appropriate. 26. 9 NYCRR § 2530.1 is amended to read as follows: A proceeding for judicial review pursuant to article 78 of the Civil Practice Law and Rules may be instituted only to review a final order of the DHCR pursuant to section 2526.2(c)(2) of this Title; or to review a final order of the commissioner pursuant to section 2529.8 of this Title; or after the expiration of the 90-day or extended period within which the commissioner may determine a PAR pursuant to section 2529.11 of this 13 19 Title, and which, therefore, may be "deemed denied" by the petitioner. The petition for judicial review shall be brought in the Supreme Court in the county in which the subject housing accommodation is located and shall be served upon the DHCR and the Attorney General. A proceeding for judicial review of an order issued pursuant to section 2526.2(c)(2) or section 2529.8 of this Title shall be brought within 60 days after the issuance date of such order. Issuance date is defined as the date of mailing of the order. A party aggrieved by a PAR order issued after the 90-day or extended period of time within which the petitioner could deem his or her petition "denied" pursuant to section 2529.11 of this Title, shall have 60 days from the date of such order to commence a proceeding for judicial review, notwithstanding that 60 days have elapsed after such 90-day or extended "deemed denial" period has expired. Service of the petition upon the DHCR shall be made by either: [the rest of the section remains the same] 27. 9 NYCRR § 2531.2 is amended to add a new paragraph (e) as follows: (e) No such ICF may be served on any apartment where the tenant is the recipient of a Senior Citizen Rent Increase Exemption (SCRIE) or a Disability Rent Increase Exemption (DRIE). 14 20 CONSOLIDATED - REGULATORY IMPACT STATEMENT SUMMARY 1. STATUTORY AUTHORITY: The Administrative Code of the City of New York, (also known as “the Rent Stabilization Law”) (RSL) §26-511(b) provides authority to the Division of Housing and Community Renewal (“DHCR”) to amend the implementing regulations (also known as “the Rent Stabilization Code”) (“RSC”); Section 44 of Chap. 97, Part B of the Laws of 2011 (“the Rent Law of 2011”) further empowers DHCR to promulgate rules and regulations to implement and enforce all provisions of the Rent Law of 2011 and any law renewed or continued by the Rent Law of 2011 which includes the RSL. RSL§§ 26-504.2(b); 26-511(c); 26-511(d); 26-514; 26-516(b); and 26-517 also provide specific statutory authority governing the subject matter of many of the proposed amendments. 2. LEGISLATIVE OBJECTIVES The overall legislative objectives are contained in Sections 26-501 and 26-502 of the RSL and Section 2 of the Emergency Tenant Protection Act (“ETPA”). Because of a serious public emergency, the regulation of residential rents and evictions is necessary to prevent the exaction of unreasonable rents and rent increases and to forestall other disruptive practices that would produce threats to public health, safety and general welfare. DHCR is specifically authorized by RSL §26-511(c)(1) to promulgate regulations to protect tenants and the public interest, and is empowered by the Rent Law of 2011 to promulgate regulations to implement and enforce new provisions added by the Rent Law of 2011 as well as any law continued or renewed by the Rent Law of 2011 which includes the RSL. 1 21 3. NEEDS AND BENEFITS DHCR has not engaged in an extensive amendment process with respect to these regulations since 2000. Since that time there has been significant litigation interpreting, not only these regulations, but the laws they implement. In addition, DHCR has had twelve years of experience in administration which informs this process so does its continuing dialogue during this period with owners, tenants, and their respective advocates. This dialogue is not only through its Office of Rent Administration (ORA) which engages in close to one hundred forums and meetings on an annual basis, but through the Tenant Protection Unit (TPU) which has been created to investigate and prosecute violations of the RSL. DHCR underwent the regulatory process for the promulgation of amendments expressly required by the Rent Law of 2011 which generated further comments. This specific promulgation process was also preceded by a mass email outreach to known stakeholders in the field to solicit additional comments and suggestions. The needs and benefits of some of the specific modifications proposed are highlighted below. a. Addition of TPU definition Its inclusion demonstrates DHCR’s commitment to the TPU and proactive enforcement of the RSL. b. Codification of “Exit Registrations” This new provision in the regulation is taken from RSL §26-504.2(b) and provides for the service of appropriate notices on a tenant in an apartment alleged to be exempt from the RSL because of high rent vacancy deregulation. With the passage of the Rent Law of 2011 which 2 22 expressly gave DHCR additional authorization to enforce the RSL, inclusion of this provision in the regulations is appropriate. Greater oversight is demonstrably necessary in light of discrepancies among the registrations filed; those that are no longer being filed with high rent vacancy deregulation as the stated reason; and the number of units simply failing to register but without explanation. Tying compliance into the current registration system provides an appropriate enforcement mechanism. c. Preferential Rent Review There exists a compelling need to adopt a new regulation which requires owners, in situations where a tenant is initially charged a preferential lesser rent and then charged a higher rent, to demonstrate the legitimacy of that higher rent. Close to twenty-five percent of the rents in New York City are listed in DHCR’s registration data-base as having preferential rents. The present regulations contain incorrect legal standards. Further, courts have also acknowledged that the “4 year rule” of review gives way in areas where there is a continuing obligation to conform one’s conduct to standards created by other provisions of the Rent Stabilization Law. The present rule of time-limiting review to four years of preferential rent (regardless of when the higher rent was theoretically assumed to be proper, but never really established), places tenants in an untenable situation that discourages the exercise of their right to obtain a proper rent history. 3 23 d. Submetering costs and MCI eligibility This new provision properly recalibrates what equipment is MCI eligible with respect to submetering. e. “C” violations and MCI’s DHCR will now be conducting independent reviews of New York City’s database for immediately hazardous violations which will assure uniform and consistent enforcement of this standard governing MCI’s. f. Enhanced DRIE and SCRIE Protections Since the last code review, the State of New York adopted a Disability Rent Increase Exemption (DRIE) for eligible low income disabled tenants similar to the existing Senior Citizen Rent Increase Exemption (SCRIE) available to the low income elderly. DHCR regulations, which already prohibit the implementation of electrical submetering for SCRIE recipients, will be extended to disabled tenants receiving DRIE. DHCR also is amending its regulations to exempt both SCRIE and DRIE tenants from the high income/high rent deregulation procedures set forth in the RSL as those tenancies have already been vetted through other government programs to have income far below that required for deregulation. g. Lease Rider Requirements and Enforcement DHCR data and experience shows that Individual Apartment Improvement (IAI) increases upon vacancy make up one of the largest components of increases under the RSL. Paradoxically, a tenant may now only secure meaningful information or review of the propriety of these increases by filing an overcharge complaint before DHCR or a Court. Providing more information in the vacancy lease rider itself, as well as affording tenants the 4 24 ability to demand supporting documentation directly from the owners without Court or DHCR intercession, will provide a cost effective alternative to such proceedings. h. Codification of the overcharge “default formula” DHCR uses this kind of formula for setting rents where an owner fails to provide appropriate documentation to establish the legal rent in an overcharge proceeding or where there was an illusory prime tenancy or a fraudulent scheme to deregulate the housing accommodation. However, the regulations themselves, did not incorporate it. i. Strengthening the process for service complaints The present regulation provides that tenants are required, prior to filing a service complaint with DHCR, to send a certified letter to the owner regarding the service deficiency. More than a decade of implementation has led DHCR to the conclusion that the rule has often become a hurdle that suppresses the filing of complaints by the most vulnerable tenants. The DHCR amendments also bar those parts of MCI increases slated for future collection, where there is a subsequently issued service reduction order. Precluding the collection of these future 6% MCI increments until an outstanding service deficiency is cured, is consistent with the plain language of the RSL, which bars collection of increases where there is a failure to provide services and will aid DHCR in incentivizing prompt restoration of services. Similarly vacancy and longevity increases will no longer be allowed where there is an outstanding service reduction. 5 25 j. Deemed Leases A 2000 codification of “deemed lease” rules apparently allowed owners to claim that they could extract the full rent from tenants for a new lease term where a tenant may have remained only for a short period prior to moving out. DHCR is returning to the more traditional and appropriate use of such “deemed leases” in overcharge proceedings. k. Harassment Definition This regulation expands the definition of “harassment” to reflect some of the more up-todate schemes to deprive tenants of their legitimate rights as rent stabilized tenants. Not every harassing act is designed to create a vacancy, but can include intimidating the tenant in place to preclude the legitimate exercise of such rights. These actions can include false and illegitimate filings before DHCR l. Codification of Certain Four Year Rule Exceptions These provisions seek to set forth, in one place, a more comprehensive list of areas where, to date, by statute, case law or regulation, the “four year rule” that ordinarily governs rent and overcharge review, has been held not to be applicable and changes the rules with respect to preferential rents and “vacancy on the base date” cases. The preferential rent change has already been explained. With claims of vacancies on the base date, it is more appropriate to test the validity of a present rent against these usual standards of overcharge review, rather than simply rubber-stamping any rent that is collected because of an alleged fortuity of a vacancy. 6 26 m. Amended registration and registration requirements DHCR had accepted for filing, amended annual registrations at any time for any year. These amendments, if treated similarly to “late” registrations under the RSL, could carry a substantial penalty, but no penalty has been imposed. The number of such amendments is significant and has the effect of corrupting the purpose of DHCR’s registration data base as a contemporaneously created history of rents. Now, such amendments, where appropriate, would be reviewed and regulated by DHCR. DHCR is also amending the registration provisions to appropriately reflect DHCR’s authority and ability to change the registration forms themselves each year to capture data appropriate for the administration and enforcement of the RSL and RSC. n. Freeze of Vacancy Bonuses based on Failure to Register This change will conform DHCR’s practice to this statutory penalty for failing to properly register. 4. COSTS The regulated parties are tenants and owners. There are no additional direct costs imposed as costs of regular administration are capped at $10 per unit per year. The amended regulations do not impose any new responsibility upon state or local government. Owners will need to be initially more vigilant to assure their compliance with these changes, but such costs are already a generally-accepted expense of owning regulated housing. There are increased penalties in some instances if the regulations are violated, but the costs of conforming present business practices to the change in standards is not substantial. In addition, these consequences are largely consistent with existing case law or otherwise necessary to secure compliance. DHCR has made a significant effort to assure a safe harbor 7 27 or alternatives from the more dire consequences for owners who are operating in good faith and in substantial compliance. 5. LOCAL GOVERNMENT MANDATES No new program, service, duty or responsibility is imposed on local government. 6. PAPERWORK The amendments may, in a limited fashion, increase the paperwork burden. There will be additional costs associated with filings and the need for additional record retention, but these costs are comparably minimal and are of a kind with already existing registration and record keeping requirements. Any particularized specific claims that a changed regulation may create hardship or inequity can and will be handled in the context of the administrative applications. 7. DUPLICATION No known duplication of State or Federal requirements except to the extent required by law. 8. ALTERNATIVES DHCR considered a variety of alternatives to many of these new rules. The alternative of continuing the rule presently in place for all of these changes was considered and rejected. Other alternatives suggested, but rejected included; treating amended registrations as the equivalent of late registration, creating even more stringent pre-requirements for MCI filings with respect to violation clearance, and even more severe penalties for notice violations with respect to exit registrations and the provision of the lease rider. Continuation of the present lease rider rule, requiring an order from DHCR directing that such a rider be provided prior to any penalty, was not a real option as it effectively limits an owner’s necessary compliance 8 28 with lease rider requirements to a subset of tenants already sufficiently knowledgeable to file a complaint with DHCR. 9. FEDERAL STANDARDS Do not exceed any known minimum Federal standards. 10. COMPLIANCE SCHEDULE It is not anticipated that regulated parties will require any significant additional time to comply with the proposed rules. 9 29 CONSOLIDATED - REGULATORY IMPACT STATEMENT 1. STATUTORY AUTHORITY: Section 26-511(b) of the Administrative Code of the City of New York, (also known as “the Rent Stabilization Law”) (RSL) and RSL section 26-518(a) provide authority to the Division of Housing and Community Renewal (“DHCR”) to amend the implementing regulations (also known as “the Rent Stabilization Code”) (“RSC”); Section 44 of Chap. 97, Part B of the Laws of 2011 (“the Rent Law of 2011”) further empowers DHCR to promulgate rules and regulations to implement and enforce all provisions of the Rent Law of 2011 and any law renewed or continued by the Rent Law of 2011 which includes the RSL. The RSL also provides specific statutory authority governing the subject matter of many of the proposed amendments: RSL §26-504.2(b) provides for notice and information to tenants upon deregulation and service of an “exit” rent registration identifying such apartments as now exempt from regulation. RSL §26-517 provides for rent registration generally. RSL §26-511(c)14 provides for “preferential rents” and the subsequent charging of a legal rent, tied also to its use to meet deregulation rent thresholds. RSL §26-511(c)(2) mandates promulgation of a code that requires owners not to exceed the level of lawful rents. RSL §26-511(c)14 requires owners at the option of the tenant to grant one or two year vacancy and renewal increases. RSL §26-511(c)(5) allows the RSC to include guidelines to assure that the levels for rent increase will not be subverted or made ineffective. RSL §26511(c)(6)(b) provides that DHCR may establish criteria whereby it may act upon major capital improvement (“MCI”) applications. RSL §26-511(d) provides for a rent stabilized lease rider in a form promulgated by DHCR. RSL §26-516(b) empowers DHCR to enforce the RSL and the RSC by issuance of appropriate orders, issuance of overcharge 1 30 determinations, and to establish treble damages. RSL §26-516 provides that in addition to any other remedy provided by law, any tenant may apply to DHCR for a reduction of the rent in effect prior its most recent adjustment and an order requiring such services to be maintained; that DHCR shall reduce the rent to such level where an owner has failed to maintain such services; that such owner “shall also be barred from applying for or collecting any further rent increases”; and that the restoration of such services shall result in the prospective elimination of such sanctions. 2. LEGISLATIVE OBJECTIVES The overall legislative objectives are contained in Sections 26-501 and 26-502 of the RSL and Section 2 of the Emergency Tenant Protection Act (“ETPA”). The Legislature has determined that, because of a serious public emergency, the regulation of residential rents and evictions is necessary to prevent the exaction of unreasonable rents and rent increases and to forestall other disruptive practices that would produce threats to public health, safety and general welfare. The legislation also has an objective to assure that any transition from regulation to normal market bargaining with respect to such landlords and tenants is administered with due regard to these emergency conditions. DHCR is specifically authorized by RSL §26-511(c)(1) to promulgate regulations to protect tenants and the public interest, and is empowered by the Rent Law of 2011 to promulgate regulations to implement and enforce new provisions added by the Rent Law of 2011 as well as any law continued or renewed by the Rent Law of 2011. These laws include the ETPA, the RSL, and the City and State Rent Control Laws. 2 31 3. NEEDS AND BENEFITS DHCR has not engaged in an extensive amendment process with respect to these regulations since 2000. Since that time there has been significant litigation interpreting, not only these regulations, but the laws they implement. In addition, DHCR has had twelve years of experience in administration which informs this process, as does its continuing dialogue during this period with owners, tenants, and their respective advocates. DHCR personnel within its Office of Rent Administration (ORA) engages in close to one hundred forums and meetings on an annual basis where the administration and implementation of these laws are discussed. In the last year this information gathering process has been enhanced through several additional actions taken by DHCR. First, DHCR created the Tenant Protection Unit (TPU), a unit designated by the Commissioner to investigate and prosecute violations of the ETPA, the RSL and the City and State Rent Laws. TPU, itself, has met with the various stakeholders in an effort to ascertain what issues and concerns impinge on the owner and tenant community affected by these regulations. Second, DHCR underwent the regulatory process for the promulgation of amendments expressly required by the Rent Law of 2011. That process generated significant comments on other issues relating to the Rent Stabilization Code. Third, this specific promulgation process was preceded by a mass email outreach to known stakeholders in the field to solicit even further comments and suggestions. The needs and benefits of some of the specific modifications proposed are highlighted below. 3 32 a. Addition of TPU. Although the existing regulations already provide for delegation of functions under RSL, the inclusion of TPU as a specific term within the regulations, demonstrates DHCR’s commitment to the TPU and proactive enforcement of the RSL. b. Codification of “Exit Registrations.” This new provision in the regulation is taken almost verbatim from RSL §26-504.2(b), a provision of the RSL added by the New York City Council pursuant to Local Law No. 12 of 2000. It provides for the service of appropriate notices on a tenant who resides in an apartment that an owner asserts is no longer subject to the RSL because of high rent vacancy deregulation. The enforcement of this section without a corresponding regulatory provision has been inconsistent and problematic. Although Courts have denied increases without compliance with its provisions because of its initial enactment by the City Council, there was some question as to the ability to integrate it into a DHCR enforcement paradigm as a portion of the Rent Laws. With the passage of the Rent Law of 2011 which expressly gave DHCR authorization to enforce any such law, the state legislature resolved this matter, making its inclusion of this provision in the regulations appropriate. This greater oversight is long overdue. In New York City in 2011, 14,175 exit registrations were filed; in 2010, 16,907 units; and in 2009, 18,617. Those owners listing high rent vacancy deregulation as the reason was a lesser subset; on an annual basis: 11,364 units in 2011, 12,911 units in 2010 and 13,557 units in 2009. However, the number of units leaving the system (and without explanation) seems to be higher. In 2009, annual registrations (without initial registrations) were filed for 865,374 apartments. In 2011, 771,648 were filed, demonstrating that 93,726 units left the registration system. TPU and 4 33 ORA have an ongoing program to ascertain why apartments are not being registered. This program’s inquires have resulted in the re-registration of 1,688 buildings with 16,969 apartments as of March 2013, all leaving a significant gap. Obviously there needs to be a more regularized reporting requirement with consequences rather than the present system which has no enforcement mechanism. Tying compliance into the current registration system will provide an enforcement mechanism subject to the same curative provisions used in the applicable registration provisions in the RSL. The exit registrations, themselves, give owners a contemporaneous benchmark which will aid them in legitimate efforts to contemporaneously establish the propriety of high rent/vacancy deregulation and help them defend against claims by tenants that such deregulations are part of a fraudulent scheme as defined by the Court of Appeals in Grimm v DHCR, 15 N.Y.3d 358, 912 N.Y.S.2d 491 (1st Dept. 2010). Conversely, tenants will have greater awareness of their rights and be able to more accurately ascertain whether their apartment was properly deregulated. c. Preferential Rent Review Courts have ruled that the present regulations are incorrect to the extent that they assume that the preferential rent may be preserved exclusively by the filing of a registration or that the passage of more than four years precludes review as to whether there is a truly preferential rent. Courts have also acknowledged that the “4 year rule” gives way in areas where there is a continuing obligation to conform one’s conduct to standards created by other provisions of the Rent Stabilization Law. 5 34 Preferential rent is one of those areas. There exists a compelling need to adopt a new regulation which requires owners, in situations where a tenant is initially charged a preferential lesser rent and then charged a higher rent, to demonstrate the legitimacy of that higher rent. Clearly there can be no conceivable way to check whether that “previously established” higher rent was proper without first examining the lease preceding it, and any other increases that went into creating that higher rent, even if such increases are more than four years before a complaint is filed. No statutory proscription exists to review that higher rent because of the passage of four years. Time-limiting that review to four years regardless of when the higher rent was theoretically assumed to be proper, but never really established, places tenants in an untenable situation that discourages the exercise of their right to obtain a proper rent history. A tenant would need to decide, if the tenant is not paying this higher rent, whether to seek an immediate review of the higher rent or to hold off on seeking a rental review and let the time period for review run out and risk paying that higher rent at a later date without review. Alternatively, in seeking that review, the tenant would risk no longer being treated as a “preferred” by the owner upon lease renewal. Filing now may be a “lose” situation; failure to file may be a “lose” situation later. As for owners, the actual benefits inuring to them that have been advanced as rationales behind these preferences are questionable when weighted against the actual data. Either owners, it is explained, are providing discounts to those they perceive will be good tenants; or in that certain boroughs, the rent stabilized rents will actually exceed market rents. 