For the fourth consecutive year, the Good Cause Eviction Bill (the "Bill") has been introduced in the legislature. This Bill is essentially a statewide rent control measure, affecting residential leases not already under rent control or stabilization. There is growing belief that it could be passed this year due to a recent upstate court decision that invalidated a local Good Cause Eviction, stating that only the State Legislature can enact it.
The Bill would make it difficult for (a) co-op apartment corporations to evict tenant-shareholders, (b) tenant-shareholders in co-ops to evict sub-tenants, (c) condominium unit owners to evict tenants, or (d) landlords to evict occupants without leases or other agreements, unless good cause for eviction can be shown.
If passed, the Bill would significantly change how property owners can deal with occupants, potentially damaging the financial health of cooperatives. Even condominiums could be affected, as unit owners might struggle to cover costs and may elect Boards that lower operating expenses or amend By-Laws to limit common charges or assessments, allowing unit owners to profit from leasing their units again. This Bill applies to all residential real estate, except rent-stabilized and rent-controlled apartments, and owner-occupied houses with fewer than four units.
Under the Bill, landlords must show good cause to evict tenants, subtenants, or occupants, even without a valid lease. Evictions would require a court order and demonstration of "good cause for removal." Good cause includes failure to pay rent, unless the tenant faced an unreasonable rent increase. An unreasonable increase is assumed to be an annual increase greater than 3% or 1.5 times the consumer price index increase.
All tenants and subtenants must be offered a renewal lease with a reasonable rent increase, presumed to be 3% annually. If not offered, an occupant could stay without paying rent, regardless of whether the lease expired or the occupant never had a lease.
Good cause also includes occupants' refusal to grant access to the property owner for necessary repairs or improvements. However, it would be up to a court to decide what qualifies as "necessary." This could lead to court battles over eviction proceedings that could last for years.
This Bill would essentially cap rent increases in New York State at 3% per year, regardless of increases in property taxes or other operating expenses. It would give judges the power to decide if repairs and improvements are necessary in privately-owned real estate, mandate renewal leases, and limit landlords' ability to regain their properties.
It's worth noting that while rent can only increase by 3%, property taxes have increased by more than 3% per year for the last decade. Additionally, new laws and regulations aimed at reducing buildings' carbon footprints and new Local Law 11 regulations will require operating cost increases greater than 3%.
This Bill could result in co-ops being unable to terminate shareholder leases and condo unit owners being unable to pursue tenants for non-payments if maintenance, common charges, and assessments increase more than 3%. It could also limit the ability of co-op shareholders and condo unit owners to rent out their homes and apartments with increases greater than 3% per year.
The legislation assumes that apartment and building owners can subsidize their neighbors indefinitely while working through the courts to operate their properties. It raises the question of who will pay the bills when tenants or occupants don't pay rent, maintenance, or common charges and may not even have the right to live there.
Shockingly, property owners would need to prove good cause to evict squatters, likely going through lengthy court battles. Additionally, employees provided with housing (e.g., a superintendent) would be protected from eviction after termination unless the property owner can prove that the termination was lawful.
Furthermore, the Housing Security and Tenant Protection Act of 2019 allows judges to permit tenants to remain in their homes for up to a year after defaulting on rent payments due to hardships, while property owners continue to pay for real estate taxes, heat, insurance, repairs, and other expenses.
If you have questions about this Bill and its potential impact on property owners' ability to pay their bills, it is recommended that you contact the Bill's sponsors, especially if one of the sponsors represents your district as a State Senator or Assembly Member. This legislation could have significant implications for property owners, tenants, and the real estate market as a whole. It is crucial for those affected to stay informed and take appropriate action to protect their interests.
Thomas Hollingsworth
CNE Certified Negotiation Expert
Thrive Real Estate Team
Licensed Associate Real Estate Broker
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