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Rent De-Regulation Costs Increase- The NY Bill Is a Monster Sans Teeth

Photobucket 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.

The Legalese (A00473): Provides that an owner or lessor of a rent controlled or rent stabilized unit commences an action in bad faith to recover possession on the grounds that it is not occupied as the tenant`s primary residence shall be liable for the tenant`s court costs and attorney`s fees in addition to an amount which is three times the monthly rent or actual damages.

February 23, 2009 | Filed Under Property Management, Rent Control, Rent Regulation, Rent Stabilization, Rental Property Management 

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