6 35 Neither explanation comes close to explaining the scope and prevalence of such preferential rents, given the legislature’s findings that government intervention is necessary to prevent the exaction of even higher rents and rent increases, and that owner advocacy groups routinely assert that the legal rents under this system deprive owners of an appropriate return. On the other hand, in Grimm v. DHCR, supra, the Court of Appeals indicated that such claims of a discount may well be part of a fraudulent scheme to deregulate an apartment. Close to twenty-five percent of the rents, 203,408 apartments in New York City, according to DHCR registration data-base, are listed as of May 2012 as having preferential rents (814,500 were registered), and there is no discernable pattern to support the rationale that these are simply lower rents in less “hot” boroughs. These preferential rents are equally prevalent in each of the four boroughs of New York City which have the majority of rent regulated units, with the largest number of preferential rents in Manhattan, cutting against the proffered explanation that preferential rents are an out-of-Manhattan phenomenon. As reported by DHCR to the NYC Rent Guidelines Board, as of May 16, 2012, there are 42,537 preferential rents registered in the Bronx, 50,406 in Brooklyn, 47,669 in Queens and 60,778 in Manhattan. d. Submetering costs and MCI eligibility This new provision properly recalibrates what equipment is MCI eligible with respect to submetering so that tenants are not charged for that part of a submetering installation that primarily benefits owners. Submetering promotes energy efficiency by placing the costs of electrical usage as well as its future fluctuations directly on the tenants rather than filtering those increases through 7 36 the RSL system of controlling rent increases. Thus, “market risks” related to energy costs are essentially shifted from the owners to their tenants with the goal of making tenants more likely to conserve and budget their electrical usage. Tenants do receive a corresponding decrease from their legal rent when DHCR approves submetering, based on a formula that will reflect the estimated current cost of such electrical usage. However, allowing an MCI rent increase based on the installation of the device that enables such submetering, immediately results in less of a rent decrease than that formula provides. Other possible alternatives, such as barring submetering or continuing the present formulation, are not as appropriate. The regulatory amendment still promotes the energy conservation consistent with what DHCR and its predecessor rent agencies have done for forty years, but more appropriately apportions some of the costs between owner and tenant. Accordingly, DHCR will still allow increases for rewiring and electrical upgrades, but not for the submetering equipment itself. e. “C” violations and MCI’s The presence of an immediately hazardous “C” violation leads to the denial of an MCI. Weinreb Management v. DHCR, 295 A.D.2d 232, 744 N.Y.S.2d 321 (1st Dept. 2002); 370 Manhattan Avenue Co., LLC v. DHCR, 11 A.D.3d 370, 783 N.Y.S.2d 38 (1st Dept. 2004); 251 West 98th Street Owners LLC v. DHCR, 276 A.D.2d 265, 713 N.Y.S.2d 729 (1st Dept. 2000) Although not so limited by its regulations, as a matter of practice, DHCR was not conducting any independent review of the New York City’s Violation Database, but only reviewed such violations where they were otherwise brought to DHCR’s attention. 8 37 This practice, itself, has already been mitigated by subsequent case law, where the Appellate Division noted that others than the affected tenant themselves could legitimately bring such violations to DHCR’s attention. Fieldbridge Associates LLC v. DHCR, 87 A.D.3d 598, 927 N.Y.S.2d 918 (1st Dept. 2011) Since the promulgation of this Code provision in 1987, the New York City Violation database has become readily available online, and New York City has implemented numerous efficiencies to assure its data is current. This new codification benefits owners and tenants. Tenants will obtain uniform and consistent enforcement of the already existing regulatory standards governing MCI’s. For both owners and tenants, the modification in procedure to be applied after the effective date of the regulatory change is further coupled with a specific test period which provides all parties going forward with greater certainty as to whether specific violations will impinge on the grant of the MCI itself, or instead be the subject of a subsequent rent decrease application. f. Enhanced DRIE and SCRIE Protections Since the last code review, the State of New York adopted a Disability Rent Increase Exemption (DRIE) for eligible low income disabled tenants similar to the existing Senior Citizen Rent Increase Exemption (SCRIE) available to the low income elderly. DHCR regulations, which already prohibit the implementation of electrical submetering for SCRIE recipients, will be extended to disabled tenants receiving DRIE. DHCR also is amending its regulations to exempt both SCRIE and DRIE tenants from the high income/high rent deregulation procedures set forth in the RSL. As those tenancies have already been vetted through other government programs to have income far below that 9 38 required for deregulation, the procedure, if invoked by the owners, cannot obtain any meaningful result. It simply creates unneeded stress on these vulnerable populations. Even worse, it may result in the inappropriate loss of apartments through these senior or disabled tenants failing to adequately respond to mechanically generated notices as part of the process. g. Lease Rider Requirements and Enforcement DHCR data and experience shows that Individual Apartment Improvement (IAI) increases upon vacancy make up one of the largest components of increases under the Rent Stabilization Law. Paradoxically, because the improvements do not require tenant consent, they are among the least regulated. A tenant may only secure meaningful information or review of the propriety of these increases by filing an overcharge complaint before DHCR or a Court. This is a somewhat cumbersome and costly process for both owners and tenants. Providing more information in the vacancy lease rider itself, as well as affording tenants the ability to demand supporting documentation directly from the owners without Court or DHCR intercession, will provide a cost effective alternative to such proceedings. Greater transparency in how vacancy rents are set, will allow greater self-policing and encourage voluntary compliance with the Rent Stabilization Law. The change, itself, is not a significantly increased burden on owners as owners are already required to retain this information and make it available to DHCR, or face severe penalties. The Rent Stabilization Code, itself, used to contain severe penalties for failing to provide such lease riders and Courts have denied increases that an owner seeks to secure without an appropriate lease. DHCR designed the consequences for non-compliance to be similar to those for failing to register, which contains ways to recognize a variety of mitigating circumstances, and also time-limits the period for these direct demands for information. 10 39 h. Codification of the overcharge “default formula” DHCR and its predecessor agency have used this type of formula for setting rents where an owner fails to provide appropriate documentation to establish the legal rent in an overcharge proceeding. The same test is also used where there was an illusory prime tenancy or a fraudulent scheme to deregulate the housing accommodation. However, the regulations, themselves, did not incorporate the formula. Instead, a modified formula was included in the RSL by the 2000 amendments that is available only in very limited circumstances, largely for buyers in foreclosure proceedings. The inclusion of this limited formula but not the actual rule itself has caused confusion. i. Strengthening the process for service complaints The present regulation provides that tenants are required, as a precondition to filing a service complaint with DHCR, to send a certified letter to the owner 10 to 60 days prior to filing a complaint regarding the service deficiency. A failure to append the letter to the DHCR complaint, results in dismissal of the application. This rule, enacted as part of the Code in 2000, had, as its goal, fostering voluntary compliance by owners to provide required services. More than a decade of implementation has led DHCR to the conclusion that, while positive interaction between owners and tenants regarding repairs without DHCR’s intervention needs to be encouraged, the dismissal of meritorious service complaints on this basis is an even greater problem. The rule has often become a hurdle that suppresses the filing of complaints by the most vulnerable tenants. DHCR, as part of its service reduction procedures, already recognizes and gives owners notice and an opportunity to cure service complaints prior to the issuance of rent reduction 11 40 orders. Even after such reductions, DHCR has a process to restore the rents. Nonetheless, extensive numbers of rent reduction cases are granted and applications for rent (service) restoration need to be filed. For calendar year 2009, there were 2,469 rent reduction applications properly filed based on failure to provide services and 1,013 rent reductions orders issued. For the calendar year 2010, there were 2,432 applications filed and 1,048 rent reduction orders issued. For the calendar year 2011 there were 2,342 applications filed and 1,156 rent reduction orders issued. Rent restoration applications, after some lag time, eventually roughly match rent reductions ordered. For the calendar year 2009, there were 1,165 restoration applications filed. For the calendar year 2010, there were 1,146 applications filed. For the calendar year 2011, there were 1,141 applications filed. (Significantly, over the three year period, more than 25% of the rent (service) restoration orders found services not restored.) DHCR has recently implemented its “code red” processing whereby DHCR, on the most egregious service issues notifies owners of the service reduction complaint and through the inspection process will assist owners in getting access to apartments, if necessary. The experience in this type of case processing is similar to that of filings where owners receive written notification of a service reduction by the tenant, in that in over 40% of the cases, rent reduction orders are issued due to the failure of owners to make repairs. The difference in code red case processing is that because no initial notice is required as a pre-requisite to filing with DHCR, action is taken much more quickly (orders are generally issued within 61 days of filing) when compared to standard processing which requires that the case may only be filed within a time period of 10 to 60 days after a tenant notifies an owner. 12 41 On the other hand, staff analysis shows that based on this pre-letter request, over sixteen percent of the service complaints that tenants try to file are rejected in whole based on the failure to send a “pre-letter” with another fifteen percent rejected in part where that letter does not raise each service problem upon which a DHCR complaint is then filed or there was another defect with the filing. Approximately seventy-five percent of rejected complaints are never re-filed. While a portion of these cases may have been addressed by the owners, the large percentage of cases granted after owners have been given notice suggests that is not the situation. Staff review of a significant sampling of the rejected complaints has also led to the conclusion that the effect of this rule falls disproportionately on complainants with limited English language proficiency as well as those identified as elderly and infirm. This disproportionate impact unfortunately makes sense, as such tenants are being called upon to navigate a technically dense requirement without the aid and/or intervention of the government as a precondition to obtaining actual government help. Even where such notice is, in DHCR’s opinion, appropriately given, there has been some owner movement in actual practice to turn the notice into a strict pleading requirement, to defeat service complaints, on the basis of” improper service”, or that the tenant failed to use the appropriate legal name for the owner. The proposed DHCR modification still encourages direct owner and tenant interaction to secure repairs and will recognize, as part of its case-by-case processing, that time, if reasonable under the circumstances, may be afforded to owners to provide necessary repairs. However, the continuation of the regulation in its present form is untenable and unconscionable. 13 42 The DHCR amendments also bar those parts of MCI increases that have a future effective date, where there is a subsequently issued service reduction order with an effective date which is prior to the date slated for MCI increase collection. Precluding the collection of these future 6% MCI increments until an outstanding service deficiency is cured, is consistent with the plain language of the RSL, which bars collection of increases where there is a failure to provide services and will aid DHCR in incentivizing prompt restoration of services. Similarly vacancy and longevity increases will no longer be allowed where there is an outstanding service reduction. DHCR’s prior position to the opposite effect was consistent with its understanding that a failure to otherwise comply with the RSL did not affect the ability to collect these increases. However, the Appellate Division has now ruled otherwise. See, Bradbury v. 342 West 30th Street Corporation, 84 A.D.3d 681, 924 N.Y.S.2d 349 (1st Dept. 2011). j. Deemed Leases The use of “deemed leases” has an extensive history in overcharge cases and has been used in the past to shield owners from unwarranted overcharge awards where a tenant may not have executed a renewal lease, but remained for the entire term of such lease without eviction and paid the increase attendant on renewal. However, the 2000 codification of the deemed lease rule instead allowed owners to claim that the rule could be used as a sword, to extract the full rent from tenants for a complete lease term where a tenant may have remained only for a short period prior to moving out. The Appellate Division, 2nd Department, in Samson Mgt. v. Hubert, 92 A.D.3d 932, 939 N.Y.S.2d 138 (2nd Dept. 2012), found that the 2000 regulatory provision, if it was indeed seeking to give a legal gloss to such behavior, 14 43 would be contrary to law. Hence, DHCR is amending its regulation to conform to the Court’s decision in Samson Mgt. v. Hubert and return to the traditional usage of “deemed leases.” k. Harassment Definition This regulation expands the definition of “harassment” to reflect some of the more up-todate schemes to deprive tenants of their legitimate rights as rent stabilized tenants. Not every harassing act is designed to create a vacancy, but can include intimidating the tenant in place to preclude the legitimate exercise of such rights. These actions can include false and illegitimate filings before DHCR l. Codification of Certain Four Year Rule Exceptions These provisions seeks to set forth, in one place, a more comprehensive list of areas where, to date, by statute, case law or regulation, the “four year rule” that ordinarily governs rent and overcharge review, has been held not to be applicable. The list should serve as a useful guide to owners and tenants. The list contains two areas expressly modified by these regulations: preferential rents and vacancy on the base date cases. The needs and benefits for the change with respect to preferential rents have already been explained. As to vacancies, DHCR, prior to this amendment, took the position that if an apartment was vacant or exempt (usually by owner occupancy) on the base date (four years prior to the filing of an overcharge complaint), DHCR was precluded from determining whether the present tenant’s rent was legal. Rather than finding the correct rent by calculating what would have been the proper increase for that period, as it would have if the vacancy or exemption was within four years, DHCR would dismiss the complaint. Although this prior 15 44 policy was upheld, experience has demonstrated that this is an area where it is more appropriate to test the validity of a present rent against these usual standards, even if these standards required rental information that occurred before the base date, rather than simply rubber-stamping any rent that is collected. The lack of a proper base date lease (which is what the owner would be asserting) is the identical lack of proof that could otherwise lead to use of the default method in setting the rent. In fact, there have been owners who have inappropriately used the “vacancy on base date” defense in an effort to defeat such legitimate review. The present rule is not required by statute as the Appellate Division, First Department, has already reviewed information before the base date where there was such a vacancy, but because the owner claimed the rent was now also unregulated, it did not fall within the parameters of what had been the existing regulation. Gordon v. 305 Riverside Corp., 93 A.D.3d 596, 941 N.Y.S.2d 93 (1st Dept. 2012). There is ongoing litigation over the applicability of the four year rule to Roberts litigation; given that such litigation is still ongoing and not finally determined, it is not contained in this regulation. m. Amended registration and registration requirements Although not provided for by regulation, through its own inaction by not rejecting them, DHCR had allowed owners to file “amended” registrations at any time for any year. These amendments, if treated similarly to “late” registrations under the RSL, could carry a substantial penalty, but no penalty has been imposed. The number of such amendments is significant. In 2009, amended registrations for 1,129 buildings representing 5,958 apartments were filed; in 2010, amended registrations for 1,259 buildings representing 8,597 apartments were filed; in 2011, amended registrations for 402 16 45 buildings representing 4,579 apartments were filed. The unsupervised inclusion of amendments in the registration system has the effect of corrupting the purpose of DHCR’s registration data base as a contemporaneously created history of rents. An amended registration was cited by the Court of Appeals in Grimm v. DHCR, supra, as one of the indicia of a fraudulent scheme to deregulate a housing accommodation. The new DHCR rule would still allow for such amendments, where appropriate, but would ensure that the process was regulated by itself or another governmental agency, and where appropriate, assure there was also notice to the present tenant, who could comment on the owner’s rationale for seeking such amendment. DHCR is also amending the registration provisions to appropriately reflect DHCR’s authority and ability to change the registration forms themselves each year to capture data appropriate for the administration and enforcement of the RSL and RSC. n. Freeze of Vacancy Bonuses based on Failure to Register This change will conform DHCR’s practice to the Court’s interpretation of this statutory penalty for failing to properly register. o. Housing Development Fund Companies This provision provides an appropriate rent-setting mechanism for Housing Development Fund Companies upon a foreclosure which are not presently covered by DHCR’s deconversion regulations and balances the need for an economic rent with the low income nature of these tenancies. 4. COSTS The regulated parties are residential tenants and the owners of the rent stabilized housing accommodations in which such tenants reside. There are no additional direct costs imposed 17 46 on tenants or owners by these amendments as owner direct costs are capped at $10 per unit per year. The amended regulations do not impose any new program, service, duty or responsibility upon any state agency or instrumentality thereof, or local government. Owners of regulated housing accommodations will need to be initially more vigilant to assure their compliance with these changes. Compliance costs are already a generally-accepted expense of owning regulated housing. There are increased penalties in some instances if the regulations are violated, but the costs of conforming present business practices to the change in standards is not substantial. In addition, these consequences are largely consistent with existing case law or otherwise necessary to secure compliance. DHCR has made a significant effort to assure a safe harbor or alternatives from the more dire consequences for owners who are operating in good faith and in substantial compliance. Tenants will not incur any additional costs through implementation of the proposed regulations. The additional costs need to be weighed against the actual outlay by owners leading to what DHCR is seeking to supervise, monitor, and make more transparent by many of these changes: increases leading to the possible deregulation of units. Imposing rents that approach deregulation thresholds requires a significant outlay of funds on the part of owners. The median rent stabilized rent is $1,107 per month. The median stay of a rent stabilized tenant is 7 to 8 years, based on DHCR’s review of turn-over from its registration database. Thus, adding the vacancy bonus and longevity increase to the median rent will result in a rent of $1,288 per month while the amount to deregulate an apartment is a rent of $2,500. This means an owner must increase the rent through the installation of individual apartment improvements costing either $72,880 or $42,420, depending on the number of units in the building. This financial outlay stands in contrast to the median family income of a rent 18 47 stabilized tenancy of $37,000 per year and mean family income of $51,357 per year as reported by NYC Rent Guidelines Board. 5. LOCAL GOVERNMENT MANDATES The proposed rule making will not impose any new program, service, duty or responsibility upon any level of local government. 6. PAPERWORK The amendments may, in a limited fashion, increase the paperwork burden. There will be additional costs associated with filings and the need for additional record retention, but it is relatively minimal. The filing of exit notices and registrations and the use of proper lease riders are already part of the RSL. Serving final registrations is an extremely limited cost and registration has otherwise been an annual owner cost since 1984 for these housing accommodations. There may be more instances where an owner may need to retain proof of the legality of rent for a longer period, but a prudent owner would already retain that information for other purposes, such as assuring that an increase was not part of a fraudulent scheme to deregulate an apartment, making sure leases were offered on the same terms and conditions, assuring that a preferential rent was correct, and to resolve possible jurisdictional disputes. Any particularized specific claims that a changed regulation may create hardship or inequity can and will be best handled in the context of the administrative applications, themselves, where such factual claims can be assessed. IG Second Generation Partners, L.P. v. DHCR, 10 N.Y.3d 474, 859 N.Y.S.2d 598 (2008) 19 48 7. DUPLICATION The amendments do not add any provisions that duplicate any known State or Federal requirements except to the extent required by law. There are instances where a rent stabilized property participates in another State, city or Federal housing program. In those instances, there may be a need to comply with the RSC requirements as well as the mandates of that city, State or Federal program. 8. ALTERNATIVES DHCR considered a variety of alternatives to many of these new rules. As set forth in part in the Needs and Benefits section, the alternatives of continuing the rule presently in place for all of these changes were considered and rejected. There were other alternatives suggested as part of DHCR’s outreach that were reviewed initially as part of DHCR’s initial deliberative process, but were rejected. For example: DHCR considered treating any attempt to amend registrations as the equivalent of late registration, since it nullifies the previous timely filing. However, this blanket penalty gave way to a more nuanced procedure to allow review of the reasons for amendments and to make amendments subject to review and supervision. DHCR considered creating more stringent pre-requirements for MCI filings with respect to violation clearance. However, in leaving those other building violations to service reductions, while tightening up procedures to assure the clearance of immediately hazardous violations, DHCR sought to strike a balance between the need to assure owner compensation for building improvements and the maintenance of already existing services. 20 49 DHCR considered the implementation of more severe penalties for notice violations with respect to exit registrations and the provision of the lease rider. Rather than create a blanket denial of increases, DHCR made the consequences act in lock step with regular registration penalties to assure that a paperwork failure, in and of itself, would not lead to an excessive penalty, if the rent was otherwise legal and proper. However, continuation of the present rule, which required as a precondition to any penalty for failing to provide a rider that the tenant obtain an order from DHCR directing that such a rider be provided, was not a real option. The purpose of the rider is to advise tenants of their rent stabilized rights and to allow them to make an informed decision as to whether the invocation of DHCR’s intercession to obtain those rights is necessary. This precondition, by definition, limits penalties for failing to provide a rider only to those tenants already sufficiently savvy about their rights to already know them. It also effectively limits an owner’s necessary compliance with lease rider requirements to the same subset of knowledgeable tenants, thus assuring that the purpose of the rider is effectively gutted by regulation. 9. FEDERAL STANDARDS The proposed amendments do not exceed any known minimum Federal standards. 10. COMPLIANCE SCHEDULE It is not anticipated that regulated parties will require any significant additional time to comply with the proposed rules. 21 50 CONSOLIDATED - RURAL AREA FLEXIBILITY ANALYSIS The Rent Stabilization Code applies exclusively to New York City, and therefore, the proposed rules will not impose any reporting, recordkeeping, or other compliance requirements on public or private entities located in any rural area pursuant to Subdivision 10 of SAPA Section 102. 