Requires the stabilization code in the city of New York to provide for the automatic renewal, at the option of the owner, of leases not timely renewed

Summary of specific provisions

Section 1 This bill amends subdivision c of section 25-511 of the administrative Code of the City of New York to provide that a rent stabilized tenant who (1) has received the requisite notice of lease renewal, (2) has not responded to the owner regarding whether the tenant intends to remain in occupancy after the expiration of the lease and, if so, as to the length of such renewal, and (3) then does remain in occupancy after the expiration of their lease, may be deemed to have their lease renewal by the owner subject to the same terms and conditions of the prior renewal lease. Such lease shall be deemed renewed at the legal regulated rent together with any Rent Guidelines Board increases that would have been applicable had the offer of a renewal lease been timely accepted.

Section 2 provides that the effective date shall be thirty days after enactment.

Justification

Since 2000, Section 2523.59 c(2) of the Rent Stabilization Code has provided for the implementation of deemed leases in precisely the same manner as set forth in the proposed legislation. However, in a recent decision by the Appellate Division, Second Department, in the case of Samson Management v. Hubert, the Code provision was invalidated because of the Court's ruling that the regulation conflicts with Section 232-c of the Real Property law. The Real Property Law provision states that "(w)here a tenant whose term is longer than one month holds over after the expiration of such term, such holding over shall not give to the landlord the option to hold the tenant for a new term solely by virtue of the tenant's holding over." Although the legislative history to Section 232-c indicates that "restrictions provided by rent control statutes" supersede the provisions of Section 232-c, the Court's ruling is currently dispositive (efforts to seek leave to appeal were denied).

This legislation is important for several reasons. First, the Second Department's ruling has cast doubt on countless deemed leases that are currently in use in that Department. The status of these leases remains uncertain and it is unclear whether tenants who are occupying these apartments are subject to rent stabilization or whether they are now month to month tenants. Second, the Court's ruling has also

thrown into question the status of deemed leases in the First Department and the rights and obligations of the affected owners and tenants as well. Thirdly, both tenants and property owners will be operating under a cloud of uncertainty as to their rights and obligations in both Departments at this juncture. And lastly, the Code provision was adopted primarily to address a reality of landlord - tenant practice. Previously owners would commence litigation against tenants who failed to renew. The outcome, after expending fees for attorneys and crowding the Housing Court calendar, was that tenants would be provided the opportunity to then execute the renewal lease to forestall eviction. The deemed lease provision of the Rent Code ensured that owners would not need to pursue needless litigation and that tenants would remain protected notwithstanding their failure to execute renewal leases.

This legislation will have the effect of establishing the deemed lease mechanism as a matter of law and remove any doubt as to the continued effectiveness of deemed leases, including those which were executed previously, or are currently in effect, or which may be entered into in the future.

Prior legislative history

This is a new bill.

Fiscal implications

Undetermined savings from a reduction of caseload in Housing Court.

Effective date

This act shall take effect immediately.