Relates to civil penalties that may be imposed for violations of the rent stabilization law of 1969 and the emergency tenant protection act of 1974

Sections 4 and 5 of the bill amend RSL § 26-51 1(c)(1 3) and EPTA § 6(d)(1), which allow an owner to obtain increases in apartment rents based on individual apartment improvements (IAIs). These sections require that as a condition of obtaining such increase, the owner must give the tenant written notice of the calculation of such increase on a form prescribed by DHCR and file such form with MICR. This amendment will conform and make similar the provisions of the RSL to those of the RCL, which already requires a filing of a written notice with DHCR disclosing the IAIs performed. Section 6 of the bill provides that failure to file notice of high-rent deregulation as required under the administrative code of New York City tolls the limitations period for challenging such deregulation and for concomitant examination of the rental history and determination of any rent overcharge if that deregulation is vacated.

Section 7 of the bill grants the same relief as set forth in section 6 as such relief applies to the emergency tenant protection act of 1974.

Section 8 of the bill provides that it shall take effect immediately except: (a) sections 1, 2, and 3 shall take effect on the thirtieth day next succeeding the date on which this bill shall become a law and shall apply to acts or offenses committed on or after such date; (b) sections 4 and 5 shall apply with respect to any modification or increase of dwelling space or increase in services or installation of new equipment or improvements or new furnishings or furniture in a housing accommodation on or after the date this bill becomes law; and (c) sections 6 and 7 shall apply to housing accommodations which become vacant on or after the date this bill becomes law.

Existing law

RSL § 26-516 and EPTA § 12a(3)(i) and (ii) provide for a civil penalty of $250 for the first violation of a division order and $1,000 for each subsequent violation of such order, and a civil penalty of not less than $1,000 for the first offense of harassment and $5,000 for each subsequent offense of harassment or for harassment directed at the tenants of more than one apartment.

RCL § 26-413 provides for a civil penalty of $100 for the first violation of a division order and $500 for each subsequent violation of such order, and a civil penalty of not less than $1,000 for the first offense of harassment and $5,000 for each subsequent offense of harassment or for harassment directed at the tenants of more than one apartment.

RSL § 26-516, ETPA § 12, and CPLR § 213-a currently provide, without exception, for a four-year statute of limitations for challenging a legal rent. In addition, RSL § 26-516 and ETPA section 12 only require an owner to maintain rent records for four years.

There is no current statutory requirement for a separate and specific IAI notice to tenants in either the RSL or ETPA. Notice to tenants of IAIs is currently provided only in a rider to the lease and in annual apartment registrations.

RSL § 26-504b currently requires an owner to give notice to both the tenant and DHCR of any claim of "high rent vacancy deregulation." However, the RSL does not contain any sanction for the failure of the owner to comply with this important notice requirement. The ETPA currently does not contain any notice requirements for high rent deregulation.

Prior legislative history

A bill proposing an increase in civil penalties for a violation of a division order and for harassment was introduced in 2008, but did not become law. The other provisions of this bill are new.

Statement in support

The civil penalty provisions of the rent laws are intended to function both as a deterrent against violations of the rent laws, including the harassment of tenants, and as an appropriate sanction for the violations that do occur. The penalty for violation of a DHCR order ($250) has remained the same since 1984, a period of 24 years. The penalties for harassment ($1,000 for the first offense and $5,000 for each subsequent offense) have not been updated since 1997, a period of more than 10 years. Increased penalties are needed so that they will continue to be an effective deterrent and a meaningful sanction for violations of the rent laws.

The current provisions of the RSL and ETPA do not provide adequate notice to the tenant of the nature and scope of the IAIs that were performed in the housing accommodation before the tenant moved in. With the increased notice provisions provided for by the bill, the tenant will be fully apprized as to the scope and cost of the alleged IAI so that he or she can perform a reasonable inquiry to determine if the increases are appropriate.

In regard to apartments leaving rent regulation, the rent laws provide for the deregulation of apartments that become vacant with a lawful rent of at least $2,000 per month. Since the right of a tenant to challenge a rent extends only for four years, a claim of "high rent vacancy deregulation," which is predicated on the lawful rent for an apartment reaching the $2,000 per month level, becomes unchallengeable after four years. Therefore, an affected tenant must be given notice not only of his or her right to challenge the claim of deregulation, but also of the information necessary to understand the owner's claim and to file a meaningful challenge, if deemed warranted. Where the owner fails to provide the required notices for high-rent exemption, the most effective method for ensuring that tenants are given a meaningful opportunity to challenge claims of deregulation and concomitant rent overcharges is to provide that the period to examine the rental history of an accommodation otherwise provided by the rent stabilization law not commence until such notices are provided.

Budget implications

None. DHCR will address any responsibilities placed upon it by the bill within existing resources.

Effective date

This bill would take effect immediately, except (a) sections 1, 2, and 3 would take effect on the thirtieth day next succeeding the date on which this act shall become a law and shall apply to acts or offenses committed on or after such date; (b) sections 4 and 5 would apply with respect to any modification or increase of dwelling space or increase in services or installation of new equipment or improvements or new furnishings or furniture in a housing accommodation on or after the date this act becomes law; and (c) section 6 and 7 would apply to housing accommodations which become vacant on or after the date this bill would become law.