Prohibits the collection of rent arrearages accruing prior to the date of approval of an application for an adjustment in the legal regulated rent based upon a major capital improvement

BILL NUMBER:S7039

Title of bill

An act to amend chapter 576 of the laws of 1974 constituting the emergency tenant protection act in relation to prohibiting the collection of rent arrearages accruing prior to the date of approval of an application for an adjustment in the legal regulated rent based upon a major capital improvement

Purpose

This bill prohibits the temporary retroactive rent increase or surcharge prior to the approval of the MCI application for rent stabilized apartments. Under current law, landlords are entitled to collect a retroactive surcharge, which is the amount owed between the effective date and the collectable date of the DHCR order granting the MCI. If the application is approved, in addition to the increase becoming a part of the tenants' base rent, the landlord is entitled to collect the increase retroactively, between the "effective date" (the date of the first rent payment 30 days after the tenant is notified notified by DHCR that a complete application was filed) and "collectable date" (the MCI is approved) in the form of a temporary surcharge. The rent increase (the surcharge and the base rent increase) cannot be collected from the tenants until the application is approved, so the surcharge is collected temporarily in addition to the increased base rent after the collectable date. This bill would bringing rent stabilized apartments in line with rent controlled apartments, eliminating the retroactive temporary surcharge and allowing landlords to begin collecting the increased base rent only upon the collectable date or the date the application is approved.

Summary of provisions

Section 1 amends Section 6 of section 4 of chapter 576 of the laws of 1974 by adding a new subdivision prohibiting any adjustment in the legal regulated rent based upon a major capital improvement until the date of approval of the application.

Section 2 establishes the effective date.

Justification

Under current law for rent stabilized tenants, in addition to the cost of a MCI becoming part of the tenants' base rent, the landlord is entitled to collect a temporary retroactive surcharge, which is the amount owed between the effective date and the collectable date of the DHCR order granting the MCI. This bill will eliminate the undue burden created by the combined effect of the permanence of the increase and the retroactive temporary surcharge by eliminating the temporary surcharge. This will create consistency between rent stabilized and rent controlled apartments, eliminating the retroactive temporary surcharge and allowing landlords to begin collecting the increased base rent upon the collectable date or the date the application is approved.

Legislative history

None

Fiscal implications

None.

Effective date

This act shall take effect immediately.