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Category: Renting Your Apartment


Prepaid Condominium Rents: A Sucker’s Punch

January 30th, 2015 — 1:54pm

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When WC Fields said “A sucker is born every minute” he was not talking about tenants prepaying a year of rent on their condominium but he may very well have been!

When a tenant prepays rent, they are setting themselves up for a serious headache. Continue reading »

Take the scenario where the lease is terminated because the apartment is destroyed or sold* and the tenant is no longer required to pay rent for the remainder of the term. Even though the landlord may be legally required to return part of the prepaid rent, the tenant may have to chase the landlord down and hope he does not abscond from his duties. This can be particularly difficult when the landlord lives in another state or county. In such a situation, money which belongs to the tenant could be held up for an unknown and potentially prolonged period of time.

Another pitfall is the loss of control over monthly rental payments. If the rent has been paid in advance, the tenant loses the ability to withhold rent due a breach of the warranty of habitability by the landlord. It will almost certainly be difficult to convince the landlord to return prepaid rent and such a situation may require legal action. Of course, if the rent has not been prepaid, the tenant is in control of his rental payment when a warranty of habitability issues arises.

Many leases include a provision stating that if certain services are lost (i.e. heat, water, air conditioning), then the tenant may receive an abatement of the rent due for the period of time that such services are missing. Again, if the tenant prepays the rent, it will be up to the tenant to go after the landlord and request a return of a portion of what was paid. Rather than maintaining control of what is paid to the landlord, the tenant will have to hope that they are dealing with an honest landlord.

Due to these and other potential risks involved with prepaying the rent, we suggest that the tenant pays rent on a monthly basis. Any inconvenience associated with this arrangement trumps the consequences which a tenant may face from prepaying the rent.

Having said all of the above, we recognize that sometimes the market dictates the terms and so, in an owner’s market, the tenant might just have to suck it up and take one for the team if he or she wants that apartment but if they do they should at least be aware of what they are getting into.

*Believe it or not, one of the common condominium lease forms include a provision in which the lease may be terminated if the owner decides to sell the apartment.

By Ryan V. Stearns and Jerome J. Strelov

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UPDATE: Squatters, Transients and Luxury Apartment Renters – Are You Confused Yet?

November 1st, 2013 — 11:08am

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confusedOur last post discussed a case in which the City was successful in enjoining Smart Apartments from advertising for transient (i.e. less than 30 day occupancy) rentals.  On this NYC marathon weekend when the City is virtually flooded with tourists here for very short periods, we thought it appropriate to revisit this issue. Continue reading »

The Environmental Control Board (the “ECB”) has now decided that the short-term rental of an apartment (less than 30 days) via websites such as Airbnb is legal, so long as a permanent occupant of the apartment is present.  Apparently the dire issues of safety and nuisance, which the City had argued in another case is the purpose of the regulation, were sorted out through the presence of a roommate.  Arbitrary?  You be the judge!

The ECB decision overturned a $2,400.00 fine imposed on the owner of a condominium unit whose tenant used Airbnb to rent a room out to a Russian tourist for three days.  According to the original decision, the Airbnb user was in violation of the Administrative Code of the City of New York § 28-118.3.2 because that short-term rental was contrary to law.

The relevant part of the Multiple Dwelling Law, Article I §4(8)(a) (the “MDL”) and the Administrative Code of the City of New York § 27-2004(a)(8)(a) (the “Code”) provides that a Class A multiple dwelling shall only be used for permanent residential purposes, which is defined as occupancy by the same person or family for 30 consecutive days or more.  However, the MDL and the Code also states that occupancy for less than 30 consecutive days by other persons living within the household of the permanent occupant such as house guests, or lawful boarders, roomers or lodgers is not inconsistent with the occupancy of a dwelling unit for permanent residence purposes.  The MDL goes on to define a boarder, roomer or lodger in part as “…a person living within the household who pays a consideration for such residence…”

Here, the ECB found that the tourist’s three day occupancy of the apartment was not illegal because the tourist shared the apartment with the Airbnb user’s roommate.  In other words, according to this case, a would-be illegal short-term renter may legally rent a Class A dwelling unit for less than 30 consecutive days so long as a permanent roommate is present at the time of the occupancy.  It is irrelevant that the roommate and the tourist were strangers, as the MDL does not require the individual renting the apartment to have a personal relationship with the permanent occupants of the residence.

It should be emphasized that the exception to the 30 day rule, which this decision suggests, is tailored to a situation where at least one permanent resident of the apartment is occupying the apartment at the same time as the renter.

We believe that the MDL provides a distinction without a difference and this case only serves to amplify the absurdity of the law, demonstrating that it is not based in reason or reality.  As we previously stated, it does not make sense to prohibit an individual from renting his or her apartment for 29 days but not for 30 days.  It is similarly irrational to prohibit someone from renting an apartment for 30 days unless a legal tenant is present.  These ambiguities make us wonder what the actual purpose of this law is and if it is regulating the people it was designed to regulate?

