In New York City, the term “pied-à-terre” commonly refers to an apartment used as a non-primary residence. Pied-à-terre rentals can often be found in Condominium and Cooperative buildings as well as townhouses. Over the past few years, New York State has enacted legislation which significantly affects rental units. This client alert will address the Housing Stability and Tenant Protection Act passed in 2019 and Good Cause Eviction passed in April of this year and their effects on pied-à-terre apartments.
Housing Stability and Tenant Protections Act (HSTPA) 2019
The HSTPA marked significant legislation affecting pied-à-terre owners. Small landlords unfamiliar with the law faced consequences including owners being unable to deduct from the security deposit or tenants staying beyond the length of their lease. One case in the Hamptons infamously made the New York Post multiple times. See more on our blog HERE.
The HSTPA requires that all residential landlords, including pied-à-terre owners, provide advance notice if they are not renewing a lease or if they are raising the rent by 5% or more. The length of the notice period depends on how long the tenant has occupied the apartment.
- Tenants who have occupied an apartment for less than 1 year are entitled to 30 days’ notice.
- Tenants who have occupied an apartment or have a written lease term of at least one year are entitled to 60 days’ notice.
- Tenants who have occupied an apartment or have a lease term of at least two years are entitled to 90 days’ notice.
The HSTPA also affects landlords’ obligations regarding security deposits. As of 2019, security deposits may not exceed one month’s rent (with an exclusion for seasonal rentals). Landlords must offer an inspection between 1-2 weeks before the tenant surrenders possession of the apartment and provide the tenant 48 hours’ notice of the inspection; and must provide an itemized list of any damage or other condition discovered in the inspection that must be cured. Finally, the landlord must return the security deposit within 14 days of tenant’s surrender of the Premises or provide an itemized list of damages. Failure of the landlord to timely return the deposit with any itemized list of deductions for uncured damage or conditions forfeits the right to retain any portion of the deposit for cleaning or repairs. More information on the law can be found HERE.
Understanding Good Cause Eviction Basics
On April 20, 2024, the New York State Budget for Fiscal Year 2024-2025 was enacted. In its announcement of the enactment, the New York State Senate wrote, “[T]his budget includes some of the state’s strongest tenant protections with the enactment of ‘Good Cause’ protections.” This is in reference to an amendment included in the budget, which added Article 6-A, known as the Good Cause Eviction Law (Article 6-A § 210), to New York Real Property Law. According to Article 6-A § 215, “No landlord shall, by action to evict or to recover possession, by exclusion from possession, by failure to renew any lease, or otherwise, remove any tenant” from any covered housing accommodations, “except for good cause.” It should be noted, that Good Cause Eviction initially only applies for New York City.
What Constitutes ‘Good Cause’
According to the New York State Assembly, the Good Cause Eviction Law “establishes applicability, necessity for good cause, grounds for removal of tenants, preservation of existing requirements of law, and a voidance of any lease or rental agreements that are contrary to public policy.” The grounds for removal of tenants that constitute “good cause” are defined in Article 6-A § 216. They include, but are not limited to, (a) (i) failure to pay rent barring any unreasonable increase in rent; (b) a violation of a substantial obligation of tenancy or breach of any of the landlord’s rules and regulations; (c) substantially damaging the housing accommodation or causing damage elsewhere in or on the real property; (d) occupancy that is in violation of or causes a violation of law; (e) using housing accommodation for an illegal purpose; (f) unreasonable refusal of access to the housing accommodation for the purpose of making necessary repairs or improvements; and (j) failure to agree to reasonable changes to a lease at renewal, including rent increases that are not unreasonable.
The Reprieve Mixed with Ambiguity
Good Cause Eviction does provide and exception for “small landlords.” Under RPL § 211(3)(b) a natural person is a small landlord if that person owns or is a beneficial owner directly or indirectly, in whole or in part of no more than ten (10) units. While this exception clearly applies to a pied-à-terre owner with either one or a few units, it does create ambiguities when an individual owns a rental apartment and has a “beneficial” in other rental apartments i.e. among own other rental properties in New York State through a syndicate. Those who derive income from other rental properties in New York State should be cautious about how Good Cause Eviction impacts them.
Residential leasing, particularly for pied-à-terre owners, has become difficult. Our firm has developed a proprietary platform called RezCue which helps owners, brokers and property managers keep track of important deadlines.
The foregoing is not intended to be comprehensive nor constitute legal advice. If you would like to discuss your specific circumstances or would like more information, feel free to contact us at (212) 625-8505.