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New Rules for Landlords & Tenants Part III

Posted by Arnold A. Arpino | Jan 31, 2020 | 0 Comments

On June 14, 2019, in response to a housing shortage that has spanned more than fifty years, New York passed the Housing Stability and Tenant Protection Act of 2019 (HSTPA). HSTPA will bring about broad and sweeping changes to the laws governing many forms of housing across New York. 

This is Part 3 of a three-part series of posts discussing the sweeping reforms. Part 1  focused on the new changes to the Real Property Law. Part 2 focused on the changes to Real Property Actions and Proceedings Law. This post will discuss the changes to the General Obligations Law and changes to the General Business Law with respect to Co-Ops and Condo Conversions.  

Under the Old Law: 

General Obligations Law: 

  • Limits on Security Deposits and Pre-Paid Rent (GOL § 7-108(1-a)): Rent-stabilized tenants were not required to deposit or advance more than 1 month's rent as security deposit; no limits on security deposits or pre-paid rent for market tenants. 
  • Inspection of Premises, Return of Security Deposit (GOL § 7-108 (1-a)(c)–(e)): A security deposit had to be returned within a “reasonable time.” Law did not specify time. 

General Business Law: 

  • Conversions to Cooperative and Condominium Ownership (GBL § 352-eeee): the law permitted conversion based on an eviction plan. In a non-eviction plan, at least 15% of tenants in residence must have agreed to buy before the conversion was effective. 

Under the New Law: 

  • Limits on Security Deposits: 
  1. Tenants in rent-stabilized and unregulated units may not be required to deposit more than 1 month's rent as security deposit 
  2. Abolishes pre-paid rent advances. No more first and last month's rent accepted or required at beginning of tenancy. 
  • Inspection of Premises: 
  1. After lease is signed but before occupancy begins, landlord must offer tenant an opportunity to inspect apartment (with landlord present). After the inspection, the parties must enter into a written agreement attesting to the condition of the apartment and noting any defect or damage. The agreement is admissible as evidence of the condition of the premises at the beginning of the occupancy only in actions related to returning the security deposit and not for warranty of habitability. 
  2. Upon tenant's notice of intent to vacate, landlord must conduct exit walk-thru no more than 2 weeks and no less than one week before the surrender. Landlord must give 48 hours' written notice of inspection. Tenant may be present. After inspection, landlord must give itemized statement specifying repairs and cleaning that shall be the basis of any security-deposit deduction. Tenant may cure any condition before tenancy ends. 
  3. Landlord has 14 days from tenant's vacatur to return security and an itemized statement if any portion of the deposit is retained for nonpayment of rent, nonpayment of utility charges, damage caused by tenant beyond wear and tear and moving, or storage of tenant's belongings.   
  • Return of Security Deposit: 
  1.  If landlord fails to provide itemization or deposit within 14 days, landlord forfeits right to retain any portion of security deposit. 
  2. The security deposit cannot be withheld based on a claim of wear and tear, attorneys' fees, late fees, additional rent, or other miscellaneous charges. 
  3. The itemized statement must specify any repairs or cleaning that shall be the basis of any deduction from the security deposit. Tenant may cure any condition before tenancy ends. 
  4. In an action disputing the amount of any security deposit retained, landlord has burden to justify retaining any portion of the deposit. 
  5. Willful violation subject to punitive damages up to twice the amount of the deposit. 
  • Conversions to Cooperative and Condominium Ownership: 
  1. The eviction option is eliminated. For a non-eviction conversion to be effective, at least 51% of tenants in residence must agree to purchase. 
  2. Tenants in occupancy have 90-day exclusive right to purchase and 6-month right of first refusal. 
  3. Holders of unsold shares and unsold units may lose ability to seek MCIs for capital improvements. To qualify for an MCI, building must be 35% rent regulated.
  4. Eligible senior citizens or disabled persons who do not purchase may not be subject to unreasonable rent increases or evicted during their occupancy except for nonpayment of rent, illegal use or occupancy of the premises, failure to provide reasonable access, or a similar tenant breach of obligations to dwelling-unit owner. 
  5. Eligible senior citizens/disabled persons who reside in units subject to government regulation remain subject thereto. 
  6. Rights granted to eligible senior citizens/disabled persons under the plan may not be abrogated or reduced. 
  7. Co-op plan offeror has 30 days from receipt of the form from occupant claiming to be a senior citizen or disabled to challenge the claim. Dispute brought before the Attorney General, who has 30 days to decide. The determination is subject to CPLR Art. 78 review if filed within 30 days of Attorney General's determination. Absent fraud, this is the sole method to resolve. 
  8. Applicable only in New York City 



About the Author

Arnold A. Arpino

Managing Shareholder focusing on Creditor's Rights, Real Estate, & Non-Taxable Estate Planning.


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