Who's the Landlord?

On June 14, Govenor Andrew M. Cuomo signed the Housing Stability and Tenant Protection Act of 2019. This pro-tenant legislation is intended to prevent widespread evictions, preserve affordable housing, and safeguard against rising rents. It is also designed to protect elderly, disabled, and otherwise vulnerable New Yorkers.

The expansion of tenants’ rights under the act will undoubtedly have many unintended consequences in the relationship between co-op boards, rent-regulated tenants, managing agents, and investors. It will also strengthen the “super” rights of rent-regulated tenants, which were included in original leases and memorialized or enhanced in the act. For example, if there is nothing in the original lease prohibiting dogs, smoking, or having a washer and dryer, tenants under the act would be allowed to keep a dog, to smoke, or to own a washer and dryer – even if that has been prohibited in the cooperative or condominium in which they live.

What do you do if a non-purchasing tenant comes to the board or the managing agent and complains about defective conditions in his or her unit? Always keep in mind that the non-purchasing tenant’s primary relationship is with the  owner of his or her unit, who is the actual landlord. In a co-op this will be the sponsor or a subletting shareholder; in a condominium it will be a subletting unit-owner. As such, it is important that the complaining tenant is instructed to speak directly with the landlord or the landlord’s agent. At the same time, the board or its managing agent should investigate the situation and make a good-faith attempt to rectify the matter, perhaps by conducting an inspection to verify the problem and to assess whose responsibility it is to correct it. If repairs are needed that aren’t the cooperative or condo’s responsibility, the board’s representatives should provide the apartment’s owner with a firm deadline and a date for a follow-up compliance inspection.

But what happens if the apartment owner is a sponsor who has disappeared, or is simply too detached, too preoccupied, or too financially distressed to maintain the tenant’s unit in good repair? What if this owner doesn’t care if the matter winds up in court – because the owner views it as an opportunity to buy out the tenant and unlock the equity? No matter what the owner’s reasoning, you do not want a situation in which a struggling tenant stops paying rent, and thereafter is advised to claim harassment, retaliatory eviction, constructive eviction, or breach of warranty of habitability as a basis for a rent forgiveness. Such a course of action leads to frustration, delay, and additional expenses for everyone involved – except, perhaps, the allegedly aggrieved tenant.

What’s worse, should this tenant commence an affirmative proceeding (also known as an HP proceeding) against the apartment owner, it might result in fines and penalties against the board, the managing agent, and the building. This unwanted publicity may also negatively affect shareholders or unit-owners who are attempting to sell or rent their units in an already soft market.

So, what should a board do with an intransigent landlord? Building staff should regularly inspect all units, including those that are rent-regulated, and notify the responsible party of any substandard conditions. Repairs that are the responsibility of the cooperative or the condominium should be regularly performed to individual apartments and common areas. Services, such as extermination, should be made available to rent-regulated tenants. Expediters should also be retained, if needed, to remove existing violations so that they cannot be used as a defense to avoid the payment of rent.

Boards must be vigilant. If required repairs have not been made following notice, the cooperative or condominium should retain its own independent contractors to perform those repairs that cannot be made in-house. The managing agent should retain all invoices and canceled checks as proof of payment, as well as repair logs and communications. In appropriate circumstances, the landlord should be billed for the cost of repairs.

In any event, communication with the apartment owner is vital at all times. If all efforts at out-of-court settlement and remediation fail, the apartment owner must be reminded of the cooperative’s right to cancel the shares, terminate the proprietary lease, commence foreclosure proceedings, and notify the shareholder’s lender of the default. The apartment owner should also be urged to take the delinquent non-purchasing tenant to court. This is consistent with the board’s responsibility to all residents of the building to assure that maintenance or common charges are paid in a timely fashion.

Strength in Numbers
If there is a lawsuit, the best approach is for the apartment’s owner and the co-op or condo board to go in together and try to convince the court that everything possible was done to resolve the situation. The superintendent and managing agent must be willing to testify and present their detailed logs, invoices, or any proof that payments and repairs were made. Otherwise, the case could be lost in the first five minutes, along with the unpaid maintenance or common charges.

As a result of the act, the courts are loath to evict any tenants, particularly if they’re elderly, disabled, or otherwise vulnerable. As such, although it is not the board’s responsibility to assist an irresponsible rent-regulated tenant or apartment owner in making repairs, such assistance may quickly resolve the situation. You should also be prepared to demonstrate that the building is well-maintained. All in all, the more you’ve done to find a solution, the more it will help you if the case winds up in court.

Helene Hartig is the founder and owner of Hartig Law.