51 CONSOLIDATED - REGULATORY FLEXIBILITY ANALYSIS (FOR SMALL BUSINESSES AND LOCAL GOVERNMENTS) 1. EFFECT OF RULE The Rent Stabilization Code (“RSC”) applies only to rent stabilized housing units in New York City. The class of small businesses affected by these proposed amendments would be limited to certain small property owners, who own limited numbers of rent stabilized units. The amended regulations would have limited burdensome impact on such businesses. These amendments to the RSC, which apply exclusively in New York City, are expected to have no impact on the local government thereof. 2. COMPLIANCE REQUIREMENTS The proposed amendments would require small businesses that own regulated residential housing units to perform some minimal additional recordkeeping or reporting. Such businesses will continue to need to keep records of rent increases and improvements made to the properties in order to qualify for rent increases authorized under the proposed changes, but in addition to keeping such records, will also be required in vacancy and renewal lease riders to provide such records to the tenant. In addition, rent increases will not be permissible until the proper lease rider is provided to the tenant. The rent would be frozen based on such failure if the rent is otherwise illegal. Further, such businesses will be required to provide a valid explanation for the need to amend registration statements already filed with DHCR. The proposed 1 52 amendment of the registration statements must also be provided to the tenant in occupancy and would generally require the owner to provide DHCR an explanation of the need for such amendment. In addition, small businesses will be required to produce rental records prior to the four year review of rental records in circumstances where there is a finding of a fraudulent scheme to deregulate an apartment; where there is a “preferential rent” in order to establish the terms and conditions of such preferential rent and whether it was previously established; and where an apartment was vacant or temporarily exempt on the base date. While these businesses may need to retain proof of the legality of rent for a longer period and produce such to DHCR, a prudent business owner would already have retained that information for these purposes already based on existing case law. Such businesses will also be required to file an exit registration with DHCR when an apartment is deregulated and required to serve such on the tenant who resides in the apartment that the business asserts is no longer subject to regulation. The exit registrations themselves give these businesses a contemporaneous benchmark which will aid them in legitimate efforts to contemporaneously establish the propriety of high rent/vacancy deregulation and help them defend against claims by tenants that such deregulations are part of fraudulent scheme as defined by the Court of Appeals in Grimm v DHCR, 15 N.Y.3d 358, 912 N.Y.S.2d 491 (1st Dept. 2010). This requirement has also been statutory since 2000. Businesses for a very limited time period will also be required to provide additional information directly to tenants with respect to explaining the propriety of 2 53 IAI charges comprising the rent as a new lease. However, since the purpose of this is to cut down on rent overcharge proceedings before DHCR and the court, it may be ultimately more cost effective than waiting on administrative or judicial proceedings to supply the information. 3. PROFESSIONAL SERVICES The proposed amendments will not require small businesses to obtain any new or additional professional services. Many businesses do use a professional service to file and serve their annual registrations. Even if the filing of a rent registration was considered a new requirement, as explained in the Regulatory Impact Statement, the cost is comparatively minimal. 4. COMPLIANCE COSTS There is no indication that the proposed amendments will impose any significant, initial costs upon small businesses. There are no additional direct costs imposed on these businesses by these amendments as owner direct costs are capped at $10 per unit per year. Small business owners of regulated housing accommodations will need to be initially more vigilant to assure their compliance with these changes. Compliance costs are already a generally-accepted expense of owning regulated housing. There are increased penalties in some instances if the regulations are violated, but the costs of conforming present business practices to the change in standards is not substantial. In addition, these consequences are largely consistent with existing case law or otherwise necessary to secure compliance. DHCR has made a significant effort to assure a safe harbor or alternatives from the more dire 3 54 consequences for owners who are operating in good faith and in substantial compliance. The additional costs need to be weighed against the actual outlay by owners leading to what DHCR is seeking to supervise by many of these changes: increases leading to the possible deregulation of units. Imposing rents that approach deregulation thresholds requires a significant outlay of funds on the part of owners. The median rent stabilized rent is $1,107 per month. The median stay of a rent stabilized tenant is 7 to 8 years based on DHCR’s review of turn over from its registration database. Thus adding the vacancy bonus and longevity increase to the median rent will result in a rent of $1,288 per month while the amount to deregulate an apartment is a rent of $2,500. This means an owner must increase the rent through individual apartment improvements through installation of improvements costing either $72,880 or $42,420 depending on the number of units in the building. This financial outlay stands in contrast to the median family income of a rent stabilized tenancy of $37,000 per year and mean family income of $51,357 per year as reported by New York City Rent Guidelines Board. The amended regulations do not impose any new program, service, duty or responsibility upon any state agency or instrumentality thereof, or local government. 5. ECONOMIC AND TECHNOLGICAL FEASIBILITY Compliance is not anticipated to require any unusual, new or burdensome technological applications but ultimately encourages the use of “online” filings and use of DHCR forms, which are increasingly online, which will actually reduce costs. 4 55 6. MINIMIZING ADVERSE IMPACT The proposed regulations have no adverse impact on local government. They will have comparatively minimal costs to businesses considering that these changes are necessary to enforce a statute designed to protect the public health safety and welfare. The regulations being implemented do not create different regulatory standards for small businesses. Instead DHCR in the administrative proceedings themselves can take equitable circumstances into consideration which may include the size of the business. It is difficult, on a blanket regulatory basis, to make exceptions for small businesses. Outside of the proceedings themselves, it is difficult to ascertain the size of the business subject to these regulations as a single business may own multiple properties often created as single asset corporations. However, as set forth in the Regulatory Impact Statement, the new rules recognize a variety of mitigating circumstances, safe harbors and curative provisions so that an otherwise legally compliant owner suffers minimal or no penalties for a paperwork omission error. To the extent the approaches suggested in SAPA section 202-b are otherwise appropriate, present procedures take these into account. 7. SMALL BUSINESS AND LOCAL GOVERNMENT PARTICIPATION DHCR personnel within its Office of Rent Administration (ORA) engages in close to one hundred forums and meetings on an annual basis with community groups, owner and tenant advocacy organizations and local officials where the administration and implementation of these provisions was under discussion. In the last year this information gathering process has been enhanced through several additional actions taken by DHCR. 5 56 DHCR created the Tenant Protection Unit (TPU) a unit designated by the Commissioner to investigate and prosecute violations of the ETPA, the RSL and the City and State Rent Laws. TPU itself has met with the various stakeholders in an effort to ascertain what issues and concerns impinge on the owner and tenant community affected by these regulations. Further, DHCR held a public hearing on the implementation of regulations to conform to the changes in the rent laws enacted by the 2011 Law at which many of these provisions were raised by commenters as suggested changes and ORA subsequently sent outreach letters to stakeholders, specifically including small businesses and their advocates, seeking comments and suggestions on changes to the regulations. Finally, the Rent Stabilization Law specifically provides for review by the New York City Department of Housing Preservation and Development prior to promulgation. 6 57 CONSOLIDATED - JOB IMPACT STATEMENT It is apparent from the text of the rules, required by statutory amendment, that there will be no adverse impact on jobs and employment opportunities by the promulgation of these regulations. 58 Executive Order No. 17 Local Government Mandate Evaluation Impact on Local Government and Property Taxpayers Submitting Agency: DHCR NYCRR Citation: 9 NYCRR 2520.5(o); 2520.11(u); 2521.1; 2521.2(b), (c); 2522.4(a)(3)(22); 2522.4(a)(13); 2522.4(d)(3)(iii); 2522.5(c)(1); 2522.5(c)(3); 2522.6(b); 2523.4(a)(1), (a)(2), (c), (d)(2); 2523.5(c)(2), (c)(3); 2524.3(a), (e), (g); 2525.5; 2526.1(a)(2); 2526.1(a)(3)(iii); 2526.1(g); 2527.9; 2528.3; 2528.4(a); 2529.12; 2530.1; 2531.2 Description of the Regulation: The proposed regulations codify the addition of the Tenant Protection Unit; codify exit registrations, provide an appropriate rent setting mechanism for HDFCs upon a foreclosure; remove language preserving preferential rents solely through registrations; remove submetering costs as eligible for MCI increases and allow DHCR to independently review “C” violations to deny MCI applications; add enhanced DRIE and SCRIE protections; increase requirements for lease rider with additional explanation of rent increases and the ability of tenants to demand supporting documentation, and provide for a rent freeze for failure to provide the lease rider or supporting documentation unless the rent would otherwise be legal; codify the default formula for rent setting with an alternative fourth method; remove service complaint pre-notice as a basis for dismissal of a complaint, reduce time for owners to respond to a service complaint, prevent 6% MCI increases from being collected after a service reduction order, and bar vacancy bonuses after a service reduction order; conform deemed lease provision to case law; redefine harassment to include certain false filings intended to deprive tenants of continued rent stabilized protections; codify exceptions to four year statute of limitations; require DHCR or other government approval for amended registrations if not amended within appropriate filing year; clarify that a rent freeze due to failure to register includes vacancy bonuses; add five days for mailing of certain notices, exclude additional five days for mailing of other papers and notices not already specified, and clarify that Article 78 statute of limitations runs from date of mailing of DHCR order. Statutory Authority for the Regulation: The Administrative Code of the City of New York and Section 44 of Chapter 97, Part B of the Laws of 2011 enable DHCR to amend the Rent Stabilization Code. Agency Contact: Gary R. Connor – General Counsel Telephone: (212) 480-6707 Email: [email protected] 1. Does the regulation impose a mandate on a county, city, town, village, school district or special district that requires such entity to: a. Provide or undertake any program, project or activity; Yes No X 59 b. Increase spending for an existing program, project or activity (even if such program, project or activity is voluntarily undertaken by a local government unit); Yes No c. Grant any new property tax exemption, or broaden the eligibility or increase the value of any existing property tax exemption; or Yes No d. Carry out a legal requirement that would likely have the effect of raising property taxes. Yes No If the answer to all questions above are “no,” ensuring the regulation will not result in a mandate on local governments and property taxpayers, an accounting and the approval of the Office for Taxpayer Accountability are not required. If the answer to any question above is “yes,” and the regulation may have a fiscal impact on local governments and property taxpayers, please proceed to items 2 – 3. 2. Is the mandate required by federal law or regulation or state law? Yes No a. If yes, please cite the specific provision in the statute or federal regulation. b. If yes, please describe any elements of the regulation not specifically mandated by the statute or regulation. 3. If any portion of the mandate is not required by federal or state law, please attach to this Checklist an Accounting for such portion containing:* a. A description of the mandate in the regulation; b. An accounting of the impacts of such mandate that includes: (i) A fiscal impact statement; (ii) A cost-benefit analysis, which includes: (x) a specific delineation of the costs and benefits to local governments and property taxpayers; and (y) a quantification of the impact on local government revenue and expenditures, where such impact is quantifiable based on available 60 information (please consult with the Governor’s Office of Regulatory Reform if further guidance is needed); c. A description of input sought and received from affected local governments; d. A description of the proposed revenue sources to fund such mandate; and e. An explanation as to why this regulation should be advanced with a mandate. *Note: The “Regulatory and Flexibility Analysis for Small Businesses and Local Governments” may be attached so long as the items set forth in 3 above are fully accounted for in the Analysis. 61 Darryl C. Towns Commissioner Andrew M. Cuomo Governor New York State Division of Housing and Community Renewal Office of Rent Administration Gertz Plaza 92-31 Union Hall Street Jamaica, NY 11433 Advisory Opinion 2014-1 (January 8, 2014) New York City Rent Stabilization Code and Tenant Protection Regulations Revisions to Lease Rider Form and Related Documents DHCR is giving interested parties a twenty day period to comment on DHCR’s proposed lease rider form which DHCR will review and consider in promulgating a final lease rider form and related documents. Accordingly, pursuant to Section 2520.7 of the Rent Stabilization Code and 2500.6 of the Tenant Protection Regulations, the effective date for implementation of the amendments to Sections 2522.5(c)(1) and 2522.5(c)(3) of the Rent Stabilization Code and Section 2502.5(c) of the Tenant Protection Regulations will be delayed until the form referred to in those sections is finalized based on DHCR’s review. Such date will not exceed 180 days after the effective date of the Rent Code Amendments of 2014. Upon finalization, DHCR will amend the advisory opinion to reflect the implementation of the form. Current procedures and forms may continue to be used until that time. Woody Pascal Deputy Commissioner www.nyshcr.org 62 ANDREW M. CUOMO GOVERNOR DARRYL C. TOWNS COMMISSIONER/CEO NEW YORK STATE DIVISION OF HOUSING & COMMUNITY RENEWAL HOUSING TRUST FUND CORPORATION STATE OF NEW YORK MORTGAGE AGENCY NEW YORK STATE HOUSING FINANCE AGENCY NEW YORK STATE AFFORDABLE HOUSING CORPORATION STATE OF NEW YORK MUNICIPAL BOND BANK AGENCY TOBACCO SETTLEMENT FINANCING CORPORATION HOW TO AMEND REGISTRATIONS – Issued 1/8/2014 Special Note: The Rent Code Amendments of 2014 provide that, an owner seeking to file an amended registration for other than the present registration year must seek an order from DHCR by filing an Administrative Determination (for details see Administrative Determination Procedure http://www.nyshcr.org/Apps/RentReg/) unless the amendment has been already directed by DHCR or another government agency that supervises the housing accommodation. Current Year Annual Registration Amended annual registrations will be accepted for filing by DHCR through March 31 which is the last day before the subsequent registration year commences. Amended annual registrations submitted after that date will be rejected, unless accompanied by an order/directive from the DHCR or another government agency that supervises the housing accommodation. A copy of the amended registration form must be served on the tenant currently in occupancy of the subject apartment Prior Year Annual Registration Amended annual registrations for prior years will be rejected at all times, unless accompanied by an order/directive from DHCR or another government agency that supervises the housing accommodation. A copy of the amended registration form must be served on the tenant currently in occupancy of the subject apartment. Late Annual Registration Late annual registrations (first submission as opposed to an amended filing) submitted for years prior to the one in effect will be accepted. However, amendments to these late registrations will be rejected at all times, unless accompanied by an order/directive from the DHCR or another government agency that supervises the housing accommodation. A copy of the amended registration form must be served on the tenant currently in occupancy of the subject apartment. Initial Registration Submissions of either Amended Initial registrations or “ New” Initial registrations to replace a previous Initial registration will be rejected by DHCR at all times, unless accompanied by an order/directive from the DHCR or another government agency that supervises the housing accommodation. A copy of the amended registration form must be served on the tenant currently in occupancy of the subject apartment. Owners Right to Challenge Rejection Owners reserve the right to challenge the rejection of a registration filing and can seek formal review of the matter by submitting in writing a request for DHCR to file an Administrative Determination, pursuant to Rent Stabilization Code section 2522.6 or ETPA Section 2502.6 Owners who file an Administrative Determination with DHCR may resubmit the amended registration with proof of the Administrative Determination filing and the registration will be accepted on an interim basis. The permanent acceptance or rejection will be dependent upon the outcome of the Administrative Determination. NYS DHCR Processing Services Unit - Hampton Plaza – 5th floor 38-40 State Street – Albany NY 12207 nyshcr.org 63 ANDREW M. CUOMO GOVERNOR DARRYL C. TOWNS COMMISSIONER/CEO MNEW YORK STATE DIVISION OF HOUSING & COMMUNITY RENEWAL HOUSING TRUST FUND CORPORATION STATE OF NEW YORK MORTGAGE AGENCY Annual Rent Registration Amendment Procedure – Issued 1/8/2014 NEW YORK STATE AFFORDABLE HOUSING CORPORATION Special Note: The Rent Code Amendments of 2014 provide that, an owner seeking to file an amended registration for other than the present registration year must seek an order from DHCR by filing an Administrative Determination (for details see Administrative Determination Procedure http://www.nyshcr.org/Apps/RentReg/) unless the amendment has been already directed by DHCR or another government agency that supervises the housing accommodation. STATE OF NEW YORK MUNICIPAL BOND BANK AGENCY Only building owners/managing agents can submit amendments. NEW YORK STATE HOUSING FINANCE AGENCY TOBACCO SETTLEMENT FINANCING CORPORATION The process for filing Amendments to previously submitted Annual Rent Registration information is as follows: Either photocopy the original building/apartment form manually submitted to the Division of Housing and Community Renewal (DHCR) or reprint the forms submitted through ARRO. If you do not have a copy of the original form, contact either [email protected]; [email protected]; or call Rent Info at 718-739-6400. A blank form will be provided to you for reproduction. (NOTE: amendments to annual rent registration submissions must be completed using the annual building and/or apartment registration forms for the year being amended). forms. Write the word AMENDMENT on top of both the building and apartment Make the necessary changes directly on the form. Include a signed and notarized RR-2S form or the building summary submitted through the Annual Rent Registration Online (ARRO) system. Return the forms to the address below. Supply a copy of the amended apartment form to the tenant(s). If you have any questions, please email [email protected] or call 518-486-3367. NYS DHCR Processing Services Unit - Hampton Plaza – 5th floor 38-40 State Street – Albany NY 12207 nyshcr.org 64 ANDREW M. CUOMO GOVERNOR DARRYL C. TOWNS COMMISSIONER/CEO NEW YORK STATE DIVISION OF HOUSING & COMMUNITY RENEWAL HOUSING TRUST FUND CORPORATION STATE OF NEW YORK MORTGAGE AGENCY NEW YORK STATE HOUSING FINANCE AGENCY NEW YORK STATE AFFORDABLE HOUSING CORPORATION STATE OF NEW YORK MUNICIPAL BOND BANK AGENCY TOBACCO SETTLEMENT FINANCING CORPORATION ADMINISTRATIVE DETERMINATION PROCEDURE – Issued 1/8/2014 In order to receive a formal determination, it will be necessary for you to request in writing that this Agency open an “Administrative Determination” case. Such a proceeding may be initiated where the rent or other facts are in dispute, in doubt, or not known, or where the rent must be fixed or established. Please highlight or underline this request in the opening paragraph of your letter and address it to the attention of: Director, Multi-Service Unit Property Management Bureau 92-31 Union Hall Street Jamaica, NY 11433 Your letter should be as detailed as possible and include the following information: 1. The full name of person(s) making the request. 2. The full address of the premise in question, including apartment number(s). 3. The owner’s/tenant’s full name and address. 4. The rental history of the unit(s) in question, if available. 5. A copy of the initial lease/rental agreement, if available. 6. Supporting evidence to prove the points as indicated in the correspondence being submitted. 7. If applicable, an order from DHCR or another government agency that supervises the housing accommodation and requires an amended registration filing. Please make sure that your letter is signed and notarized, as it will serve as an affidavit. 38-40 State Street, Albany, NY 12207 nyshcr.org 65 FACT SHEET Andrew M. Cuomo, Governor A PUBLICATION OF NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL OFFICE OF RENT ADMINISTRATION #3 Required and Essential Services Services owners are required to provide An owner must provide and maintain services and equipment furnished or required by Rent Control or Rent Stabilization regulations. Required or essential services include repairs, heat, hot and cold water, maintenance, painting and janitorial services, elevator service and ancillary services such as garage and recreational facilities. This may include services that were provided but not registered by the owner on the Initial Apartment Registration (DHCR Form RR-1(i)) or, the Initial Building Services Registration (DHCR Form RR-3(i)). Under rent stabilization, an owner must generally maintain all services required by the Rent Stabilization Law on rent stabilization's base dates of May 31, 1968 and/or May 29, 1974. The base date for apartments under the Emergency Tenant Protection Act (ETPA) outside of NYC is May 29, 1974, or the day immediately prior to the local effective date, whichever is later. The base date for buildings which were governed by MitchellLama regulations is the day they became subject to rent regulation. Under rent control, the owner must generally provide and maintain all services furnished or required to be furnished on the base date of May 1, 1950 for rent controlled apartments outside of NYC, and March 1, 1943 for those within NYC. Minor (De Minimis) Service conditions Certain conditions complained of as constituting a decrease in a required service may have only a minimal impact on tenants, do not affect the use and enjoyment of the premises, and may exist despite regular maintenance of services. Such conditions, which are minor (de minimis) in nature, do not rise to the level of a failure to maintain a required service. See Fact Sheet #37, De Minimis Conditions, for a schedule of these conditions. Repair or replacement of defective equipment When an owner provides equipment or services within an apartment, such as a refrigerator, stove or air conditioner, the owner must maintain it in good working order. Defective equipment can be: Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #3 pg. 1 of 3 66 1. 2. 