Rent De-Regulation Costs Increase- The NY Bill Is a Monster Sans Teeth
It’s no secret that evicting non-primary tenants can be arduous, time consuming, expensive and fruitless. Now the government is trying to dissuade landlords from even trying. A bill is now pending before the NY state legislature, (A00473 see below) which would award court costs and punitive damages to tenants who successfully defend against their eviction (and against the ending of rent regulation for that unit) based on non-primary residence. A form of this bill passed the assembly on 06/24/2008.
Although this bill might appear to have teeth, really it’s all gums. Do the math from a landlord’s perspective with me:
- A lease demands $500 rent each month for an apartment that would rent for $1200 to $3600 on the open market. Three times the rent would be a $1500 penalty
- The tenant uses free legal aid or a mom and pop law firm for a maximum of 10 hours at $250/hour. This totals $2500
- Penalty losses would equal roughly $4000. The value of the building on a conservative 5x rent roll would increase by a minimum $42,000 (5*$700*12 months), alternatively, the increased rent roll of $8,400 easily justifies the risk.
- The landlord’s legal expenses also need to be considered.
For the long-term, well capitalized landlord, the decision to deregulate remains a no brainer.
There are many ways to prove a resident is not a primary tenant. Video surveillance is one. It’s not enough to show that the primary doesn’t come home for months on end. A landlord needs to show that someone else does live in the apartment in question and that the primary tenant live elsewhere. These aren’t easy to do. Secure Watch can help. They are experts at assisting landlords in proving who lives where.
Another method is to rekey the building. That’s simply changing the front locks to use a multi-lock or other hard to duplicate key system. Only primary tenants and immediate family get keys. Primary tenants who show up to housing court without keys to their ‘home’ can look pretty foolish in front of a judge.
There are more ways than these to prove non-residence and more ways than non-residence to get an unwanted tenant out. A good property management firm is an important part of any successful suit and is aware of what happens in its buildings.
New Property Management: The Devil You Wish You Knew
Many property owners shy away from changing building managers. It’s difficult. There are long established relationships, too many ongoing projects, or our favorite ” knowledge of the property”. Baloney. Bogus. Hogwash. Bollocks.
There are few reasons to stay with a property manager and many reasons to leave. When a property management firm communicates clearly and lives up to its obligations, they should be trusted and retained. But when property owners have to perform management responsibilities, it’s time to do some head scratching and ask “So why are we paying these guys?”.
Realizing it’s time to switch managers does not ensure a smooth transition; however if you have an organized step by step plan you can have a seamless hand off.
Luckily, the Real Estate Board of New York (REBNY) has laid these out or at least established some guidelines.(See Below)
Even with the guidelines in place, communication and expectation management are imperative for a successful transition.
Although prospective clients frequently ask for our opinions about specific situations before beginning a client/vendor relationship, it is important to be aware of all pre-existing conditions at a property before we begin to manage it. Learning about non-paying tenants, decade old feuds, or rowdy neighbors can be accomplished before either party sets itself up for disappointment.
Although changing management companies can seem daunting, with the right preparation, process and right company it doesn’t have to be.
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1) MORTGAGE INFORMATION a) Payment Book/Monthly Payments b) Name and Address of Lender c) Closing binder 2) INSURANCE a) Original Policies/Schedule b) Insurance Broker c) Pending Claims 3) LEGAL a) Corporate/Certiorari Counsel b) Pending Legal Matters c) Corporate Stock Book/Seal d) Certificate of Incorporation e) Asbestos/Engineering Survey f) Survey/Deed/Title Policy g) Board Minutes h) By-Laws/House Rules i) Offering Plans/Amendments j) Conversion Closing Binder (if applicable) 4) ACCOUNTING a) Name/Address of Firm b) Federal/State/Sales Tax Returns c) Audited Annual Reports/Budget d) 1098 Information e) RPIE/RPT Filings f) Block/Lot/Assessed Valuation g) Real Estate Tax/Water Bill h) NYC Real Property Tax i) Abatement Filings 5) PAYROLL a) Employees Earning Records b) Union Wage Contract c) Forms 940 and 941 d) Unemployment Insurance Returns e) Social Security Tax Returns f) Copies of W-4 Forms g) * Federal ID number 6) TRANSFER DEPARTMENT a) Pending Transactions b) Blank Proprietary Leases c) Resale/Sublet Requirements |
7) GENERAL a) Inventory of Building Supplies b) Certificate of Occupancy c) Building Plans d) Alteration Agreement e) Commercial/Store/Garage Leases f) Water Meter Numbers g) Name of Architect & Engineers h) Vendor/Maintenance Contracts i) Board Policies/Late Fees/Sublets j) Construction Contracts/Warranties k) Floor Plans l) Lead Based Paint Records (pre 1978 buildings) m) J 51 Documents 8 ) SHAREHOLDERS/UNIT OWNERS a) *Rent Roll (Maintenance/Common Charges) b) Collections/Arrears Report c) Payment Histories/Delinquent Residents d) *Alternate Address Listing e) Share Allocation f) Garage Sales Tax Exemptions g) Current Directors/Managers h) Shareholder/Unit Owner Files i) Guarantee Agreements, if any j) Escrow Agreements, if any k) Sublease Information l) List of Mortgagees/Lenders for each unit m) List of Mortgagees/Lenders for each unit n) Shareholder/Unit owner social security number 9) OPERATIONS a) Bank Statements/Reconciliations/All Accounts b) Paid/Unpaid Invoices c) Service Contracts d) Monthly Operating Statements e) Cash Balances Available for Transfer f) Open Purchase Orders g) Pending Service Requests h) Management Reports i) Pending Violations j) Complete Set of Keys 10) LICENSES/PERMITS a) Certificate of Operations/Oil Burner b) Annual Boiler Inspection c) Fuel Storage Permit d) Super’s Certificates of Fitness e) *MDR Card f) Local Law 10/16 Reports g) Elevator Inspections/Tests h) Miscellaneous Permits |