By Ryan V. Stearns and Jerome J. Strelov

 

 

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Squatters, Transients and…Luxury Apartment Renters?

August 6th, 2013 — 4:21pm

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donotredAll of these months, the owner of apartment 3A could not figure out why there was a constant buzz of activity surrounding his neighbor’s apartment.  Beginning around January, there had been an influx of strange happenings including loud parties and exotic meetings being conducted by constantly changing and often unfriendly faces.

The new and unwelcomed hullabaloo aroused the owner’s suspicion and caused him to probe its origins.  After a quick Google search, he had discovered the source of the activity – a rental advertisement by Airbnb.com – a website devoted to providing apartment dwellers a platform for advertising the rental of their space for short periods of time, just like a hotel. Continue reading »

This is hardly a novel concept, and up until recently, it was arguably legal.  Yet despite its newfound illegal status in New York, there remains a plethora of websites offering this service for those who want to be part time inn-keepers and transform their traditional living space into a transient hotel.  To deal with these amateur inn-keepers, New York State amended the Multiple Dwelling Law, Article I §4(8)(a) in 2010 and cleared up the confusion surrounding its previously ambiguous language.  The law now plainly states “A Class A multiple dwelling shall only be used for permanent residential purposes…which is defined as occupancy of a dwelling unit by the same natural person or family for thirty consecutive days or more…”  The Administrative Code of the City of New York § 27-2004(a)(8)(a) mirrors the language of the Multiple Dwelling Law.   The penalty for noncompliance can be $2,400 per violation and targets landlords, who are considered the legally responsible party, even if the landlord’s tenants are to blame for renting out the space.  That would mean the cooperative corporation for coop abusers and the owners of condominium units in condos.

However, it is not just recreational apartment renters who have come under scrutiny, as large companies have not overlooked the fact that there is a lot of money to be made in the hotel industry.  In October 2012, New York City filed suit against Smart Apartments, a major operator of short-term rentals in more than 50 buildings in the City.  While the suit is sure to please the hotel lobby, the City’s lawsuit focused on the safety concerns, nuisance and deceptive trade practices presented by illegal hotels.

In February 2013, the City was successful in enjoining Smart Apartments from advertising or allowing the transient occupancy in New York City Class A Multiple Dwellings, and compelling them to remove any such advertising from all internet websites and other media.  The decision stated that Smart Apartment’s business was illegal, unsafe, a public nuisance and was based on deceptive trade practices.

The crux of the argument posed by the City is that short-term rentals are unsafe and a nuisance.  The City claims they are unsafe because New York City Fire and Building Codes require transient residences to observe significantly higher fire safety standards than non-transient residences and most apartment buildings are not up to that higher code.  However, whether that higher standard for a less than 30 day stay makes any sense is another question.  After all, what is the practical difference between someone who is subletting an apartment for a month and one who is only there for a week?  It is not likely that the former is more familiar with the staircases and thus more capable of evacuating the building in case of a fire.

The City argues they are a nuisance because of (among other reasons) security risks, loud parties and the occupants not conducting themselves in the “civilized, genteel manner of the locals”.

And it is not just the internet sites that have to worry.  Recently, an administrative law judge sustained a notice of violation for “occupancy contrary to Certificate of Occupancy in that apartment 5G was used transiently” issued by the NYC Environmental Control Board to an owner of a condominium unit.  The owner was issued a fine for $2,400 after the owner’s tenant used Airnb, Inc. to arrange for a guest to occupy the premises for less than 30 days.

There is no doubt that constantly changing neighbors may pose a nuisance to others who live in the building.  As an advisor to Mayor Bloomberg said, “It’s not the bargain that somebody who bought or rented an apartment struck, that their neighbors could change by the day.”   However, in coops and condos this can and generally is controlled by the building’s bylaws or proprietary lease.  For example, most coops have strict subleasing restrictions and some condos have time limits as well as rights of first refusal.  In other words, this is an activity which the building’s owners are fully capable of regulating and all such regulation decisions should be deferred to them.  Potential purchasers who perform their due diligence can themselves decide whether they want to live in a building which allows short-term rentals.

So what are we left with?  The issue of safety seems baseless because it strains logic to conclude that the same apartment is safe for a 30 day rental but not for a 29 day rental.   The idea that short-term renting is a nuisance to other owners in the building is erroneous because the coop or condo owners can set the rules and a buyer should know these rules before he or she signs a contract.

While we recognize that the City should insure that housing is safe even for short-term rentals, we believe that these current laws should be re-examined in light of the fact that people are using the internet to find housing for short stays in the City.  It simply does not seem reasonable to allow the same apartment to be rented for 30 days but not for 29.  Certainly there must be a way to find logical protections that make sense given the realities of the internet and how it has affected the marketplace.

By: Ryan V. Stearns and Jerome J. Strelov

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