3. Repaired at the owner's expense or; Replaced with reconditioned or used equipment, provided it is in good working order and is comparable to the item replaced. The owner is not entitled to any increase in rent based on the cost of reconditioned or used equipment or; Replaced with a new one, for which the owner may be entitled to an Individual Apartment Improvement (IAI) rent increase. For occupied apartments, however, the tenant's voluntary written consent is required before the owner may collect the increase. If an installation of new equipment is done while the apartment is vacant, the new tenant's consent is not required for the owner to collect the IAI rent increase. See Fact Sheet #12. For rent stabilized apartments, the tenant's written consent should be retained by the owner, but need not be filed with DHCR. For all apartments subject to rent control, the owner must file a notice (DHCR Form RN-79b) with DHCR to obtain a rent increase for new equipment. The tenant's consent is a part of that form and the rental increase is effective on the first rent payment date following its filing. Filing complaints with DHCR Tenants can file a written complaint of a decrease in services on the appropriate DHCR form. For additional information, see Fact Sheet #14, Rent Reductions for Decreased Services. Sources: New York City Rent Stabilization Code, Section 2523.4 Tenant Protection Regulations, Section 2503.4 New York City Rent and Eviction Regulations, Section 2202.16 New York State Rent and Eviction Regulations, Section 2102.4 Related material: Fact Sheet #12, Rent Adjustments for New Services, New Equipment or Improvements to an Apartment Fact Sheet #14, Rent Reductions due to Decreased Services Fact Sheet #37, De Minimis Conditions in Building-Wide or Individual Apartment Areas Rent InfoLine (718) 739-6400 Revised (1/14) Web Site: www.nyshcr.org Email address: [email protected] #3 pg. 2 of 3 67 For more information or assistance, call the DHCR Rent InfoLine, or visit your Borough or County Rent Office. Revised (1/14) Queens 92-31 Union Hall Street 6th Floor Jamaica, NY 11433 (718) 739-6400 Lower Manhattan 25 Beaver Street 5th Floor New York, NY 10004 Brooklyn 55 Hanson Place 7th Floor Brooklyn, NY 11217 Bronx 2400 Halsey Street Bronx, NY 10461 Upper Manhattan 163 W. 125th Street 5th Floor New York, NY 10027 Westchester County 75 South Broadway White Plains, NY 10601 Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #3 pg. 3 of 3 68 FACT SHEET A PUBLICATION OF NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL OFFICE OF RENT ADMINISTRATION Andrew M. Cuomo, Governor # 4 Lease Renewal in Rent Stabilized Apartments Generally, tenants in rent stabilized apartments must be offered renewal leases. The renewal lease can be for a term of one or two years, at the tenant's choice and is at a rate set by the local Rent Guidelines Board. The renewal lease offer must be made on a form created by or on a facsimile approved by the Division of Housing and Community Renewal. The Lease Renewal Process 1. In New York City, the owner must give written notice of renewal by mail or personal delivery not more than 150 days and not less than 90 days before the existing lease expires on a DHCR Renewal Lease Form (RTP-8). For tenants outside of New York City, an owner must first sign and date the renewal notice (RTP-8 ETPA), and then send it by certified mail not more than 120 days and not less than 90 days before the existing lease expires. 2. After the renewal offer is made, the tenant has 60 days to choose a lease term, sign the lease, and return it to the owner. For tenants outside of New York City, the lease must be returned to the owner by certified mail. If the tenant does not accept the renewal lease offer within this 60-day period, the owner may refuse to renew the lease and may also proceed in court after the expiration of the current lease, to have the tenant evicted. 3. When a tenant signs the Renewal Lease Form and returns it to the owner, the owner must return the fully signed and dated copy to the tenant within 30 days. A renewal should go into effect on or after the date that it is signed and returned to the tenant but no earlier than the expiration date of the current lease. In general, the lease and any rent increase may not begin retroactively. (See Example #1 below) Other Considerations If the owner does not return a copy of the fully executed Renewal Lease Form to the tenant within 30 days of receiving the signed lease from the tenant, the tenant should nevertheless pay the new rent, and may file the "Tenant's Complaint of Owner's Failure to Renew Lease and/or Failure to Furnish a Copy of a Signed Lease" [DHCR form RA-90]. Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #4 pg. 1 of 4 69 Renewal leases must keep the same terms and conditions as the expiring lease unless a change is necessary to comply with a specific law or regulation. Those lawful provisions that would change the expiring lease should be attached to the Renewal Lease Form. (See Example #2 below) In New York City only, when a tenant receives the Lease Renewal Form, a copy of the Rent Stabilization Rights Rider for Apartment House Tenants Residing in New York City must be attached. The Rider will explain how the proposed rent was computed and describe the rights and obligations of tenants and owners under the Rent Stabilization Law. Reasons for Not Renewing a Lease An owner can refuse to renew a lease for several reasons, some of which are: 1. The owner or a member of the owner's immediate family needs the apartment for their personal use and primary residence. If the tenant is a senior citizen, or disabled, special rules apply [See Fact Sheets on Special Rights of Senior Citizens and Special Rights of Disabled Persons]. 2. The apartment is not used as the tenant's primary residence. 3. The owner wants to take the apartment off the rental market, either to demolish the building for reconstruction or use it for other purposes permitted by law. However, when the owner does not offer the tenant a renewal lease for one of these reasons, the owner must give the tenant written notice of non-renewal during the lease offering time frame described in "The Lease Renewal Process" section of the Fact Sheet. Failure to serve this notice on the tenant during this time frame will entitle the tenant to a renewal lease. Examples Example #1 1. Mr. Rivera's lease expired on July 31, 2007. He did not receive a timely renewal lease offer and has continued to pay his rent of $800. 2. On May 15, 2008, the landlord makes him an offer of a renewal lease to commence retroactively on August 1, 2007 at a rent of $834 for 1 year or $858 for 2 years. The additional $34 represents a 4.25% increase for 1 year, and the additional $58 represents a 7.25% increase for 2 years. Rent InfoLine (718) 739-6400 Revised (1/14) Web Site: www.nyshcr.org Email address: [email protected] #4 pg. 2 of 4 70 3. In this situation, the option for the commencement date of the lease is Mr. Rivera's. He can request that the lease be dated to start on: a) b) 4. August 1, 2007, the date it would have begun had a timely offer had been made or September 1, 2008, the first rent payment date occurring no less than 90 days after the offer is made. Whether Mr. Rivera chooses option (a) or (b), the applicable guideline increase will be the lower of the two possible rates. In this case, he will be liable for the lower rates in effect on September 1, 2008; 3% for 1 year or 5.75% for two years. Moreover, the increase in rent to either $824 for 1 year, or $846 for 2 years, will not go into effect until September 1, 2008. Example #2 1. Two years ago, Mrs. Cooper signed a vacancy lease which contained no clauses or riders regarding lead paint, recyclable materials, late fees, or pets. Upon expiration of her lease, the landlord offers a renewal lease which includes several riders: a) b) c) d) Rider 1 (Prevention of Lead-Based Paint Hazards) requests that Mrs. Cooper advise the owner if a child under 6 years old resides in the apartment. Rider 2 specifies how certain materials such as paper, cardboard, cans, bottles, etc. must be recycled. Rider 3 states that the tenant will be liable for a $20 late fee if rent is received by the landlord after the 10th of the month. Rider 4 prohibits the harboring of pets in the apartment. 2. In this situation, Riders 1 and 2 constitute lawful provisions to the lease because they are necessary to comply with New York City lead paint and recycling laws. 3. Riders 3 and 4 are provisions that cannot be added to the renewal lease because they constitute material changes to the terms and conditions of the vacancy lease, which did not include a late fee or a pet clause. Mrs. Cooper can sign the rider without waiving any rights and may file a lease renewal complaint. Sources: New York City Rent Stabilization Code, Section 2523.5 Tenant Protection Regulations, Section 2503.5 Related Material: Fact Sheet #2, Rent Stabilization Lease Rider Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #4 pg. 3 of 4 71 For more information or assistance, call the DHCR Rent InfoLine, or visit your Borough Rent Office. Queens 92-31 Union Hall Street 6th Floor Jamaica, NY 11433 (718) 739-6400 Lower Manhattan 25 Beaver Street 5th Floor New York, NY 10004 Brooklyn 55 Hanson Place 7th Floor Bronx 2400 Halsey Street Bronx, NY 10461 Brooklyn, NY 11217 Upper Manhattan 163 W. 125th Street 5th Floor New York, NY 10027 Revised (1/14) Westchester County 75 South Broadway 2nd Floor White Plains, NY 10601 Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #4 pg. 4 of 4 72 FACT SHEET A PUBLICATION OF NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL OFFICE OF RENT ADMINISTRATION Andrew M. Cuomo, Governor #6 Fair Market Rent Appeals Fair Market Rent Appeals In NYC, when a tenant moves out of a rent controlled apartment, the apartment becomes decontrolled. If that apartment is in a building built before January 1, 1974, containing six or more units at any time, it becomes rent stabilized. The owner must register the unit with the NYS Division of Housing and Community Renewal (DHCR) by completing the Initial Apartment Registration, (DHCR Form RR-1) and must provide the tenant with a copy by certified mail. The owner may charge the first stabilized tenant a rent negotiated between them, which is subject to the tenant's right to file a "Fair Market Rent Appeal" (FMRA). However, when a previously rent controlled apartment is vacated and the rent charged to the next tenant is $2,500 or more, the apartment is exempt from rent regulation pursuant to High-Rent Vacancy Deregulation. This first deregulated tenant must be served with a DHCR High-Rent Vacancy Deregulation notice (HRVD-N) and an "exit" apartment registration form, as per the Rent Code Amendments of 2014. The tenant may challenge the deregulation by filing a Fair Market Rent Appeal with DHCR within 90 days of service of this notice or service of a copy of the registration statement, whichever occurs first. DHCR reserves the right to convert an overcharge complaint to a Fair Market Rent Appeal, based on the previous regulatory status of the apartment. Usually, a FMRA is a challenge to the negotiated first stabilized rent, and it must be filed by a tenant within four years after the vacancy or within 90 days after the owner mails the requisite written notice (Form RR-1) of the initial legal regulated rent by certified mail to the tenant, whichever first occurs. If the tenant challenges this initial legal regulated rent and it is found to be excessive, the rent as adjusted by DHCR will become the Adjusted Initial Legal Regulated Rent. Once a FMRA is filed, no subsequent tenant may file such appeal. If the appeal is denied or not filed in a timely manner, then the negotiated initial legal regulated rent becomes the lawful rent, not subject to challenge. All future rent increases, whether for a renewal or vacancy lease, are subject to limitations provided under the Rent Stabilization Law. The tenant must allege in such appeal that the initial rent is in excess of the fair market rent, and facts which, to the best of his or her information and belief, support such allegation. In determining a FMRA, consideration will be given not only to the applicable guidelines promulgated for such purposes by the Rent Guidelines Board, but also rents prevailing for substantially similar ("comparable") accommodations located in the same general area as the subject building on the date the complaining tenant moved into the subject apartment. A "comparable" apartment may be either a rent stabilized or an unregulated unit. The number of rooms in the "comparable" apartment may not exceed the number of rooms in the subject apartment. The rent for a rent stabilized "comparable" apartment will be considered only if it is unchallenged (no challenge to its rent is pending before the DHCR). The fair market rent will generally be established at the greater of the Special Guidelines component promulgated by the Rent Guidelines Board and the highest registered rent for a comparable rent stabilized apartment in the subject building on the date the complainant moved in, plus lawful increases for individual apartment improvements. Rent InfoLine (718) 739-6400 Revised (1/14) Web Site: www.nyshcr.org Email address: [email protected] # 6 pg. 1of 3 73 The owner may also elect to submit for consideration the rent of either a "comparable" rent stabilized apartment located outside of the subject building or a "comparable" unregulated apartment located either within or outside of the subject building. If the owner elects to offer the rent of a "comparable" rent stabilized apartment located outside of the subject building, it must be properly registered with the DHCR. The rent for such apartment will be averaged with the highest registered rent for a "comparable" apartment in the subject building. The fair market rent will be established at the greater of the average of the comparable rents and the Special Guidelines component, plus lawful increases for individual apartment improvements. If the owner elects to offer the rent of a "comparable" unregulated apartment, the fair market rent will be established at the average of the rent for the unregulated "comparable" and the Special Guidelines component, plus lawful increases for individual apartment improvements. An order determining a FMRA and establishing the legal regulated rent at an amount lower than that being paid by the tenant will direct the current owner to refund the excess rent to the tenant in cash, check, or money order, and to the extent that the present owner is liable for all or any part of the refund, such current owner may credit such refund against future rents over a period not in excess of six months. If the refund exceeds the total rent due for six months, the tenant at his or her option may continue to abate his or her rent until the refund is fully credited, or request the current owner to re-fund any balance outstanding at the end of the six-month period. A current owner who is a party to a FMRA will be jointly liable with a prior owner for excess rent collected by a prior owner, and each owner will re-main severally liable for the excess rent collected by each. DHCR shall con sider a current owner to be a party to a FMRA if one of the following events occurs before the issuance of a Rent Administrator's order resolving the FMRA: 1) DHCR serves the current owner with a copy of the FMRA and affords the current owner an opportunity to file an answer; or 2) whether or not DHCR serves a copy of the FMRA on the current owner, the current owner files an answer to the FMRA; or 3) the current owner, after purchase of the building, fails to notify DHCR of the change of ownership as required by the Rent Stabilization Code, and DHCR serves the prior owner with a copy of the FMRA at the address given in the last filed registration and at the address specified by the tenant in the FMRA, if the address specified by the tenant is different from the address specified by the prior owner on the last filed registration statement. Judicial Sale Exception In the absence of collusion between the current owner and any prior owner, where no records sufficient to establish the fair market rent were provided at a ju-dicial sale, or such other sale effected in connection with, or to resolve, in whole or in part, a bankruptcy proceeding, mortgage foreclosure action or other judicial proceeding, an owner who purchases upon or subsequent to such sale shall not be liable for excess rent collected by any owner prior to such sale. An owner who did not purchase at such sale, but who purchased subsequent to such sale shall also not be liable for excess rent collected by any prior owner subsequent to such sale to the extent that such excess rent is the result of excess rent collected prior to such sale. If the refund exceeds the total rent due for six months, the tenant at his or her option may continue to abate his or her rent until the refund is fully credited, or request that the present owner refund any balance outstanding at the end of such six-month period. Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #6 pg. 2 of 3 74 A Receiver who is appointed by a court of competent jurisdiction to receive rent for the use or occupation of a housing accommodation shall not, in the absence of collusion or any relationship between such Receiver and any owner or other Receiver, be liable for excess rent collected by any owner or other Receiver, where records sufficient to establish the fair market rent have not been made available to such Receiver. For more information or assistance, call the DHCR Rent InfoLine, or visit your Borough or County Rent Office. Revised (1/14) Queens 92-31 Union Hall Street 6th Floor Jamaica, NY 11433 (718) 739-6400 Lower Manhattan 25 Beaver Street 5th Floor New York, NY 10004 Brooklyn 55 Hanson Place 7th Floor Brooklyn, NY 11217 Bronx 2400 Halsey Street Bronx, NY 10461 Upper Manhattan 163 W. 125th Street 5th Floor New York, NY 10027 Westchester County 75 South Broadway 2nd Floor White Plains, NY 10601 Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #6 Pg.3 of 3 75 FACT SHEET A PUBLICATION OF NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL OFFICE OF RENT ADMINISTRATION Andrew M. Cuomo, Governor #17 Harassment Harassment by an owner is a course of action intended to force a tenant out of his/her apartment or to cause a tenant to give up rights granted the tenant by the Rent Stabilization Law or Rent Control Law. No owner or anyone acting for the owner may interfere with a tenant's privacy, comfort, or quiet enjoyment of the tenant's apartment. Interference includes reducing services or engaging in baseless court proceedings. The Rent Code Amendments of 2014 (RCA 2014) expanded such course of conduct to include the filing of false documents with or making false statements to DHCR. Harassment is a serious violation of a tenant's rights. The New York State Division of Housing and Community Renewal (DHCR) established the Enforcement Unit specifically to handle harassment cases. The Unit is staffed with attorneys who specialize in this area of the rent laws. They respond to all complaints of harassment made within New York State related to rent regulated housing. Owners found guilty of tenant harassment by an administrative order after a hearing is held, are subject to a fine of $2,000 for a first offense and up to $10,000 for each subsequent offense. In addition, DHCR will permit no rent increases once there has been a finding of harassment until there is a finding that the harassment has ended. Upon receipt of a properly filled complaint form, RA-60H "Tenant's Statement of Harassment", the complaint is reviewed to determine an appropriate course of action. The review process may determine that the tenant actually needs to file a complaint of failure to renew lease or decrease in services, as opposed to a harassment complaint and will provide the tenant with the needed form. Those complaints that allege facts that would constitute harassment are assigned to an attorney. A copy of the complaint will be served on the owner and the Enforcement Unit attorney will schedule a conference for the tenant and owner. The conferences generally result in a written and signed agreement that details the corrective action to be taken by one or both parties. The agreement is then monitored by the DHCR attorney to ensure that any behavior being viewed as harassment has ceased. Where no satisfactory agreement is reached and/or the owner continues to engage in an unlawful course of conduct, the Enforcement Unit will commence a formal hearing before a DHCR Administrative Law Judge seeking fines against the owner. A formal hearing is held at a DHCR office and requires that the tenant and owner appear in person, to provide testimony. In many instances, this may require several days of attendance. Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #17 pg. 1 of 2 76 If you think you are a victim of harassment, you may obtain a "Tenant Statement of Complaint(s) - Harassment (DHCR Form RA-60H), from your Borough or County Rent Office, or write to: DHCR Enforcement Unit Gertz Plaza 92-31 Union Hall Street Jamaica, NY 11433 For more information or assistance, call the DHCR Rent InfoLine, or visit your Borough or County Rent Office. Revised (1/14) Queens 92-31 Union Hall Street 6th Floor Jamaica, NY 11433 (718) 739-6400 Lower Manhattan 25 Beaver Street 5th Floor New York, NY 10004 Brooklyn 55 Hanson Place 7th Floor Brooklyn, NY 11217 Bronx 2400 Halsey Street Bronx, NY 10461 Upper Manhattan 163 W. 125th Street 5th Floor New York, NY 10027 Westchester County 75 South Broadway 2nd Floor White Plains, NY 10601 Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #17 pg. 2 of 2 77 FACT SHEET A PUBLICATION OF NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL OFFICE OF RENT ADMINISTRATION Andrew M. Cuomo, Governor #20 Special Rights of Disabled Persons Introduction - Rights for Disabled Persons The law grants certain protections for disabled persons who occupy rent regulated housing with regard to protection from eviction and exemption from rent increases. These protections are described below. Eviction protections for disabled tenants 1. An owner cannot evict a disabled tenant or the spouse of a disabled tenant from rent stabilized apartments in NYC for the purpose of owner occupancy unless the owner provides an equivalent or superior apartment at the same or lower rent in an area near the tenant's present apartment. 2. An owner cannot evict a disabled tenant from rent stabilized apartments outside NYC and rent controlled apartments statewide for purposes of owner occupancy. 3. If a building is being converted to cooperative or condominium ownership under a legal Eviction Plan, rent stabilized tenants who are eligible disabled persons may refuse to purchase their apartments and remain in occupancy as fully protected rent stabilized tenants with lease renewal privileges. Rent controlled tenants are similarly protected. The tenant's disability must be certified as of the date of the New York State Attorney General accepts the Eviction Plan for filing. To take advantage of this benefit, an eligible disabled person in New York City must elect, on forms provided by the Attorney General, to become a "non-purchasing" tenant within 60 days of the date that the Final Offering Plan is presented to the tenants. Outside NYC, there is no formal election requirement. For the purposes of these protections, disabled persons are tenants and/or spouses of tenants who have an impairment resulting from anatomical, physiological or psychological conditions demonstrable by medically acceptable clinical and laboratory diagnostic techniques that are expected to be permanent, and prevent the tenant from engaging in any substantial, gainful employment. Rent Increase Protections for Disabled Tenants DRIE in New York City In New York City, a tenant may apply, if eligible, for a DISABILITY RENT INCREASE EXEMPTION (DRIE). Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #20 pg. 1 of 4 78 The applicant with a disability must be named on the lease for the rent-regulated or cooperative/condominium apartment (where the mortgage is or once was federally insured under Section 213 of the National Housing Act). For the purposes of qualifying for DRIE, a rent-regulated apartment includes apartments subject to rent stabilization, rent control, Mitchell-Lama regulations, and the New York City Department of Housing Preservation and Development's Division of Alternative Management Programs (DAMP). If a tenant qualifies for this program, such tenant is exempt from: 1. Future rent guidelines increases, Maximum Base Rent increases, fuel cost adjustments, increases based on the owner's economic hardship, or Major Capital Improvements. However, the tenant must pay any additional security deposit that would be required as a result of these types of increases. 2. Tenants receiving a Disability Rent Increase Exemption (DRIE) may choose a one-or-two-year lease renewal. 3. NYC disabled tenants may also carry this exemption from one apartment to another when moving, upon the proper application being made to the New York City Department of Finance, DRIE Unit. 4. Deregulation of the apartment based on High-Rent High-Income, pursuant to the Rent Code Amendments of 2014 (RCA 2014). Owners shall not serve these tenants with an Income Certification Form and DHCR will not process an Owner's Petition for Deregulation. 5. Rent reductions for DHCR approved electrical conversions to individual metering (direct or sub-metering), as per the RCA 2014. The cost of electricity remains included in the rent until the DRIE recipient vacates. The owner is however, permitted to install electric conversion equipment in the apartment when it is occupied by the DRIE recipient. Eligibility requires that such tenant is a recipient (or former recipient, as described below) of benefits from any of the following programs: a) b) c) Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) under the Federal Social Security Act; Disability Pension or Disability Compensation benefits as provided by the United States Department of Veteran Affairs; or Medical Assistance benefits pursuant to NY State Social Law, and a former recipient of SSDI or SSI benefits. The aggregate disposable income (for all members of the household residing in the housing accommodation whose head of the household is a person with a disability) for the applicable income tax year cannot exceed the maximum income eligible for SSI benefits under federal law. However, an increase in SSI benefits which take effect after the eligibility date of DRIE benefits is not included in the aggregate disposable income. Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #20 pg. 2 of 4 79 To apply for DRIE, the tenant of a NYC rent controlled or rent stabilized apartment must file an application with: NYC Department of Finance SCRIE/DRIE EXEMPTION 59 Maiden Lane, 19th Floor New York, NY 10038 Tenants may also contact New York City's Citizen Service Center by dialing 311. DRIE - Outside New York City As of February 1, 2012, the Office of Rent Administration (ORA) has been notified that in Westchester County,the municipalities of Dobbs Ferry, Greenburgh, Hastings on Hudson, New Rochelle, Yonkers and the City of Rye have adopted DRIE. ORA has not been notified of any municipalities in Nassau County that have adopted DRIE. Applications for DRIE exemptions are made to the Division of Housing and Community Renewal on the Tax Abatement Certificate and SCRIE/DRIE Application and Order (DHCR form RTP-13). If you live in Westchester County, call (914) 948-4434, to obtain an application form and to inquire about your municipality's income eligibility level. Owners receive certificates for real estate tax payment. A DRIE recipient outside of New York City is also entitled to the following exemptions: 1. Deregulation of the apartment based on High-Rent High-Income, pursuant to the Rent Code Amendments of 2014 (RCA 2014). Owners shall not serve these tenants with an Income Certification Form and DHCR will not process an Owner's Petition for Deregulation. 2. Rent reductions for DHCR approved electrical conversions to individual metering (direct or sub-metering), as per the RCA 2014. The cost of electricity remains included in the rent until the DRIE recipient vacates. The owner is however, permitted to install electric conversion equipment in the apartment when it is occupied by the DRIE recipient. DHCR Services The Central Office of the Office of Rent Administration at Gertz Plaza, 92-31 Union Hall Street, Jamaica, NY and the Borough and County Rent Offices are totally accessible buildings, including the bathroom facilities. Staff members at all Rent Offices are available to assist visually-impaired persons with forms and other printed materials. With advance notification, staff members can also provide assistance for tenants and owners with hearing impairments, or serious mobility problems. If a hearing-impaired person is a party or a witness at a hearing before the Division of Housing and Community Renewal (DHCR), DHCR will provide a signer to interpret the proceedings. Sources: Real Property Tax Law Section 467-b New York City Rent Stabilization Law Section 26-509 Rent InfoLine (718) 739-6400 Revised (1/14) Web Site: www.nyshcr.org Email address: [email protected] #20 pg. 3 of 4 80 For more information or assistance, call the DHCR Rent Infoline, or visit your Borough or County Rent Office. Queens 92-31 Union Hall Street 6th Floor Jamaica, NY 11433 (718) 739-6400 Lower Manhattan 25 Beaver Street 5th Floor New York, NY 10004 Westchester County 75 South Broadway 3rd Floor White Plains, NY 10601 South side of 110th St. and below Brooklyn Bronx Upper Manhattan 55 Hanson Place 7th Floor Brooklyn, NY 11217 2400 Halsey Street Bronx, NY 10461 163 W. 125th Street 5th Floor New York, New York 10027 North side of 110th St. and above Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #20 pg. 4 of 4 81 FACT SHEET Andrew M. Cuomo, Governor A PUBLICATION OF NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL OFFICE OF RENT ADMINISTRATION # 21 Special Rights of Senior Citizens The law grants certain exemptions from rent increases to tenants who are senior citizens. If a tenant or tenant’s spouse is 62 years of age or older and is living in a rent regulated apartment, and the combined household income is at or below the income eligibility level and they are paying at least 1/3 of their disposable income toward their rent, the senior citizen tenant may qualify for the SENIOR CITIZEN RENT INCREASE EXEMPTION (SCRIE). If a tenant qualifies for this program, the tenant is exempt from future rent guidelines increases, Maximum Base Rent increases, fuel cost adjustments, and increases based on the owner’s economic hardship and Major Capital Improvements. However, the tenant must pay the additional security deposit. SCRIE In New York City In NYC, the Department of Finance (DOF) administers the SCRIE program. To apply for SCRIE, the tenant of a NYC rent controlled or rent stabilized apartment must file an application with: NYC Department of Finance SCRIE/DRIE Exemption 59 Maiden Lane, 19th Floor New York, New York 10038 Web Site: www.nyc.gov/dof Tenants may also contact New York City's Citizen Service Center by dialing 311. In NYC, the income eligibility level currently in effect is at $29,000. Tenants receiving a NYC Senior Citizen Rent Increase Exemption (SCRIE) may choose a one-or two-year lease renewal. NYC senior citizen tenants may also carry this exemption from one apartment to another upon moving, upon the proper application being made to DOF. SCRIE Outside New York City In the counties outside of NYC covered by the Emergency Tenant Protection Act, the New York State Division of Housing and Community Renewal (DHCR) administers the SCRIE program. To apply for SCRIE, the tenant of the rent regulated apartment must file an application with: DHCR District Rent Office 75 South Broadaway White Plains, New York 10601 (914) 948-4434 Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #21 pg. 1 of 3 82 Outside NYC, SCRIE is a local option and communities have different income eligibility limits and exemption allowances. Seniors applying for a SCRIE are required to choose a two-year renewal lease. Applications for SCRIE exemptions are made to the Division of Housing and Community Renewal on the Tax Abatement Certificate and Senior Citizen Rent Increase Exemption Application and Order (DHCR form RTP-13). Owners receive certificates for real estate tax payment. If you live in Nassau or Westchester County, call (914) 948-4434, to obtain an application and to inquire about your municipality's income eligibility level. Municipalities outside of New York City with a SCRIE Program are listed below. Nassau County Glen Cove Great Neck Plaza Town of North Hempstead Village of Hempstead Village of Thomaston Westchester County Village of Dobbs Ferry Town of Greenburgh City of New Rochelle Village of Hastings on Hudson Village of Irvington Village of Pleasantville Village of Larchmont Village of Tarrytown Town of Mamaroneck Village of Sleepy Hollow Village of Mamaroneck City of White Plains City of Mount Vernon City of Yonkers City of Rye Other rights for senior citizens include: 1. If a building is being converted to cooperative or condominium ownership under an Eviction Plan, an "eligible senior citizen" may refuse to purchase the apartment and remain in occupancy as a fully protected rent stabilized tenant with the right to a lease renewal. Rent controlled senior citizen tenants are similarly protected against eviction. “Eligible senior citizens” are tenants who are primary residents in the apartment and are at least 62 years of age or have a spouse 62 years of age or older on the date the New York State Attorney General accepts the Eviction Plan for filing. To take advantage of this benefit, an eligible senior citizen in NYC must elect, on forms provided by the Attorney General, to become a "non-purchasing” tenant within 60 days of the date that the Final Offering Plan is presented to the tenants. Outside NYC, there is no formal election requirement. 2. An owner cannot evict a tenant from rent stabilized apartments in NYC for the purpose of owner occupancy, when either the tenant or the tenant’s spouse is 62 years of age or older unless the owner provides an equivalent or superior apartment at the same or lower rent in an area near the tenant’s apartment. 3. For rent stabilized apartments outside NYC and rent controlled apartments statewide, an owner may not evict a tenant for the purpose of owner occupancy where any member of the tenant's household is 62 years of age or older. Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #21 pg. 2 of 3 83 4. A NYC senior citizen with a currently valid SCRIE order is not required to pay any portion of a fuel cost increase that would raise the total rent to over 1/3 of the tenant's household disposable income. A senior citizen who applies for and is granted a SCRIE order within 90 days after receipt of the owner’s fuel cost adjustment report, are retroactively exempt from paying any portion of the most recent fuel cost adjustment that would raise the total rent to over 1/3 of the tenant's total household disposable income. 5. A tenant 62 years of age or older may terminate his/her lease, without penalty, in order to move into a health care facility or senior citizen housing complex. If the senior citizen terminates the lease in order to move into a health care facility or senior citizen housing complex, the owner must receive at least 30 days written notice, accompanied by documentation of admission or pending admission to the health care facility or senior citizen housing complex. 6. All SCRIE recipients in any municipality are exempt from: A. Rent reductions for DHCR approved electrical conversions to individual metering (direct or sub-metering), as per the RCA 2014. The cost of electricity remains included in the rent until the SCRIE recipient vacates. The owner is however, permitted to install electric conversion equipment in the apartment when it is occupied by the SCRIE recipient. B. Deregulation of the apartment based on High-Rent High-Income, pursuant to the Rent Code Amendments of 2014 (RCA 2014). Owners shall not serve these tenants with an Income Certification Form and DHCR will not process an Owner's Petition for Deregulation. For more information or assistance, call the DHCRRent InfoLine, or call or visit your Borough Office or County Rent Office. Queens 92-31 Union Hall Street 6th Floor Jamaica, NY 11433 (718) 739-6400 Lower Manhattan 25 Beaver Street 5th Floor New York, NY 10004 Brooklyn 55 Hanson Place 7th Floor Brooklyn, NY 11217 Bronx 2400 Halsey Street Bronx, NY 10461 Upper Manhattan 163 W. 125th Street 5th Floor New York, NY 10027 Westchester 75 South Broadway 3rd Floor White Plains, NY 10601 South side of 110th St. and below North side of 110th St. and above Rent InfoLine (718) 739-6400 Revised (1/14) Web Site: www.nyshcr.org Email address: [email protected] #21 pg. 3 of 3 84 FACT SHEET A PUBLICATION OF NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL OFFICE OF RENT ADMINISTRATION Andrew M. Cuomo, Governor # 36 High-Rent Vacancy Deregulation and High-Rent High-Income Deregulation The Rent Code Amendments of 2014 (RCA 2014), require an owner to provide the first tenant of an apartment deregulated pursuant to High-Rent Vacancy with a notice (HRVD-N) created by DHCR, that details the last legal regulated rent, the reason for deregulation and calculations of the rent qualifying for deregulation. The notice must also contain a statement that the last legal regulated rent or maximum rent may be verified by contacting DHCR. The notice must be sent by certified mail within 30 days after the tenancy commences or after the signing of the lease by both parties, whichever occurs first, or shall be delivered to the tenant at the signing of the lease. In addition, the owner is required to file a registration statment for the subject apartment with DHCR. The registration must indicate that the apartment is deregulated and the last legal regulated rent. It must be served on the first tenant of an apartment deregulated pursuant to High-Rent Vacancy within 30 days after the tenancy commences or the filing of such registration, whichever occurs later. Deregulation of a high-rent apartment may occur as follows: A. High-Rent Vacancy Deregulation If an apartment is vacated with a legal regulated rent (Rent Stabilization) or maximum rent (Rent Control) of $2,500 or more per month, such apartment qualifies for permanent deregulation, and therefore for removal from all rent regulation. Prior to June 24, 2011, the threshold was $2,000. Specific Situations Relating to High-Rent Vacancy Deregulation With regard to rent stabilized apartments, where an owner installs new equipment or makes improvements to the individual apartment qualifying for an individual apartment improvement rent increase, while such apartment is vacant, and the legal regulated rent is raised on the basis of such rent increase, or as a result of any rent increase permitted upon vacancy or succession, or by a combination of rent increases, as applicable, to a level of $2,500 or more per month, whether or not the next tenant in occupancy actually is charged or pays $2,500 or more per month, such apartment will qualify for deregulation. An apartment also qualifies for deregulation if, while it is vacant, the owner substantially alters its outer dimensions, creating a “new” apartment and the rent paid by the first tenant after the alteration is $2,500 or more per month. An apartment will also qualify for deregulation upon vacancy by the tenant, where a preferential rent of less than $2,500 per month is charged and paid and a higher legal regulated rent hasbeen established. Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #36 pg. 1 of 4 85 Exceptions to Vacancy Deregulation Apartments in buildings that are receiving certain real estate tax benefits (e.g. "421-a" or "J-51") are not eligible for High-Rent Vacancy Deregulation at least for as long as such benefits continue. High-rent vacancy deregulation does not apply to apartments for which DHCR determines that the owner, or any person acting on such owner’s behalf, with intent to cause the tenant to vacate, engaged in any course of conduct (including, but not limited to, interruption or discontinuance of required services) which interfered with or disturbed or was intended to interfere with or disturb the comfort, repose, peace or quiet of the tenant in his or her use or occupancy of the apartment. Where the tenant of record dies or otherwise permanently vacates the apartment, and the tenant’s family member, whether “traditional” or “nontraditional”, is entitled to be named on a renewal lease [for rent control, has the right to continue in occupancy as a statutory tenant] through “succession,” the housing accommodation will not be considered as having become vacant for the purposes of high-rent vacancy deregulation. B. High-Rent High-Income Deregulation Upon the issuance of an order by the DHCR, apartments which have a legal regulated or maximum rent of $2,500 or more per month and which are occupied by persons whose total annual federal adjusted gross incomes, as reported on their New York State Income Tax returns, have been in excess of $200,000 for each of the two preceding calendar years, may be permanently deregulated under the procedures set forth below. The standards for determining whether the $2,500 rent threshold has been met are essentially the same as those for high-rent vacancy deregulation stated above. To be eligible for High-Rent High-Income Deregulation, the legal regulated or maximum rent must have continuously been $2,500 or more per month from the time of the owner’s service of the income certification form upon the tenant (see discussion below) to the issuance of an order deregulating the subject apartment. Prior to July 1, 2011, the thresholds were $2,000 in rent and $175,000 in income. Procedures for High-Rent High-Income Deregulation “Annual income” means the federal adjusted gross income as reported on the New York State Income Tax return, and “total annual income” as the sum of the annual incomes of all persons who occupy the apartment as their primary residence on other than a temporary basis. The annual incomes of bona fide employees of such occupants, as well as the annual incomes of bona fide subtenants are not included. However, even where an apartment is sublet, the annual income of the prime tenant will be considered. Where the tenant on the lease is a corporation, the annual income of the corporation is not considered in determining whether the threshold total annual income level has been met. On or before May 1 of each year, the owner of any rent regulated apartment having a legal regulated or maximum rent of $2,500 or more per month may serve the tenant(s) residing therein with an Income Certification Form (ICF) as prescribed by the DHCR, on which such tenant(s) must identify the individuals referred to in the preceding paragraph (and provide such other information as the form requires, including information relating to occupants who may have recently vacated). The tenant(s) must certify whether the household’s total annual income was in excess of $200,000 in each of the two preceding calender years. The ICF does not require disclosure of any income information other than whether the threshold for each of the two preceding years has been met. The ICF must also inform the tenant(s) of the protections against harassment, that disclosure of income information is limited to the manner required by the ICF, and that only the tenants of apartments having a $2,500 rent level as described above may be served with and asked to complete an ICF. Where the monthly legal regulated or maximum rent is less than $2,500, an owner is not authorized to serve an ICF. In all cases, the operative date for determining the nature of any person’s status or occupancy is the date on which the ICF is served. Revised (1/14) Rent InfoLine (718) 739-6400 Web Site: www.nyshcr.org Email address: [email protected] #36 pg. 2 of 4 86 The owner must serve the ICF by at least one of the following methods: personal delivery, certified mail or regular first class mail, and must also obtain and retain proofs of service. With regard to personal service, such proof would be a copy of the ICF signed (not initialed) and dated by the tenant acknowledging receipt; with regard to certified mail, it would be a U.S. Postal Service receipt stamped by the U.S. Postal Service; and with regard to regular first class mail, it would be a U.S. Postal Service Certificate of Mailing stamped by the U.S. Postal Service. The tenant(s) must return the ICF to the owner within 30 days after service. If the tenant(s) returns the ICF and the “total annual income,” as certified, exceeded the threshold amount for each of the two preceding years, the owner may, no later than June 30, file an Owner’s Petition for Deregulation (OPD) with DHCR, and an order will be issued providing that the apartment will no longer be subject to rent regulation upon expiration of the existing lease (rent stabilized apartment), or as of March 1 in the year next succeeding the filing of the OPD (rent controlled apartment). However, in the event the tenant(s) fails to return the ICF within 30 days of service, or the owner disputes it, such owner may, no later than June 30, file an OPD with DHCR requesting DHCR to verify the “total annual income” of the occupants of the subject apartment with the New York State Department of Taxation and Finance (DTF). DHCR will notify the subject tenant(s) named on the lease that they must provide any information DHCR and DTF require to verify whether the total annual income exceeded the applicable threshold amount for each of the two preceding calendar years. The notice will also state that a failure to do so within 60 days may result in an order being issued decontrolling the apartment. In this situation, the tenant(s) may be required to submit a photocopy of either the preprinted mailing labels used on the New York State State Income Tax returns for the applicable years, or the first page of the New York State Income Tax returns for the applicable years, for each tenant or occupant whose income is to be included in “total annual income,” or in the event neither is available, a written explanation indicating why Income Tax returns were not filed for the applicable years. Tenant(s) should delete all social security numbers and income figures from all copies of preprinted mailing labels or tax returns submitted. The name and address of any tenant or occupant who didn’t file a New York State State Income Tax return for any applicable year must be supplied on a form prescribed by the DHCR, as they would have appeared had that tenant or occupant filed the return. If DTF notifies DHCR that it has determined that the total annual income was in excess of the threshold amount for each of the two preceding years, DHCR will notify the owner and tenants of the results of such determination, after which all parties will have 30 days to comment. Where appropriate, after the expiration of the comment period, DHCR will issue an order providing that the apartment will no longer be subject to rent regulation upon expiration of the existing lease (for rent stabilized apartments), or as of March 1 in the year next succeeding the filing of the OPD (for rent controlled apartments). Where the DTF determines that the income threshold has not been met, DHCR will deny the OPD. Subsequent Occupancy A high rent apartment, which becomes deregulated on the basis of high income, remains deregulated, notwithstanding subsequent occupancy by a household whose total annual income would not have qualified for high income deregulation, or if the legal regulated monthly rent falls below $2,500. Revised (1/14) Rent InfoLine (718)739-6400 Web Site:www.nyshcr.org Email address: [email protected] #36 pg. 3 of 4 87 Exceptions to High-Rent High-Income Deregulation Apartments in buildings that are receiving certain real estate tax benefits (e.g. "421-a" or "J-51") are not eligible for High-Rent High-Income Deregulation at least for as long as such benefits continue. The RCA 2014, prohibit this type of deregulation for apartments occupied by tenants who are the recipient of Senior Citizen Rent Increase Exemption (SCRIE) or a Disability Rent Increase Exemption (DRIE). Owners shall not serve these tenants with an Income Certificate Form and DHCR will not process an Owner's Petition for Deregulation. Lease Renewal Where the “window period” during which an owner must offer a renewal lease has not expired, an owner who has filed an OPD with DHCR which is still pending, is permitted to attach a rider to the offered renewal lease, on a form prescribed or a facsimile of such form approved by the DHCR, containing a clause notifying the tenant that the offered renewal lease, if accepted, will nevertheless no longer be in effect after 60 days from the issuance by the DHCR of an order of deregulation. The rider may also state that in the event that a petition for administrative review (PAR) is filed against such order of deregulation, the renewal lease will terminate after 60 days from the issuance by the DHCR of an order dismissing or denying the PAR. Privacy The only information required to be exchanged and subject to consideration in the process of income verification among the owner, tenant, DHCR and the DTF is whether the income threshold for each of the two preceding years has been met. Specific income figures will not be disclosed or exchanged. The provisions of the State Freedom of Information Law (“FOIL”) which might otherwise allow certain information to be disclosed, do not apply to such income information obtained by DHCR. For more information or assistance, call the DHCR Rent InfoLine, or visit your Borough or County Rent Office. Queens 92-31 Union Hall Street 6th Floor Jamaica, NY 11433 (718) 739-6400 Lower Manhattan 25 Beaver Street 5th Floor New York, NY 10004 Brooklyn 55 Hanson Place 7th Floor Brooklyn, NY 11217 Bronx 2400 Halsey Street Bronx, NY 10461 Upper Manhattan 163 W. 125th Street 5th Floor New York, NY 10027 Westchester County 75 South Broadway White Plains, NY 10601 Rent InfoLine (718)739-6400 Revised (1/14) Web Site: www.nyshcr.org Email address: [email protected] #36 pg. 4 of 4 88 89 90 91 FACT SHEET Andrew M. Cuomo, Governor A PUBLICATION OF NEW YORK STATE DIVISION OF HOUSING AND COMMUNITY RENEWAL OFFICE OF RENT ADMINISTRATION #40 Preferential Rents A preferential rent is a rent which an owner agrees to charge that is lower than the legal regulated rent that the owner could lawfully collect. Owners can decide to terminate the preferential rent and charge the higher legal regulated rent upon renewal of the lease or when that tenant permanently vacates the apartment (see Example #1). However, the rent laws impose a condition on an owner's right to charge the claimed legal regulated rent. The legal regulated rent must have been written in the vacancy or renewal lease in which the preferential rent was first charged. In addition, DHCR recommends that the legal rent be indicated in all subsequent renewal leases. Registration with DHCR of the legal regulated rent by itself will not establish the legal regulated rent for future usage (see Example #2). In addition, the terms of the lease itself, may affect the owner's right to terminate a preferential rent. If the lease agreement contains a clause that the preferential rent shall continue for the term of the tenancy, not just the specific lease term, then the preferential rent cannot be terminated for that tenancy (see Example #3). The preferential rent continues to be the basis for future rent increases. However, if the lease is silent and did not contain a clause that clarified whether the preferential rent was for the "term of the lease" or "the entire term of the tenancy", then the owner may terminate the preferential rent at the time of the lease renewal. (See Example #4) Ordinarily, the rental history preceding the 4 year period to the filing of an overcharge complaint will not be examined. However, the Rent Code Amendments of 2014 do provide that when an owner claims that the rent being charged is “preferential”, DHCR will examine the lease and rent history immediately preceding such preferential rent, even if it is before 4 years, to assure that the higher “legal” rent is correctly calculated and lawful. Examples Example #1 Mr. Jones signed a one year lease, effective October 1, 2006. The lease cited a legal regulated rent of $1,200 and a preferential rent of $1,000. 1. Revised (1/14) The lease contained a clause that stated "the preferential rent shall be offered only for the term of this lease". Rent Infoline (718) 739-6400 Web Site: www.nyshcr.org E-mail address: [email protected] #40 pg. 1 of 4 92 2. 