What You Need To Know About The New Rent Laws

Just last month, lawmakers in Albany and Governor Cuomo enacted The Housing Stability and Tenant Protection Act of 2019, which brings significant changes in New York State’s rent laws. While much of the legislation affects rent-regulated (stabilized/controlled) units — such as changes to vacancy deregulation, preferential rents, major capital and individual apartment improvements — there are also important changes that affect ALL rental units. So whether you’re a landlord or a tenant, here are some of the important changes to take note of:

Caps on application fees & security deposit. When signing a new lease, security deposits are now limited to one month’s rent. There is also a new limitation on application fees: a landlord may not collect an application fee except for background and credit checks, and even then the landlord may only collect $20 or the actual cost of the screening, whichever is less. The landlord may not request the fee from the applicant unless the landlord provides a copy of the background and credit checks, as well as the receipt or invoice for the screening. Tenants may also be able to avoid paying the fee if they provide the landlord with a copy of a background check and/or credit check conducted within the past thirty days.

Right of inspection and "cure path" for post-tenancy repairs. Before taking occupancy, the tenant now has a right to inspect the apartment to create a written document attesting to the condition of the unit. Prior to surrendering the apartment, the tenant may have another inspection where the landlord gives the tenant an itemized list of repairs or cleaning that may be the cause for deductions from the tenant’s security deposit. This "cure path" allows tenants to amend the conditions itemized before the end of their tenancy. For any outstanding issues, the landlord must provide the tenant with a final itemized statement indicating what deductions were made, if any, and the reasoning why within 14 days after the tenant vacates the premises.

Late fees and rent demands. Late fees cannot be charged until more than five days after the due date, and cannot exceed $50 or 5% of the monthly rent, whichever is less. If a tenant has fallen behind on rent, the owner may ask the tenant to pay the full amount that they owe — this is called a rent demand. Rent demands now allow the tenant 14 days to pay the owed rent, whereas previously, tenants were only given 3 days to pay.

Renewals or rent increases above 5%. If at the end of the term the landlord intends to raise the rent above 5%, or chooses to not renew the tenancy, the landlord must send notice to the tenant by process server (not mail). The law requires 60 days’ notice for leases of at least one year (but less than two years), and 90 days’ notice for leases of two years or more or where a tenant has lived in the unit for two years or more.

These are just some highlights, but you can find the full text of the new legislation here. Some of the provisions leave room for interpretation, so if you have concerns or questions, please reach out and we can connect you with landlord-tenant attorneys that are familiar with the changes.

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Neighborhood Spotlight: Sutton Place

Besides being the location of Woody Allen’s iconic Manhattan bridge scene, Sutton Place is a cozy enclave by the East River that is historically known for upscale apartments and prestigious residents. Running from 53rd Street to 59th Street between First Avenue and the East River, the neighborhood has some of the most elegant and classic pre-war co-ops in the city, complete with around-the-clock doormen, roof decks, gyms, shared gardens, and more. Former Governor Mario Cuomo, designer Kenneth Cole, and actress Sigourney Weaver currently call Sutton Place home, and former residents include Michael Jackson, I. M. Pei, Freddie Mercury, Joan Crawford, and Marilyn Monroe and Arthur Miller. Take a look at some of our favorite spots in this secluded -- and exclusive -- neighborhood of Manhattan.

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Buyer Myths Debunked

At my homebuyer seminars, I always begin by addressing the pervasive misconceptions about buying an apartment in NYC. Here are six things that I hear all the time:

1.) “I’m not going to live in New York forever.” NYC has a way of sucking you in no matter what your intentions, but that’s beside the point. Buying an apartment in NYC need not be a lifelong financial commitment since most buyers can expect to break even within five years, and that’s assuming a very modest rate of appreciation. Of course, this may not hold true in the event of a significant economic downturn (like 2008), but even in such cases, NYC’s market has shown its resiliency by bouncing back within a few years and then exceeding pre-recession values. For that reason, it is important to plan ahead to avoid being in the position of selling during a downturn.

2.) “I can save money by not working with a buyer’s agent.” A buyer’s agent is compensated, indirectly, by the seller via his agent. The person who gets a windfall when a buyer is unrepresented is the seller’s agent since most listing contracts have the same commission regardless of whether the seller’s agent has to share his or her commission with the buyer’s agent. Having an agent on the buy-side means the buyer’s interests are better represented, and the buyer has someone to negotiate on their behalf, rather than the seller’s agent acting in a dual capacity representing both buyer and seller. In almost all sale transactions in NYC there are agents on both sides, and in my personal experience, prospective buyers who are unrepresented tend to present haphazard offer packages at non-competitive levels. Being represented by an experienced agent also sends a signal to a seller that the buyer is serious and will be prepared throughout the process.

3.) “I can’t buy as nice of an apartment as I can rent.”

To the surprise of many buyers, the monthly carrying costs of owning a home (including mortgage payments) can be roughly the same as the monthly rent on a comparable unit. Even where monthly costs are slightly higher than a comparable rent price, unlike rent paid to a landlord, a big chunk of these payments (often ⅓ or more) goes toward the equity in the property and other portions may be tax deductible.

4.) “I want to buy a condo, so I can renovate it how I want.”

The perception that condo boards will let you do what you want is generally misplaced. If you live in a building where you share walls, entrances, and elevators with other residents, you can’t renovate willy nilly. Almost all buildings (both condo and coop) have alteration agreements which set forth rules regulating how renovations are done in order to protect the quality of life of other residents (such as hours of construction, duration of renovations, use of elevators….) and to maintain the physical integrity of the building (such as requiring an architect to vet layout changes, prohibiting wet over dry, … ). Alteration agreements aren’t designed to destroy an owner’s renovation dreams, but rather to make sure that one person’s toilet doesn’t leak down into someone else’s living room, or that your neighbor’s renovation doesn’t last 6 years. Often, boards will welcome renovations that are done properly and safely as these raise property values in the building.

5.) “The cheaper the apartment, the better the deal.”

Many first-time homebuyers are easily enticed by listings that at first glance appear to be a bargain. However, an unexpectedly low price tag almost always means there is something about the property that makes it worth inherently less than comparable properties or that the building’s financial condition makes ownership costlier or more risky. The market here is highly efficient and moves quickly unlike many places, so a lower price tag is not usually about timing or a lack of buyers at that particular time, but due to some flaw or immutable characteristic which will limit the upside in the future. That said, there is a property for everyone, so if a buyer is ok with brick wall views and lack of light, they can pay less and enjoy the space all the same so long as they remember that when it comes time to sell, the property won’t be right for everyone so the selling price down the line will also be below market.

6.) “I’m too early in my search to reach out to an agent.”

Many first-time buyers only reach out to agents once they are fully ready to buy. Before that, they have spent countless hours thinking about their budget and stressing out without actually having the right information. A good agent would never push a buyer to rush the process, but can save a potential buyer lots of time and wasted energy, as well as getting them on a more efficient plan to be ready to buy. It is never too soon to reach out to an agent who will be able to answer your preliminary questions, and help you feel at ease and knowledgeable throughout every stage or your search (even if that stage is just browsing listings for fun).

Buying a home is one of the biggest decisions someone can make, but it doesn’t need to be the most painful. If you or someone you know is thinking about buying a home, we are here to help with any questions, big or small.

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