3. On October 1, 2007, when Mr. Jones' one year lease renewal begins, the legal regulated rent increases by 3% to $1,236 and the preferential rent increases by 3% to $1,030. Mr. Jones will pay the $1,236 rent. In this example, the owner can terminate the collection of the preferential rent at the time of the lease renewal due to the lease clause cited above. Example #2 Mr. Jones signed a one year lease, effective October 1, 2006. The lease cited a legal regulated rent of $1,000. 1. 2. 3. The lease did not contain any clauses stating that this was a preferential rent and the lease did not cite the legal regulated rent of $1,200. On April 1, 2007, the owner filed a Registration form with DHCR that listed a legal regulated rent of $1,200 and a preferential rent of $1,000. On October 1, 2007, when Mr. Jones' one year lease renewal begins, the preferential rent increases by 3% to $1,030. Mr. Jones will pay the $1,030 rent. In this example, the owner did not preserve the legal regulated rent of $1,200 for future use as it was not written in the lease. The registration the owner filed did not establish the legal regulated rent for future use. Example #3 Mr. Jones signed a one year lease, effective October 1, 2006. The lease cited a legal regulated rent of $1,200 and a preferential rent of $1,000. 1. 2. 3. The lease contained a clause that stated "the preferential rent shall be offered for the entire term of the tenancy". On October 1, 2007, when Mr. Jones' one year lease renewal begins, the legal regulated rent increases by 3% to $1,236 and the preferential rent increases by 3% to $1,030. Mr. Jones will pay the $1,030 rent. In this example, the owner must continue to base lease renewal rent increases for Mr. Jones on the preferential rent, due to the lease clause cited above. Example #4 The owner, ABC Corporation offers Ms. Santiago a lease. Ms. Santiago signed a one year lease, effective October 1, 2006. The lease cited a legal regulated rent of $1,500 and a preferential rent of $1,000. 1. 2. 3. Revised (1/14) The lease did not contain any clause that clarified whether the preferential rent was for the "term of the lease" or "the entire term of the tenancy". It was silent on this issue. On October 1, 2007, when Ms. Santiago's one year lease renewal begins, the legal regulated rent increases by 3% to $1,545 and the preferential rent increases by 3% to $1,030. ABC Corporation can choose to require that Ms. Santiago pay the $1,545 rent. In this example, the owner can terminate the collection of the preferential rent at the time of the lease renewal as the lease did not contain a clause stating that the preferential rent was for "the entire term of the tenancy". Rent Infoline (718) 739-6400 Web Site: www.nyshcr.org E-mail address: [email protected] #40 pg. 2 of 4 93 Preferential Rent and Deregulation When a tenant who has been paying a preferential rent vacates and a new tenant moves into the apartment, the new tenant will not be under rent stabilization if the legal regulated rent for the prior tenant plus the rent increases that are allowed for a new tenant equals at least $2,500 per month. Concessions There are two types of rent concessions. One is a concession for specific months, as for example, where the lease provides that the tenant will not have to pay rent for one or more specified months during the lease term. This type of concession is not considered a preferential rent. The other type is a prorated concession, where the dollar value of the rent free month(s) is prorated over the entire term of the lease and not tied to a specific month or months. A prorated concession is really the same as a preferential rent and will be treated in the same manner Other Considerations Where the tenant is charged a preferential rent, the following will apply. 1. The sublet allowance that the owner can charge (and the tenant can pass on to the subtenant) is based on the legal rent. The additional 10% increase that the tenant can charge the subtenant for the use of furniture is based on the preferential rent. 2. The proportionate share of the rent that the tenant can charge a roommate is based on the preferential rent. 3. The amount of a security deposit that the owner can collect from a tenent is based on the legal rent. 4. The limitation on collectability of Major Capital Improvement rent increases (6% in NYC; 15% outside of NYC) is based on the legal rent. 5. Upon issuance by DHCR of an order reducing rent for decreased services, if the tenant’s current and prior leases contain a legal rent and also provide for a preferential rent, the rent is reduced to the prior lease’s preferential rent. If the tenant’s current lease only contains a legal rent, even if the prior lease provided for a preferential rent, the rent is reduced to the prior lease’s legal rent. Sources: Chapter 82 of the Laws of 2003 New York City Rent Stabilization Code, Section 2521.2 Tenant Protection Regulations, Section 2501.2 Revised (1/14) Rent Infoline (718) 739-6400 Web Site: www.nyshcr.org E-mail address: [email protected] #40 pg. 3 of 4 94 For more information or assistance, call the DHCR Rent Infoline, or visit your Borough or County Rent Office. Queens 92-31 Union Hall Street 6th Floor Jamaica, NY 11433 (718) 739-6400 Lower Manhattan 25 Beaver Street 5th Floor New York, NY 10004 Upper Manhattan 163 W. 125th Street 5th Floor New York, NY 10027 Westchester County 75 South Broadway White Plains, NY 10601 Bronx 2400 Halsey Street Bronx, NY 10461 Brooklyn 55 Hanson Place 7th Floor Brooklyn, NY 11217 North side of 110th St. and above Revised (1/14) Rent Infoline (718) 739-6400 Web Site: www.nyshcr.org E-mail address: [email protected] #40 pg. 4 of 4 DRAFT 95 DRAFT DRAFT State of New York Division of Housing and Community Renewal Office of Rent Administration Gertz Plaza 92-31 Union Hall Street Jamaica, New York 11433 Web Site: www.nyshcr.org Email address: [email protected] O Revision Date: January 2014 Rent Stabilization LEASE Rider For Apartment House Tenants Residing In New York City FAILURE BY AN OWNER TO ATTACH A COPY OF THIS RIDER TO THE TENANT'S LEASE WITHOUT CAUSE MAY RESULT IN A FINE OR OTHER SANCTIONS NOTICE R This Rider, with this Notice, must be attached to all vacancy and renewal leases for rent stabilized apartments. This Rider was prepared pursuant to Section 26-511(d) of the New York City Rent Stabilization Law. This Rider must be in a print size larger than the print size of the lease to which the Rider is attached. The following language must appear in bold print upon the face of each lease : “ATTACHED RIDER SETS FORTH RIGHTS AND OBLIGATIONS OF TENANTS AND LANDLORDS UNDER THE RENT STABILIZATION LAW.” A Section 1 (If this is a renewal lease, do not complete section 1, go to section 2) If Box A is checked, the owner MUST show how the rental amount provided for in such vacancy lease has been computed above the previous legal regulated rent by completing the following chart. The owner is not entitled to a rent which is more than the legal regulated rent. For additional information see DHCR Fact Sheet #5. In addition, the owner MUST complete the Notice To Tenant Disclosure of Bedbug Infestation History, as required by the NYC Housing Maintenance Code Section 27-2018.1, which is required to be served on the tenant with this Lease Rider. ANY INCREASE ABOVE THE PREVIOUS LEGAL REGULATED RENT MUST BE IN ACCORDANCE WITH ADJUSTMENTS PERMITTED BY THE RENT GUIDELINES BOARD AND THE RENT STABILIZATION CODE. VACANCY LEASE RENT CALCULATION: Status of Apartment and Last Tenant (Owner to Check Appropriate Box - (A), (B), (C), or (D).) D (A) This apartment was rent stabilized when the last tenant moved out. R Address: _________________________________ Apt.# ___________ _________________________________ 1. Previous Legal Regulated Rent $____________ 2. Statutory Vacancy Increase A (i) Increase based on (1 year) (2 year) lease (circle one) (_____%) (ii) Increase based on length of time (8 years or more) since last vacancy allowance or if no vacancy alowance has been taken, the number of years that the apartment has been subject to stabilization. (0.6% x number of years) $____________ $____________ (iii) Increase based on low rental amount. If applicable complete (a) or (b), but not both. F (a) Previous legal regulated rent was less than $300 additional $100 increase, enter 100 $____________ (b) If the previous legal regulated rent was $300 or more but less than $500 (1) _______ $100 the sum of (i) and (ii) (2) _______ (1) minus (2). If less than zero, enter zero (3) _______ T Amount from line(3) 3. Vacancy Allowance, if permitted by NYC Rent Guidelines Board 4. Guidelines Supplementary Adjustment, if permitted by NYC Rent Guidelines Board $____________ (_____%) $____________ $____________ Page 1 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT 5. DRAFT 96 DRAFT Individual Apartment Improvements (IAI) Tenant Request for Documentation Check the box if you want to request at this time, from the owner, copies of documentation (e.g., bills, invoices, cancelled checks, etc.) that clarify and support the individual apartment improvement(s) cost detailed in this rider. If you do not request it now, you have the lawful right to request it within 60days of the execution of the lease, by certified mail and the owner must then provide the documentation within 30 days either by certified mail or by personal delivery with a signed acknowledgement receipt by tenant. (Refer to Rider Section 3, Other Rent Increases, Individual Apartment Improvements.) O Items A. Bathroom Renovation (check all applicable items) R Complete Renovation (if this box is checked you are not required to check Individual Items) OR Individual Items (Check all applicable items) Sink Shower Body Toilet Tub Plumbing Cabinets Vanity Floors and/or Wall Tiles Other (describe) ______________ Total Costs for Parts and Labor ____________________ A Total Rent Increase (1/40th or 1/60th) ____________________ (A) D B. Kitchen Renovation (check all applicable items) Complete Renovation (if this box is checked you are not required to check Individual Items) OR Individual Items (Check all applicable items) Sink Stove Refrigerator Dishwasher Cabinets Plumbing Floor and/or Wall Tiles Counter Tops Other (describe) ______________ Total Costs for Parts and Labor ____________________ R A C. . Other (check all applicable items) Doors Windows Radiators Light Fixtures Electrical Work Sheetrock Other (describe) _____________ Total Rent Increase (1/40th or 1/60th) ____________________ (B) F Total Costs for Parts and Labor T ____________________ Total Rent Increase (1/40th or 1/60th) ____________________ (C) $____________________ Total IAI Rent Increase Sum of (A)(B) and (C) Page 2 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT 97 DRAFT DRAFT 6. New Legal Regulated Rent $_____________________ *6A. Preferential Rent (if charged) $ ____________________ $__________________ (enter 6 or 6A) 7. Air Conditioner Surcharges: $ __________________ 8. Appliance Surcharges (Tenant installed washer, dryer, dishwasher) $ __________________ 9. Ancillary Services charged (e.g., garage) $ __________________ O 10. Other (specify _________________________________) $___________________ 11. New Tenant's Total Payment $ __________________ *If a “preferential rent” is being charged, please read Provision # 21 of this Rider. R (B) This apartment was Rent Controlled at the time the last tenant moved out. This tenant is the first rent stabilized tenant and the rent agreed to and stated in the lease to which this Rider is attached is $________. The owner is entitled to charge a market rent to the first rent stabilized tenant. The first rent charged to the first rent stabilized tenant becomes the initial legal regulated rent for the apartment under the rent stabilization system. However, if the tenant has reason to believe that this rent exceeds a “fair market rent”, the tenant may file a “Fair Market Rent Appeal” with DHCR. The owner is required to give the tenant notice, on DHCR Form RR-1, of the right to file such an appeal. The notice must be served by certified mail. A tenant only has 90 days, after such notice was mailed to the tenant by the owner by certified mail, to file an appeal. Otherwise, the rent set forth on the registration form becomes the initial legal regulated rent. A (C) The rent for this apartment is an Initial or Restructured Rent pursuant to a Government Program. (Specify Program__________________________________________) $_________. -or(D) Other_____________________________________________ $_________. (Specify - for example, a market or “first” rent after renovation to an individual apartment where the outer dimensions of the apartment have been substantially altered.) D Section 2 - This section needs to be completed for vacancy and renewal leases Lease Rider for the housing accomodation: _______________________________________________ R _______________________________________________ (Print Housing Accommodation’s Address and Apartment Number) Lease Start Date: _____________________________ Lease End Date: _____________________________ Lease Dated: ________________________________ ___________________________________________________________ A The tenant named in the lease hereby acknowledges the contemporaneous receipt of the above lease rider for the housing accommodation stated above. __________________________________________ Print Name of Tenant(s) F __________________________________________ Signature(s) and Date _______________________________________________________________________ Subject to penalties provided by law the owner of the housing accommodation hereby certifies that the above rider is hereby contemporaneously provided to the tenant with the signing of the lease and the information provided by the owner herein is true and accurate based on its records. T __________________________________________ Print Name of Owner or Owner’s Agent __________________________________________ Signature and Date Page 3 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT DRAFT 98 DRAFT Section 3 - PROVISIONS INTRODUCTION: This Rider is issued by the New York State Division of Housing and Community Renewal (“DHCR”), pursuant to the Rent Stabilization Law (“RSL”), and Rent Stabilization Code (“Code”). It generally informs tenants and owners about their basic rights and responsibilities under the RSL. O This Rider does not contain every rule applicable to rent stabilized apartments. It is only informational and its provisions are not part of and do not modify the lease. However, it must be attached as an addendum to the lease. It does not otherwise replace or modify more exact or complete sections of the RSL, the Code, any order of DHCR, or any order of the New York City Rent Guidelines Board that govern this tenancy. The Appendix lists organizations which can provide assistance to tenants and owners who have inquiries, complaints or requests relating to subjects covered in this Rider. R Tenants should keep a copy of this Rider and of any lease they sign. 1. GUIDELINES INCREASES FOR RENEWAL LEASES: The owner is entitled to increase the rent when a tenant renews a lease ( a “renewal lease”). Each year, effective October 1, the New York City Rent Guidelines Board sets the percentage of maximum permissible increase over the immediately preceding September 30th rent for leases which will begin during the year for which the guidelines order is in effect. The date a lease starts determines which guidelines order applies. A Guidelines orders provide increases for Renewal Leases. The renewing tenant has the choice of the length of the lease. Different percentages are set for rent increases for leases of 1 or 2 years. The guidelines order may incorporate additional provisions, such as a supplementary low-rent adjustment. For additional information see DHCR Fact Sheet #26. 2. VACANCY INCREASES FOR VACANCY LEASES D The owner is entitled to increase the previous legal regulated rent when a new tenant enters into a lease (“vacancy lease”). The legal regulated rent immediately preceding the vacancy may be increased by statutory vacancy increases as follows: If the vacancy lease is for a term of 2 years, 20% of the previous legal regulated rent; or if the vacancy lease is for a term of 1 year, the increase shall be 20% of the previous legal regulated rent less an amount equal to the difference between: R a) The 2 year renewal lease guideline promulgated by the New York City Rent Guidelines Board (“RGB”) applied to the prior legal regulated rent and b) The 1 year renewal lease guideline promulgated by the RGB applied to the prior legal regulated rent. Additional increases are available to owners where the legal regulated rent was last increased by a vacancy allowance eight or more years prior to the entering into of the subject vacancy lease or if no vacancy allowance has been taken, the number of years that the apartment has been subject to stabilization. Generally, this increase equals 0.6%, multiplied by the prior legal regulated rent, multiplied by the number of years since the last vacancy increase. A If the prior legal regulated rent was less than $300, the total vacancy increase shall be as calculated above, plus an additional $100. If the prior legal regulated was at least $300, and no more than $500, in no event shall the total vacancy increase be less than $100. A RGB order may authorize an additional vacancy “allowance,” which is separate from the statutory vacancy increase which an owner may charge. The tenant has the choice of whether the vacancy lease will be for a term of 1 or 2 years. For additional information see DHCR Fact Sheets #5 and 26. F Pursuant to the Rent Act of 2011, effective June 24, 2011, owners can charge and collect no more than one (1) vacancy lease rent increase in a calendar year (January 1st through December 31st). 3. SECURITY DEPOSITS An owner may collect a security deposit no greater than one month’s rent. However, if the present tenant moved into the apartment prior to the date the apartment first became rent stabilized, and the owner collected more than one month’s rent as security, the owner may continue to retain a security deposit of up to two month’s rent for that tenant only. When the rent is increased, the owner may charge an additional amount to bring the security deposit up to the full amount of the increased rent to which the owner is entitled. T A security deposit must be deposited in an interest bearing trust account in a banking organization in New York State. The tenant has the option of applying the interest to the rent, leaving the interest in the bank or receiving the interest annually. For additional information see DHCR Fact Sheet #9. Page 4 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT 4. OTHER RENT INCREASES: DRAFT 99 DRAFT In addition to guidelines and statutory vacancy increases, the rent may be permanently increased based upon the following: (A) Individual Apartment Improvements (“IAI”) - Where an owner installs a new appliance in, or makes an improvement to, an apartment, the owner may be entitled to increase the rent of that apartment for the new appliance or improvement. If an apartment has a tenant in occupancy, the owner can only receive a rent increase for the individual apartment improvement if the tenant consents in writing to pay an increase for the improvement (s). However, if the apartment is vacant, tenant consent is not required. O Pursuant to the Rent Act of 2011, effective September 24, 2011, in buildings that contain more than 35 apartments, the owner can collect a permanent rent increase equal to 1/60th of the cost of the Individual Apartment Improvement (IAI). In buildings that contain 35 apartments or less, the owner can collect a permanent rent increase equal to 1/40th of the cost of the IAI, as had previously been allowed. For example, if a new dishwasher is installed in a vacant apartment, in a 100 unit building, and the cost is $900, the rent can be increased by $15 (1/60th of $900). The same installation in a 20 unit building would result in a $22.50 rent increase (1/40th of $900). The increase, if taking place on a vacancy, is added to the legal rent after the application of the statutory vacancy increase, not before. (See Fact Sheet # 12 for additional information). R The Rent Code Amendments of 2014 require that the DHCR Lease Rider offered to vacancy lease tenants contain notification to the tenant of the right to request from the owner by certified mail Individual Apartment Improvements (IAI’s) supporting documentation at the time the lease is offered or within 60 days of the execution of the lease. The owner shall provide such documentation within 30 days of that request in person or by certified mail. A tenant who is not provided with that documentation upon demand may file form RA-90 “Tenant’s Complaint of Owner’s Failure to Renew Lease and/or Failure to Furnish a copy of a Signed Lease” to receive a DHCR Order that directs the furnishing of the IAI supporting documentation. (Refer to Rider Section 1, Individual Apartment Improvements.) A (B) Major Capital Improvements (“MCI”) - An owner is permitted a rental increase for building-wide major capital improvements, such as the replacement of a boiler, or new plumbing. The owner must receive approval from DHCR which will permit the owner to increase rents pro-rata by 1/84th of the cost of the improvement. The owner is not required to obtain tenant consent. Tenants are served with a notice of the owner's application and have a right to challenge the MCI application on certain grounds. For additional information see DHCR Fact Sheet #24. D (C) Hardship - An owner may apply to increase the rents of all rent stabilized apartments based on hardship when: 1. the rents are not sufficient to enable the owner to maintain approximately the same average annual net income for a current three-year period as compared with the annual net income which prevailed on the average over the period 1968 through 1970, or for the first three years of operation if the building was completed since 1968, or for the first three years the owner owned the building if the owner cannot obtain records for the years 1968-1970; or 2. where the annual gross rental income does not exceed the annual operating expenses by a sum equal to at least 5% of such gross income. R If an application for a rent increase based on a major capital improvement or hardship is granted, the owner may charge the increase during the term of an existing lease only if the lease contains a clause specifically authorizing the owner to do so. An increase based on a major capital improvement or hardship may not exceed 6% in any 12 month period. Any increase authorized by DHCR which exceeds these annual limitations may be collected in future years. A 6. RENT REGISTRATION: (A) Initial An owner must register an apartment's rent and services with DHCR within 90 days from when the apartment first becomes subject to the RSL. To complete the rent registration process, the owner must serve the tenant's copy of the registration statement upon the tenant. The tenant may challenge the correctness of the rental as stated in the registration statement within 90 days of the certified mailing to the tenant of the tenant's copy of the registration statement. F (B) Annual The annual update to the initial registration must be filed with DHCR by July 31st with information as of April 1st of each year. At the time of such filing, the owner must provide each tenant with the tenant's copy. The rental amounts registered annually are challengable by the filing with DHCR of a “Tenant's Complaint of Rent Overcharge and/or Excess Security Deposit” (DHCR Form RA-89). In general, the rental history that preceedes the 4 year period prior to the filing of the complaint will not be examined. The Rent Codes Amendments of 2014 do however, provide for certain exemptions, including histories involving preferential rents. T (C) Penalties Failure to register shall bar an owner from applying for or collecting any rent increases until such registration has occurred, except for those rent increases which were allowable before the failure to register. However, treble damages will not be imposed against an owner who collects a rent increase, but has not registered where the overcharge results solely because of such owner's failure to file a timely or proper initial or annual registration statement. Where the owner files a late registration statement, any rent increase collected prior to the late registration that would have been lawful except for the failure to timely Page 5 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT 7. DRAFT 100 DRAFT RENEWAL LEASES: A tenant has a right to a renewal lease, with certain exceptions (see section 11 of this Rider, “When An Owner May Refuse To Renew A Lease”). At least 90 days and not more than 150 days before the expiration of a lease, the owner is required to notify the tenant in writing that the lease will soon expire. That notice must also offer the tenant the choice of a 1 or 2 year lease at the permissible guidelines increase. After receiving the notice, the tenant always has 60 days to accept the owner's offer, whether or not the offer is made within the above time period, or even beyond the expiration of the lease term. O Any renewal lease, except for the amount of rent and duration of its term, is required to be on the same terms and conditions as the expired lease, and a fully executed copy of the same must be provided to the tenant within 30 days from the owner's receipt of the renewal lease or renewal form signed by the tenant. If the owner does not return a copy of such fully executed Renewal Lease Form to the tenant within 30 days of receiving the signed renewal lease from the tenant, the tenant is responsible for payment of the new lease rent and may file a “Tenant's Complaint of Owner's Failure to Renew Lease and/or Failure to Furnish a Copy of a Signed Lease” (DHCR Form RA-90). DHCR shall order the owner to furnish the copy of the renewal lease or form. If the owner does not comply within 20 days of such order, the owner shall not be entitled to collect a rent guidelines increase until the lease or form is provided. R If a tenant wishes to remain in occupancy beyond the expiration of the lease, the tenant may not refuse to sign a proper renewal lease. If the tenant does refuse to sign a proper renewal lease, he or she may be subject to an eviction proceeding. A An owner may add to a renewal lease the following clauses even if such clauses were not included in the tenant's prior lease: (A) the rent may be adjusted by the owner on the basis of Rent Guidelines Board or DHCR Orders; (B) if the owner or the lease grants permission to sublet or assign, the owner may charge a sublet vacancy allowance for a sub-tenant or assignee, provided the prime lease is a renewal lease. However, this sublet vacancy allowance may be charged even if such clause is not added to the renewal lease. (Subletting is discussed in section 10 of this Rider); D (C) (1) if the building in which the apartment is located is receiving tax benefits pursuant to Section 421-a of the Real Property Tax Law, a clause may be added providing for an annual or other periodic rent increase over the initial rent at an average rate of not more than 2.2 % of the amount of such initial rent per annum not to exceed nine, 2.2 percent increases. Such charge shall not become part of the legal regulated rent; however, the cumulative 2.2 percent increases charged prior to the termination of tax benefits may continue to be collected as a separate charge; R (2) provisions for rent increases if authorized under Section 423 of the Real Property Tax Law, a clause may be added to provide for an annual or other periodic rent increase over the legal regulated rent if authorized by Section 423 of the Real Property Tax Law; (D) if the Attorney General, pursuant to Section 352-eeee of the General Business Law, has accepted for filing an Eviction Plan to convert the building to cooperative or condominium ownership, a clause may be added providing that the lease may be cancelled upon expiration of a 3 year period after the Plan is declared effective. (The owner must give the tenant at least 90 days notice that the 3 year period has expired or will be expiring.) A (E) if a proceeding based on an Owner’s Petition for Decontrol (“OPD”) is pending, a clause may be added providing that the lease will no longer be in effect as of 60 days from the issuance of a DHCR Decontrol Order, or if a Petition for Administrative Review (“PAR”) is filed against such order, 60 days from the issuance of a DHCR order dismissing or denying the PAR, (see section 17 of this Rider, “Renewal Leases Offered During Pendency of High Income Deregulation Proceedings”). 8. F RENEWAL LEASE SUCCESSION RIGHTS: In the event that the tenant has permanently vacated the apartment at the time of the renewal lease offer, family members who have lived with the tenant in the apartment as a primary residence for at least two years immediately prior to such permanent vacating (one year for family members who are senior citizens and disabled persons), or from the inception of the tenancy or commencement of the relationship, if for less than such periods, are entitled to a renewal lease. “Family Member” includes the spouse, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, grandfather, grandmother, grandson, granddaughter, father-in-law, mother-in-law, son-in-law or daughterin-law of the tenant. T “Family member” may also include any other person living with the tenant in the apartment as a primary residence who can prove emotional and financial commitment and interdependence between such person and the tenant. Examples of evidence which is considered in determining whether such emotional and financial commitment and interdependence existed are set forth in the Rent Stabilization Code. Renewal lease succession rights are also discussed in detail in DHCR Fact Sheet #30. Page 6 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT 101 DRAFT 9. DRAFT SERVICES: Written notification to the owner or managing agent should be given but is NOT required, before filing a decrease in service complaint with DHCR. Owners who have not received prior written notification from the tenant will however, be given additional time to respond to a complaint filed with DHCR. Applications based on a lack of heat or hot water must be accompanied by a report from the appropriate city agency. O All Emergency conditions, do not require prior written notification. These include but are not limited to: vacate order (5 day notification), fire (5 day notification), no water apartment wide, no operable toilet, collapsed or collapsing ceiling or walls, collapsing floor, no heat/hot water apartment wide (violation required), broken or inoperative apartment front door lock, all elevators inoperable, no electricity apartment wide, window to fire escape (does not open), water leak (cascading water, soaking electrical fixtures), window-glass broken (not cracked), broken/unusable fire escapes, air conditioner broken (summer season). Complaints to DHCR on the appropriate DHCR form that cite any of these emergency conditions will be treated as a first priority and will be processed as quickly as possible. It is recommended that tenants use a separate DHCR form for any problematic conditions that are not on this emergency condition list. R Certain conditions, examples of which are set forth in the Rent Stabilization Code, which have only a minimal impact on tenants, do not affect the use and enjoyment of the premises, and may exist despite regular maintenance of services. These conditions do not rise to the level of a failure to maintain required services. The passage of time during which a disputed service was not provided without complaint may be considered in determining whether a condition is de minimis. For this purpose, the passage of 4 years or more will be considered presumptive evidence that the condition is de minimis. A The amount of any rent reduction ordered by DHCR shall be reduced by any credit, abatement or offset in rent which the tenant has received pursuant to Sec. 235-b of the Real Property Law (“Warranty of Habitability”) that relates to one or more conditions covered by the DHCR Order. For additional information see DHCR Fact Sheets #3, 14 and 37. 10. SUBLETTING AND ASSIGNMENT: A tenant has the right to sublet his/her apartment, even if subletting is prohibited in the lease, provided that the tenant complies strictly with the provisions of Real Property Law Section 226-b. Tenants who do not comply with these requirements may be subject to eviction proceedings. Compliance with Section 226-b is not determined by DHCR, but by a court of competent jurisdiction. If a tenant in occupancy under a renewal lease sublets his/her apartment, the owner may charge the tenant, the sublet allowance provided by the NYC Rent Guidelines Board. This charge may be passed on to the sub-tenant. However, upon termination of the sublease, the Legal Regulated Rent shall revert to the Legal Regulated Rent without the sublet allowance. The rent increase is the allowance provided by the NYC Rent Guidelines Board available when the tenant's renewal lease commenced, and it takes effect when the subletting takes place. If a tenant in occupancy under a vacancy lease sublets, the owner is not entitled to any rent increase during the subletting. D A tenant who sublets his/her apartment is entitled to charge the sub-tenant the rent permitted under the Rent Stabilization Law, and may charge a 10% surcharge payable to the tenant only if the apartment sublet is fully furnished with the tenant's furniture. Where the tenant charges the sub-tenant any additional rent above such surcharge and sublet allowance, if applicable, the tenant shall be required to pay to the sub-tenant a penalty of three times the rent overcharge, and may also be required to pay interest and attorney's fees. The tenant may also be subject to an eviction proceeding. R Assignment of Leases In an assignment, a tenant transfers the entire remainder of his or her lease to another person (the assignee), and gives up all of his/her rights to reoccupy the apartment. A Pursuant to the provisions of Real Property Law Section 226-b, a tenant may not assign his/her lease without the written consent of the owner, unless the lease expressly provides otherwise. If the owner consents to the assignment of the lease, the owner may charge the assignee, as a vacancy allowance, the rent the owner could have charged had the renewal lease been a vacancy lease. Such vacancy allowance shall remain part of the Legal Regulated Rent for any subsequent renewal lease. The rent increase is the vacancy allowance available when the tenant's renewal lease commenced and it takes effect when the assignment takes place. F An owner is not required to have reasonable grounds to refuse to consent to the assignment. However, if the owner unreasonably refuses consent, the owner must release the tenant from the remainder of the lease, if the tenant, upon 30 days notice to the owner, requests to be released. If the owner refuses to consent to an assignment and does have reasonable grounds for withholding consent, the tenant cannot assign and the owner is not required to release the tenant from the lease. For additional information see DHCR Fact Sheet #7. 11. T WHEN AN OWNER MAY REFUSE TO RENEW A LEASE: As long as a tenant pays the lawful rent to which the owner is entitled, the tenant, except for the specific instances noted, is entitled to remain in the apartment. An owner may not harass a tenant by engaging in an intentional course of conduct intended to make the tenant move from his/her apartment. Without DHCR consent, the owner may refuse to renew a lease and bring an eviction action in Civil Court at the expiration of the lease on any of the following grounds: Page 7 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT 102 DRAFT DRAFT (A) the tenant refuses to sign a proper renewal lease offered by the owner; (B) the owner seeks the apartment in good faith for personal use or for the personal use of members of the owner's immediate family; (C) the building is owned by a hospital, convent, monastery, asylum, public institution, college, school, dormitory or any institution operated exclusively for charitable or educational purposes and the institution requires the apartment for residential or nonresidential use pursuant to its charitable or educational purposes: or O (D) the tenant does not occupy the apartment as his or her primary residence. The owner must notify the tenant in writing at least 90 and not more than 150 days prior to the expiration of the lease term of the owner's intention not to renew the lease. With DHCR consent, the owner may refuse to renew a lease upon any of the following grounds: R (A) the owner seeks in good faith to recover possession of the apartment for the purpose of demolishing the building and constructing a new building; or (B) the owner requires the apartment or the land for the owner's own use in connection with a business which the owner owns and operates. A tenant will be served with a copy of the owner's application and has a right to object. If the owner's application is granted, the owner may bring an eviction action in Civil Court. 12. A EVICTION WHILE THE LEASE IS IN EFFECT: The owner may bring an action in Civil Court to evict a tenant during the term of the lease because a tenant: (A) does not pay rent; (B) is violating a substantial obligation of the tenancy; (C) is committing or permitting a nuisance; D (D) is illegally using or occupying the apartment; (E) has unreasonably refused the owner access to the apartment for the purpose of making necessary repairs or improvements required by law or authorized by DHCR, or for the purpose of inspection or showing. The tenant must be given at least 5 days notice of any such inspection or showing, to be arranged at the mutual convenience of the tenant and owner, so to enable the tenant to be present at the inspection or showing. A tenant cannot be required to permit access for inspection or showing if such requirement would be contrary to the lease; or R (F) is occupying an apartment located in a cooperative or condominium pursuant to an Eviction Plan. (See subdivision (D) of section 7 of this Rider, “Renewal Leases”.) A non-purchasing tenant pursuant to a Non-Eviction Plan may not be evicted, except on the grounds set forth in (A) - (E) above. Tenants are cautioned that causing violations of health, safety, or sanitation standards of housing maintenance laws, or permitting such violations by a member of the family or of the household or by a guest, may be the basis for a court action by the owner. A 13. COOPERATIVE AND CONDOMINIUM CONVERSION: Tenants who do not purchase their apartments under a Non-Eviction Conversion Plan continue to be protected by Rent Stabilization. Conversions are regulated by the New York State Attorney General. Any cooperative or condominium conversion plan accepted for filing by the New York State Attorney General's Office will include specific information about tenant rights and protections. An informational booklet about the general subject of conversion is available from the New York State Attorney General's Office. F A Senior Citizen or a Disabled Person in a building which is being converted to cooperative or condominium ownership pursuant to an Eviction Plan is eligible for exemption from the requirement to purchase his/her apartment to remain in occupancy. This exemption is available to Senior Citizens, or to Disabled Persons with impairments expected to be permanent, which prevent them from engaging in any substantial employment. A Conversion Plan accepted for filing by the New York State Attorney General's office must contain specific information regarding this exemption. 14. T SENIOR CITIZENS AND DISABILITY RENT INCREASE EXEMPTION PROGRAM: Tenants or their spouses who are 62 years of age, or older, or are persons with a disability, and whose household income level does not exceed the established income level may qualify for an exemption from Guidelines rent increases, hardship rent increases, major capital improvement rent increases and rent reductions for DHCR approved electrical submetering conversions and High-Rent High-Income deregulation. This exemption will only be for a portion of the increase which causes the tenant’s rent to exceed one-third of the “net” household income, and is not available for increases based on new services or equipment within the apartment. Questions concerning the Senior Citizen Rent Increase Exemption (SCRIE) program and the Disability Rent Increase Exemption (DRIE) program can be addressed to the New York City Department of Finance. Page 8 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT DRAFT 103 DRAFT When a senior citizen or person with a disability is granted a rent increase exemption, the owner may obtain a real estate tax credit from New York City equal to the amount of the tenant's exemption. Notwithstanding any of the above, a senior citizen or person with a disability who receives a rent increase exemption is still required to pay a full month's rent as a security deposit. For additional information see DHCR Fact Sheet # 20 and # 21. 15. SPECIAL CASES AND EXCEPTIONS: O Some special rules relating to stabilized rents and required services may apply to newly constructed buildings which receive tax abatement or exemption, and to buildings rehabilitated under certain New York City, New York State, or federal financing or mortgage insurance programs. The rules mentioned in this Rider do not necessarily apply to rent stabilized apartments located in hotels. A separate Hotel Rights Notice informing permanent hotel tenants and owners of their basic rights and responsibilities under the Rent Stabilization Law is available from DHCR. 16. HIGH INCOME RENT DEREGULATION: R Upon the issuance of an Order by DHCR, apartments which: (1) are occupied by persons who have a total annual income in excess of $200,000 per annum for each of the two preceding calendar years and (2) have a legal regulated rent of $2,500 or more per month, shall no longer be subject to rent regulation (“High Income Rent Deregulation”). The Rent Stabilization Law permits an owner to file a Petition for High Income Rent Deregulation on an annual basis. As part of the process, the tenant will be required to identify all persons who occupy the apartment as their primary residence on other than a temporary basis, excluding bona fide employees of the tenant(s) and sub-tenants, and certify whether the total annual income was in excess of $200,000 in each of the two preceding calendar years. If the tenant fails to provide the requested information to DHCR, an order of deregulation will be issued. If the tenant provides the requested information and certifies that the total annual income was not in excess of $200,000, the NYS Department of Taxation and Finance will review whether the apartment is occupied by persons who have a total annual income in excess of $200,000 in each of the two preceding calendar years. Owners cannot serve the Income Certification Forms and/or Petition for High Income Rent Deregulation on an apartment where the tenant is the recipient of a Senior Citizen Rent Increase Exemption (SCRIE) or a Disability Rent Increase Exemption (DRIE). A Pursuant to the Rent Act of 2011, the thresholds for deregulation were changed to$2,500 in rent and $200,000 in annual income. Prior to this, the thresholds had been $2,000 in rent and $175,000 in annual income. For High-Rent High-Income Deregulation, the effective date is July 1, 2011, which means that it will begin to apply to applications filed in the 2012 cycle, not to applications filed prior to July 1, 2011. 17. HIGH RENT VACANCY DEREGULATION: D If an apartment is vacated and the rent can be lawfully raised to a legal regulated rent (Rent Stabilization) or maximum rent (Rent Control) of $2,500 or more per month, such apartment qualifies for permanent deregulation, and therefore for removal from all rent regulation. For High-Rent Vacancy Deregulation, the effective date for the threshold change from $2,000 to $2,500 is June 24, 2011. R Pursuant to the Rent Code Amendments of 2014, the first tenant of the apartment after it becomes deregulated is required to be served by the owner with a DHCR Notice (HRVD-N). The notice is required to contain the reason for deregulation, the last regulated rent and the calculation of the new rent that qualified for deregulation. In addition, the owner is required to serve the tenant with a copy of a registration statement filed with DHCR indicating the deregulated status and the last legal regulated rent. (See Fact Sheet # 36). 18. RENEWAL LEASES OFFERED DURING PENDENCY OF HIGH INCOME DEREGULATION PROCEEDINGS: A Where a High Income Deregulation Proceeding is pending before DHCR and the owner is required to offer a renewal lease to the tenant, a separate rider may be attached to and served with the Rent Stabilization Law “Renewal Lease Form” (RTP-8). If so attached and served, it shall become part of and modify the Notice and Renewal Lease. The text of the rider is set forth below and may not be modified or altered without approval of DHCR. NOTICE TO TENANT: F Pursuant to Section 5-a of the Emergency Tenant Protection Act, or Section 26-504.3 of the Rent Stabilization Law, the owner has commenced a proceeding before DHCR for deregulation of your apartment by filing a Petition by Owner for High Income Rent Deregulation on _________________, 20_____. (Date) That proceeding is now pending before DHCR. If DHCR grants the petition for deregulation, this renewal lease shall be cancelled and shall terminate after 60 days from the date of issuance of an order granting such petition. In the event that you file a Petition for Administrative Review (PAR) the order of deregulation, or if you have already filed such PAR and it is pending before DHCR at the time you receive this Notice, and the PAR is subsequently dismissed or denied, this renewal lease shall be cancelled and shall terminate after 60 days from the issuance by DHCR of an order dismissing or denying the PAR. T Upon such termination of this renewal lease, the liability of the parties for the further performance of the terms, covenants and conditions of this renewal lease shall immediately cease Page 9 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT DRAFT 104 DRAFT 19. AIR CONDITIONER SURCHARGES: Owners are authorized to collect surcharges from rent stabilized tenants for the use of air conditioners. DHCR issues an annual update to an Operational Bulletin in which the lawful surcharges are established for the year. One surcharge amount is established for tenants in buildings where electricity is included in the rent. Another surcharge is established for tenants who pay for their own electricity. Such surcharges shall not become part of the legal regulated rent. (See Operational Bulletin 84-4 and Fact Sheet # 27). O 20. SURCHARGES FOR TENANT INSTALLED WASHING MACHINES, DRYERS AND DISHWASHERS: Unless a lease provides otherwise, owners are not required to allow tenants to install washing machines, dryers or dishwashers. Where a tenant requests permission from the owner to install such appliance or appliances, whether permanently installed or portable, and the owner consents, the owner may collect a surcharge or surcharges. DHCR issues periodic updates to an Operational Bulletin that sets forth surcharges for washing machines, dryers and dishwashers. One set of surcharges is established for tenants in buildings where electricity is included in the rent. Another set of surcharges is established for tenants who pay their own electricity. Such surcharges shall not become part of the rent. (See Operational Bulletin 2005-1) R 21. PREFERENTIAL RENT: A A preferential rent is a rent which an owner agrees to charge an amount that is lower than the legal regulated rent that the owner could lawfully collect. The legal regulated rent is required to be written into the vacancy lease and all subsequent renewal leases. The terms of the lease may affect the owner’s right to terminate a preferential rent. If the lease agreement contains a clause that the preferential rent shall continue for the term of the tenancy, not just the specific lease term, then the preferential rent cannot be terminated for that tenancy. The preferential rent continues to be the basis for future rent increases. However, if the lease is silent and did not contain a clause that clarified whether the preferential rent was for the “term of the lease” or “the entire term of the tenancy”, then the owner may terminate the preferential rent at the time of the lease renewal. Ordinarily, the rental history preceding the 4 year period to the filing of an overcharge complaint will not be examined. However, the Rent Code Amendments of 2014 do provide that when an owner claims that the rent being charged is “preferential”, DHCR will examine the lease and rent history immediately preceding such preferential rent, even if it is before 4 years, to assure that the higher “legal” rent is correctly calculated and lawful. (See Fact Sheet # 40.) D 22. LANGUAGE ACCESS: Copies of this Rider are available in all languages that are required pursuant to DHCR’s language access plan (see DHCR’s website www.nyshcr.org) R A . F T Page 10 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT DRAFT 105 DRAFT DRAFT Appendix Some agencies which can provide assistance New York State Division of Housing and Community Renewal (DHCR) DHCR is a state agency empowered to administer and enforce the Rent Laws. Tenants can contact DHCR at our website: www.nyshcr.org or by visiting one of our Public Information Offices listed below for assistance. Queens 92-31 Union Hall Street Jamaica, NY 11433 Lower Manhattan 25 Beaver Street New York, NY 10004 O R Bronx 2400 Halsey Street Bronx, NY 10461 Brooklyn 55 Hanson Place Brooklyn, NY 11217 Upper Manhattan 163 West 125th Street New York, NY 10027 Attorney General of the State of New York - www.ag.ny.gov 120 Broadway, New York, NY 10271 A Consumer Frauds and Protection Bureau - investigates and enjoins illegal or fraudulent business practices, including the overcharging of rent and mishandling of rent security deposits by owners. Real Estate Financing Bureau - administers and enforces the laws governing cooperative and condominium conversions. Investigates complaints from tenants in buildings undergoing cooperative or condominium conversion concerning allegations of improper disclosure, harassment, and misleading information. D New York City Department of Housing Preservation and Development (HPD): - www.nyc.gov/hpd Division of Code Enforcement Principal Office 100 Gold Street, New York, N.Y. 10038 - enforcement of housing maintenance standards. R New York City Central Complaint Bureau 215 West 125th Street, New York, N.Y. 10038 - receives telephone complaints relating to physical maintenance, health, safety and sanitation standards, including emergency heat and hot water service. This service is available 24 hours per day. However, complaints as to emergency heat service are received only between October 1st and May 31st of each year. A New York City Department of Finance - www.nyc.gov/finance SCRIE/DRIE Exemption 59 Maiden Lane, 19th Floor, New York, New York, 10038 - administers the Senior Citizen Rent Increase Exemption program and Disability Rent Increase Exemption program. Mayor’s Office for People with Disabilities - www.nyc.gov/mopd F - 100 Gold Street, 2nd Floor, New York, NY 10038 New York City Rent Guidelines Board (RGB): - www.housingnyc.com 51 Chambers Street, Room 202, New York, N.Y. 10007 - promulgates annual percentage of rent increases for rent stabilized apartments and provides information on guidelines orders. T Copies of New York State and New York City rent laws are available in the business section of some public libraries. A person should call or write to a public library to determine the exact library which has such legal material. Page 11 of 11 RA-LR1(V) (1/8/14) DRAFT DRAFT DRAFT 106 Darryl C. Towns Commissioner Andrew M. Cuomo Governor New York State Division of Housing and Community Renewal Office of Rent Administration Gertz Plaza 92-31 Union Hall Street Jamaica, NY 11433 Amended OPERATIONAL BULLETIN 2005-1 (Supplement No. 2) SURCHARGES FOR TENANT-INSTALLED WASHING MACHINES, DRYERS AND DISHWASHERS - Implementing New York City Rent Stabilization Law (RSL) Emergency Tenant Protection Act of 1974 (ETPA) New York City Rent and Rehabilitation Law (City Rent Control Law) Emergency Housing Rent Control Law (State Rent Control Law) This Operational Bulletin is issued pursuant to Sections 2522.9 and 2527.11 of the Rent Stabilization Code; Sections 2502.8 and 2507.11 of the Emergency Tenant Protection Regulations; Section 2209.8 of the City Rent and Eviction Regulations; and Section 2109.8 of the State Rent and Eviction Regulations. It applies to all rent controlled and rent stabilized housing accommodations throughout New York State. Unless a lease provides otherwise, owners are not required to allow tenants to install washing machines, dryers or dishwashers. Where a tenant requests permission from the owner to install such appliance or appliances, whether permanently installed or portable, and the owner consents, the owner may collect a surcharge or surcharges, as set forth below. Such surcharge or surcharges shall not become a part of the legal regulated or maximum rent for the purpose of computing any guidelines or other increases under the Rent Laws or Regulations. Under no circumstances shall servicing or replacement of such appliance or appliances become a service required to be provided by the owner. Monthly Surcharges Monthly surcharges are shown on the attached chart. Permissible surcharges for housing accommodations regulated pursuant to the State Rent Control Law and not located within the ETPA counties will be determined on a case-by-case basis. “Electrical exclusion” means the tenant pays for electricity; “electrical inclusion” means the owner pays for electricity. DHCR may make a downward adjustment of the surcharge where a tenant pays for heating of hot water. www.nyshcr.org 107 Factors Considered in Developing the Surcharges Various cost factors were considered, including, where applicable, the cost of energy to heat water and the cost of electricity. Non-energy factors considered were water costs and wear and tear on plumbing. Cost estimates were based on properly installed and functioning machines placed in buildings whose plumbing, water supply, and electrical systems are adequate for use of the relevant appliance. Disputes arising because the owner claims that the installation of an appliance by the tenant has damaged the owner’s plumbing or other property, if not resolvable between the parties, are not within the jurisdiction of the DHCR and would have to be determined by the courts. Applicability and Prior Practice The surcharges set forth on the attached chart shall be applicable to all pending administrative proceedings, where those proceedings include the issue of a charge for the tenant’s installation of a washing machine, dryer or dishwasher. Where a prior installation by a tenant of such appliance or appliances comes to the attention of the owner and the owner consents to the continued use of the appliance or appliances, these surcharges shall only be available prospectively unless otherwise found to be waived. The permissible monthly surcharges set forth in this Supplement No. 2 to Operational Bulletin 2005-1 shall take effect immediately and shall apply to all tenancies subject to this Operational Bulletin. The surcharges set forth herein shall remain in full force and effect until September 30, 2014. In the event DHCR does not issue an updated Operational Bulletin supplement by September 30, 2014, the surcharges herein established shall continue in effect until such time as a subsequent annual update is issued. WOODY PASCAL Deputy Commissioner for Rent Administration Dated: January 29, 2014 www.nyshcr.org 108 Appliance Electrical Exclusion or Inclusion Buildings New York City (Rent Stabilized or Controlled) ETPA Localities1 (Rent Stabilized or Controlled Washing Machine Exclusion $ 20.76 $ 18.66 Inclusion $ 22.23 $ 19.85 Exclusion $ 0.00 $ 0.00 Inclusion $ 12.29 $ 12.29 Exclusion $ 5.17 $ 5.17 Inclusion $ 7.12 $ 7.12 Exclusion $ 0.00 $ 0.00 Inclusion $ 8.88 $ 8.88 Dryer Dishwasher Gas Powered Dryers 1 ETPA localities are those localities within the Counties of Nassau, Rockland and Westchester that have adopted the Emergency Tenant Protection Act of 1974. www.nyshcr.org 109 Darryl C. Towns Commissioner Andrew M. Cuomo Governor New York State Division of Housing and Community Renewal Office of Rent Administration Gertz Plaza 92-31 Union Hall Street Jamaica, NY 11433 Amended OPERATIONAL BULLETIN 2005-1 (Supplement No. 2) SURCHARGES FOR TENANT-INSTALLED WASHING MACHINES, DRYERS AND DISHWASHERS - Implementing New York City Rent Stabilization Law (RSL) Emergency Tenant Protection Act of 1974 (ETPA) New York City Rent and Rehabilitation Law (City Rent Control Law) Emergency Housing Rent Control Law (State Rent Control Law) This Operational Bulletin is issued pursuant to Sections 2522.9 and 2527.11 of the Rent Stabilization Code; Sections 2502.8 and 2507.11 of the Emergency Tenant Protection Regulations; Section 2209.8 of the City Rent and Eviction Regulations; and Section 2109.8 of the State Rent and Eviction Regulations. It applies to all rent controlled and rent stabilized housing accommodations throughout New York State. Unless a lease provides otherwise, owners are not required to allow tenants to install washing machines, dryers or dishwashers. Where a tenant requests permission from the owner to install such appliance or appliances, whether permanently installed or portable, and the owner consents, the owner may collect a surcharge or surcharges, as set forth below. Such surcharge or surcharges shall not become a part of the legal regulated or maximum rent for the purpose of computing any guidelines or other increases under the Rent Laws or Regulations. Under no circumstances shall servicing or replacement of such appliance or appliances become a service required to be provided by the owner. Monthly Surcharges Monthly surcharges are shown on the attached chart. Permissible surcharges for housing accommodations regulated pursuant to the State Rent Control Law and not located within the ETPA counties will be determined on a case-by-case basis. “Electrical exclusion” means the tenant pays for electricity; “electrical inclusion” means the owner pays for electricity. DHCR may make a downward adjustment of the surcharge where a tenant pays for heating of hot water. www.nyshcr.org 110 Factors Considered in Developing the Surcharges Various cost factors were considered, including, where applicable, the cost of energy to heat water and the cost of electricity. Non-energy factors considered were water costs and wear and tear on plumbing. Cost estimates were based on properly installed and functioning machines placed in buildings whose plumbing, water supply, and electrical systems are adequate for use of the relevant appliance. Disputes arising because the owner claims that the installation of an appliance by the tenant has damaged the owner’s plumbing or other property, if not resolvable between the parties, are not within the jurisdiction of the DHCR and would have to be determined by the courts. Applicability and Prior Practice The surcharges set forth on the attached chart shall be applicable to all pending administrative proceedings, where those proceedings include the issue of a charge for the tenant’s installation of a washing machine, dryer or dishwasher. Where a prior installation by a tenant of such appliance or appliances comes to the attention of the owner and the owner consents to the continued use of the appliance or appliances, these surcharges shall only be available prospectively unless otherwise found to be waived. The permissible monthly surcharges set forth in this Supplement No. 2 to Operational Bulletin 2005-1 shall take effect immediately and shall apply to all tenancies subject to this Operational Bulletin. The surcharges set forth herein shall remain in full force and effect until September 30, 2014. In the event DHCR does not issue an updated Operational Bulletin supplement by September 30, 2014, the surcharges herein established shall continue in effect until such time as a subsequent annual update is issued. WOODY PASCAL Deputy Commissioner for Rent Administration Dated: January 29, 2014 www.nyshcr.org 111 Appliance Electrical Exclusion or Inclusion Buildings New York City (Rent Stabilized or Controlled) ETPA Localities1 (Rent Stabilized or Controlled Washing Machine Exclusion $ 20.76 $ 18.66 Inclusion $ 22.23 $ 19.85 Exclusion $ 0.00 $ 0.00 Inclusion $ 12.29 $ 12.29 Exclusion $ 5.17 $ 5.17 Inclusion $ 7.12 $ 7.12 Exclusion $ 0.00 $ 0.00 Inclusion $ 8.88 $ 8.88 Dryer Dishwasher Gas Powered Dryers 1 ETPA localities are those localities within the Counties of Nassau, Rockland and Westchester that have adopted the Emergency Tenant Protection Act of 1974. www.nyshcr.org 112 Bibliography of Relevant Cases and Statutes Compiled by Niles Welikson NOTE: The full text of the cases and statutes are available for download from the NYCLA website. • • • • • Go to www.nycla.org On the list on the left click CLE Under that list click on Course Materials/Publications Find the name of the class and click on Date of Publication Instructions on where to click to download will appear Broughton v. Dona, 101 A.D.2d 897, 475 N.Y.S.2d 595 Drinkhouse v. Parka Corp., 3 N.Y.2d 82, 143 N.E.2d 767, 164 N.Y.S.2d 1 Pehrson v. Community Renewal , 34 Misc.3d 1220(A), 2011 WL 7163038 (N.Y. Sup.) Grimm v. State of NY, Division of Housing and Community Renewal, 15 N.Y.3d 358, 938 N.E.2d 924, 912 N.Y.S.2d 491 Bogatin v. Windermere Owners LLC, 98 A.D.3d 896, 950 N.Y.S.2d 707 Boyd v. NYS Division of Housing and Community Renewal, 110 A.D.3d 594, 973 N.Y.S.2d 609 Thornton v. Baron, 4 A.D.3d 258, 772 N.Y.S.2d 326 Drucker v. Mauro, 30 A.D.3d 37, 814 N.Y.S.2d 43 White v. NYS Division of Housing and Community Renewal, 2013 WL 753516 (N.Y.Sup.) Conason v. Megan Holding, LLC, 109 A.D.3d 724, 972 N.Y.S.2d 223 Zheng v. MAK, 2012 WL 978592 (N.Y.Sup.) Tenants Committee of 35 Gramercy Park v. NYS Division of Housing and Community Renewal, 2011 WL 4544711 (N.Y.Sup.) Cintron v. Calogero, 15 N.Y.3d 347, 938 N.E.2d 931, 912 N.Y.S.2d 498 Watson v. NYS Division of Housing and Community Renewal, 109 A.D.3d 833, 971 N.Y.S.2d 145 Gomez v. NYS Division of Housing and Community Renewal, 79 A.D.3d 878, 912 N.Y.S.2d 444 Cabrini Realty LLC v. NYS Division of Housing and Community Renewal, 6 A.D.3d 280, 775 N.Y.S.2d 292 Levinson v. 390 West End Associates LLC, 22 A.D.3d 397, 802 N.Y.S.2d 659 § 213-a. Actions to be commenced within four years; residential rent overcharge 113 114 RSC Amendment Summary Individual Apartment Improvements Rent Stabilization Rider MCI Increases Rent Registrations Vacancy Deregulation Notices David B. Cabrera, Esq. Borah, Goldstein, Altschuler, Nahins & Goidel, P.C. 377 Broadway New York, New York 10013 Tel: 212 965-2544 Fax: 212 965-2744 [email protected] www.borahgoldstein.com ©Copyright 2014 Borah Goldstein Rent Stabilization Lease Rider Individual Apartment Improvements 2 1 115 §2522.5(c)(1) and §2522.5(c)(3) Rent Stabilization Rider: What’s the change? • DHCR has changed it’s rent stabilization rider that must be served with each vacancy and lease renewal. • The new rider details the calculation of rent increases and Individual Apartment Improvements (IAI’s). • Must provide total costs for parts and labor. • Must be executed by owner and tenants. [email protected]; (212) 9652544 3 §2522.5(c)(1) and §2522.5(c)(3) Rent Stabilization Rider (cont’d): Document Production: • Tenants have sixty (60) days to request documents regarding IAI’s after a lease has been executed. The owner has thirty (30) days to provide the documentation. If you don’t give the requested documents to the tenant: • No rent increase can be collected until the documentation is provided • The failure to provide the lease rider or documentation is curable but not retroactive. [email protected]; (212) 9652544 4 2 116 §2522.6 (b) and §2526.1(g) Rent Stabilization Rider (cont’d): How do you comply? • It would be a best practice to provide all documents at the time the lease is executed by both parties, otherwise, an owner may be unable to prove when the lease rider and IAI documents were provided to the tenant. • The sixty (60) day period runs from the date the owner signs the lease. It is imperative to get the executed lease back to the tenant to start the clock running on the sixty (60) day period. 5 §2522.4(a)(3)(22) Major Capital Improvements: There are two changes: 1. Immediately Hazardous Violations: The existence of an immediately hazardous violation in effect at the time an MCI application is filed will result in the rejection of the application. The application can be re-filed within sixty (60) days if the violation has been cleared. [email protected]; (212) 9652544 6 3 117 § 2522.4(a)(13) Immediately Hazardous Violations: How is this different from the prior regulation? • Previously, DHCR had the option to reject or ignore the immediately hazardous violation, if it was unrelated to the improvement. Recommendation: • It is imperative that an MCI application be filed shortly after the MCI is completed. • Make sure all immediately hazardous violations are cleared prior to filing an MCI. • Under certain circumstances, owners may need to go to Court to force HPD to remove violations of record or toll DHCR’s sixty (60) day violation clearance period. 7 §2522.4(a)(3)(22) Major Capital Improvements: 2. Rewiring What’s the change? • The cost of individual meters associated with conversion from submetering is excluded as a rent increase. • A rent increase for the cost of new electric lines from basement to each apartment remains an item eligible for a rent increase. [email protected]; (212) 9652544 8 4 118 END OF PART I 9 §2527.9, §2528.3(a), §2528.3, §2528.3 and §2528.4(a) Registrations: What’s the change? • • Owners cannot amend a rent registration without first going through an administrative proceeding and notifying the tenant prior to the amendment. Caveat: DHCR will allow an owner to amend the registration within the same year filed without an order or DHCR proceeding. How does this impact you? • • • Not registering will lead to an increased risk of overcharge complaints and DHCR rent investigations. The failure to file a registration results in a complete rent freeze of an MCI rent increase and any applicable statutory vacancy increase. Language that permitted an owner to cure was deleted. [email protected]; (212) 9652544 10 5 119 §2520.11 Vacancy Deregulation Notice: What’s the change? • DHCR has created a vacancy deregulation notice that did NOT previously exist. • This notice must be served on the first tenant of a deregulated unit. • The new notice must be executed by the owner and tenant. • The new notice requires the owner to provide: 1. The basis for deregulation; 2. Reflect the rent computation; 3. List the last legal regulated rent. [email protected]; (212) 9652544 §2520.11 Vacancy Deregulation Notice 11 (cont’d): The timing and method to serve the first deregulated tenant is also established. 1. First, the owner must send the new notice: a) by certified mail within thirty (30) days after the tenancy commences OR b) provide to the tenant after the signing of the lease by both parties, WHICHEVER COMES FIRST. 2. Second, the owner must serve an exit registration: a) within thirty (30) days after the tenancy commences OR b) provide to the tenant at the time the lease is executed by both parties, WHICHEVER COMES FIRST. RECOMMENDED FOR BOTH: Include a copy of the new notice and exit registration in the new lease. [email protected]; (212) 9652544 12 6 120 David Cabrera [email protected] (212) 965-2544 David B. Cabrera is a partner at Borah, Goldstein, Altschuler, Nahins & Goidel, P.C., in the Administrative Division. He has experience in all types of proceedings before the State Division of Housing & Community Renewal (DHCR), as well as matters before the Department of Housing, Preservation & Development (HPD), the Environmental Control Board, the Department of Buildings (DOB), and the Loft Board. Mr. Cabrera has over twenty years of real estate law experience, including eleven years with DHCR in various senior positions. Most recently, he was DHCR’s Deputy Commissioner for Housing Operations where he oversaw the State’s Section 8, Mitchell-Lama and Public Housing programs. He also served DHCR as General Counsel in the Office of Legal Affairs and Deputy Counsel and Assistant Commissioner in the Office of Rent Administration and specialized in rent stabilization and rent control matters. Prior to joining the DHCR, Mr. Cabrera was in private practice specializing in real estate litigation and transactions. 13 7 121 122 123 Faculty Biographies 124 125 Mitchell L. Posilkin, Esq. General Counsel T: (212) 214-9244 Email: [email protected] Website: www.rsanyc.org Mitchell Posilkin is the General Counsel of the Rent Stabilization Association, a trade association that represents approximately 25,000 owners and managers of over one million apartments in the City. In that capacity, Mr. Posilkin addresses myriad issues that affect property owners which arise in the courts, in government agencies and in the State Legislature and City Council. Prior to the commencement of his tenure at RSA in January 1996, Mr. Posilkin served as Deputy General Counsel of the Department of Housing Preservation and Development for eleven years, including two and one-half years as the Acting Director of the Department's Housing Litigation Bureau. Mr. Posilkin began his career as an Assistant Corporation Counsel in the Division of Legal Counsel at the New York City Law Department from 1979 to 1984. Mr. Posilkin graduated from the State University of New York at Binghamton in 1976 and from New York Law School, where he served as an editor of the Law Review, in 1979. Mr. Posilkin currently serves as a representative of property owners on the Housing Court Advisory Council. He has previously served on the Advisory Council as the City’s representative and as a representative of property owners, and has also served on the Housing Court Committee of the Association of the Bar of the City of New York. Mr. Posilkin has presented at many seminars held by RSA, the New York State Office of Court Administration, the New York City Bar Association, the New York State Bar Association and the Kings County Housing Court Bar Association, including programs pertaining to the significant changes over the years in the State’s rent regulatory laws and regulations, the City’s lead paint laws, Section 8, and numerous other regulatory and legislative issues of concern to property owners. 126 Robin A. Bernstein Deputy Counsel Rent Stabilization Association T: (212)-214-9246 Email: [email protected] Robin A. Bernstein is the Deputy General Counsel to the Rent Stabilization Association. Prior to her current position, Ms. Bernstein served as in-house General Counsel to a major New York City property owner, and was in private practice in the areas of landlord/tenant and real estate litigation and transactions. Ms. Bernstein has coordinated and co-authored materials for numerous RSA educational seminars. Past seminars include: Property Insurance for Apartment Building Owners – Learning from Sandy, Managing Rent Regulated Property in New York City series, and The City’s New Energy laws series. Ms. Bernstein is a member of the New York City Bar Association, The New York State Bar Association, the New York County Lawyers’ Association and the Association of Corporate Counsel. She has served on the Housing Court and Housing Court Public Projects Committees of the New York Bar Association. She has also served on the New York Bar Association Judiciary Committee for several terms. Ms. Bernstein is a member of Civil Court Practice Section of the New York County Lawyers' Association. Prior to the implementation of the Housing Court Resource Centers, Ms. Bernstein supervised RSA staff located in the court houses that assisted unrepresented small property owners. The written owners’ materials now distributed in the Resource Centers were modeled on documents drafted by RSA. She is a certified member of the Volunteer Lawyers Program of the Housing Part of the Civil Court of the City of New York. She served on the New York City Hoarding Task Force, and the City DRIE Board. Ms. Bernstein has worked with City officials, NYSERDA, private consultants, lenders, ConEdison and National Grid to educate RSA members on how to comply with the City’s new energy laws. 127 David Cabrera Partner Borah, Goldstein, Altschuler, Nahins & Goidel, P.C. T: (212) 965-2544 F: (212) 965-2744 Email: [email protected] David B. Cabrera is a partner of the Firm in the Administrative Division. He has experience in all types of proceedings before the State Division of Housing & Community Renewal (DHCR), as well as matters before the Department of Housing, Preservation & Development (HPD), the Environmental Control Board, the Department of Buildings (DOB), and the Loft Board. Mr. Cabrera has over twenty years of real estate law experience, including eleven years with DHCR in various senior positions. Most recently, he was DHCR’s Deputy Commissioner for Housing Operations where he oversaw the State’s Section 8, Mitchell-Lama and Public Housing programs. He also served DHCR as General Counsel in the Office of Legal Affairs and Deputy Counsel and Assistant Commissioner in the Office of Rent Administration where he specialized in rent stabilization and rent control matters. Prior to joining the DHCR, Mr. Cabrera was in private practice specializing in real estate litigation and transactions. Over the last decade, Mr. Cabrera has been a lecturer or participant in panel discussions before practicing attorneys, judges, real estate professionals, and trade organizations on numerous topics related to rent regulations and affordable housing. He was also a member of the Housing Court Advisory Council. Practice Areas: • Cooperative and Condominium Law • Supreme Court Litigation • Administrative Law • Residential Non-Payment Proceedings • Residential Holdover Proceedings • Appellate Litigation Education: • Vermont Law School, J.D., M.S.L. – 1991 • University of Miami, B.A. – 1987 Bar Admissions: • New York – 1992 • Connecticut – 1992 • U.S. District Court, Eastern District – 1996 • U.S. District Court, Southern District – 1996 Bar Affiliations: • New York State Bar Association 128 MAGDA L. CRUZ has been associated with Belkin Burden Wenig & Goldman, LLP since 1989, becoming a partner in 1993. Ms. Cruz specializes in appeals and complex litigation matters. She has briefed and argued appeals before New York State and Federal appellate courts involving constitutional law, property rights, commercial law, loft law, cooperative and condominium law, tax incentive law, administrative law, landlord-tenant law, mortgage foreclosure law and the Racketeer Influenced and Corrupt Organization Act. Her major appellate victories on behalf of owners include owner-occupancy, succession rights, non-primary residence, lease rights, attorneys' fees, and rent overcharge cases. Ms. Cruz also successfully obtained one of the largest Rule 130 sanctions award that the Court of Appeals has ever imposed against a party and its attorney for frivolous litigation. Ms. Cruz is a graduate of Georgetown University Law Center. Prior to joining the firm, she held positions with the New York County District Attorney's Office, The Washington Lawyers' Committee for Civil Rights Under Law, Morgan, Lewis & Bockius in Miami, Florida, and Rosenberg & Estis, P.C., in New York. In addition, Ms. Cruz has served on the Board of Directors of two cooperative apartment corporations in Brooklyn, New York. Ms. Cruz is a member of the Housing Court Advisory Council, and Women in Housing and Finance. 129 David Feuerstein is a partner in Herrick's Litigation Department, successfully representing real estate developers, hedge funds, Fortune 500 companies and individuals in matters ranging from contract disputes to government investigations. David is also an adjunct professor at the Benjamin N. Cardozo School of Law, where he teaches legal writing and research, and serves as a member of the Advisory Committee for the Heyman Center of Corporate Governance, the mission of which is to raise public and academic awareness of pressing corporate and securities law issues and to produce and disseminate research on a broad range of corporate and securities law topics. In 2013, The New York Law Journal recognized David as a "Rising Star", highlighting his successes for clients and his impact on the legal community. SuperLawyers Metro Edition also recognized David as a New York Super Lawyer in 2013 and as a “Rising Star” in 2011 and 2012. In addition, David currently serves as the President of The Denis McInerney New York County Lawyers' Association American Inn of Court. David received his B.A. from Yale College with distinction in his major and his J.D. from Benjamin N. Cardozo School of Law, magna cum laude (where he was also member of the Order of the Coif). Prior to Herrick, David was an associate at Boies, Schiller & Flexner. Before attending law school, David played professional baseball for the minor-league affiliates of the Colorado Rockies. 130 Niles Weilikson is a partner at Horing Welikson & Rosen, P.C. He is an expert in the field of landlord/tenant law and sought after as a speaker before bar association groups, landlord trade associations, community organizations, and is quoted frequently in the local media on landlord/tenant questions.