N.Y. Emergency Tenant Protection Act 576/74 § 6: Regulation of rents

§ 6. Regulation of rents. a. Notwithstanding the provisions of any

lease or other rental agreement, no owner shall, on or after the first

day of the first month or other rental period following a declaration of

emergency pursuant to section three, which date shall be referred to in

this act as the local effective date, charge or collect any rent in

excess of the initial legal regulated rent or adjusted initial legal

regulated rent until such time as a different legal regulated rent shall

be authorized pursuant to guidelines adopted by a rent guidelines board

pursuant to section four.

b. The initial legal regulated rents for housing accommodations in a

city having a population of less than one million or a town or village

as to which a declaration of emergency has been made pursuant to this

act shall be:

(1) For housing accommodations subject to the emergency housing rent

control law which become vacant on or after the local effective date of

this act, the rent agreed to by the landlord and the tenant and reserved

in a lease or provided for in a rental agreement; provided that such

initial legal regulated rent may be adjusted on application of the owner

or tenant pursuant to subdivision a of section nine of this act; and

provided further that no increase of such initial regulated rent

pursuant to annual guidelines adopted by the rent guidelines board shall

become effective until the expiration of the first lease or rental

agreement taking effect after the local effective date, but in no event

before one year from the commencement of such rental agreement.

(2) For all other housing accommodations, the rent reserved in the

last effective lease or other rental agreement; provided that an initial

rent based upon the rent reserved in a lease or other rental agreement

which became effective on or after January first, nineteen hundred

seventy-four may be adjusted on application of the tenant pursuant to

subdivision b of section nine of this act or on application of either

the owner or tenant pursuant to subdivision a of such section; and

further provided that if a lease is entered into for such housing

accommodations after the local effective date, but before the effective

date of the first guidelines applicable to such accommodations, the

lease may provide for an adjustment of rent pursuant to such guidelines,

to be effective on the first day of the month next succeeding the

effective date of such guidelines.

c. The initial legal regulated rents for housing accommodations in a

city having a population of one million or more shall be the initial

rent established pursuant to the New York city rent stabilization law of

nineteen hundred sixty-nine as amended.

d. Provision shall be made pursuant to regulations under this act for

individual adjustment of rents where:

(1) there has been a substantial modification or increase of dwelling

space, or installation of new equipment or improvements or new furniture

or furnishings, provided in or to a tenant's housing accommodation, on

written informed tenant consent to the rent increase. In the case of a

vacant housing accommodation, tenant consent shall not be required.

Except as provided in subparagraph (B) of this paragraph, the increase

in the legal regulated rent for the affected housing accommodation shall

be one-one hundred sixty-eighth, in the case of a building with

thirty-five or fewer housing accommodations or one-one hundred eightieth

in the case of a building with more than thirty-five housing

accommodations where such increase takes effect on or after the

effective date of the chapter of the laws of two thousand nineteen that

amended this paragraph, of the total actual cost incurred by the

landlord up to an amount set forth in this paragraph in providing such

reasonable and verifiable modification or increase in dwelling space,

furniture, furnishings, or equipment, including the cost of installation

but excluding finance charges and any costs that exceed reasonable costs

established by rules and regulations promulgated by the division of

housing and community renewal. Such rules and regulations shall include:

(i) requirements for work to be done by licensed contractors and a

prohibition on common ownership between the landlord and the contractor

or vendor; and (ii) a requirement that the owner resolve within the

dwelling space all outstanding hazardous or immediately hazardous

violations of the Uniform Fire Prevention and Building Code (Uniform

Code), New York City Fire Code, or New York City Building and Housing

Maintenance Codes, if applicable. Provided further that an owner who is

entitled to a rent increase pursuant to this paragraph shall not be

entitled to a further rent increase based upon the installation of

similar equipment, or new furniture or furnishings within the useful

life of such new equipment, or new furniture or furnishings. Provided

further that the recoverable costs incurred by the landlord, pursuant to

this paragraph, shall be limited to an aggregate cost pursuant to the

following:

(A) thirty thousand dollars that may be expended in a fifteen-year

period beginning with the first individual apartment improvement on or

after June fourteenth, two thousand nineteen, provided further that:

(1) if there is a tenant in place at the time the individual apartment

improvement is undertaken, no costs incurred by the landlord shall be

recoverable pursuant to this subparagraph unless the landlord obtains

written tenant consent from the tenant in place at the time the

individual apartment improvement was undertaken;

(2) increases to the legal regulated rent pursuant to this

subparagraph shall be permanent; and

(3) the thirty thousand dollars may be expended, in the aggregate, on

any number of separate individual apartment improvements in a

fifteen-year period, but in no event shall costs above thirty thousand

dollars be recoverable in a fifteen-year period pursuant to this

subparagraph.

(B) fifty thousand dollars that may be expended in a fifteen-year

period beginning with the first individual apartment improvement on or

after June fourteenth, two thousand nineteen, pursuant to regulation,

operational bulletin or such other guidance as the division of housing

and community renewal may issue, provided further that:

(1) costs shall only be recoverable by a landlord pursuant to this

subparagraph for an individual apartment improvement undertaken during a

vacancy;

(2) costs shall only be recoverable by a landlord pursuant to this

subparagraph for an individual apartment improvement if (i) the

apartment was timely registered as vacant by no later than the

thirty-first of December in each of two thousand twenty-two, two

thousand twenty-three, and two thousand twenty-four, provided that a

landlord may recover costs on this basis no more than once, or (ii) if

the apartment is vacant following a period of continuous occupancy of at

least twenty-five years that occurred immediately prior to the

commencement of such individual apartment improvement;

(3) costs shall only be recoverable by a landlord pursuant to this

subparagraph if such landlord has received prior certification to

recover costs pursuant to this subparagraph from the division of housing

and community renewal based on establishing that the landlord satisfies

one of the eligibility criteria delineated in clause two of this

subparagraph, provided further that such certification shall not be

deemed as evidence that the work performed or costs claimed for the

individual apartment improvement was substantiated or to otherwise act

as a defense in any subsequent rent overcharge proceeding,

determination, or audit;

(4) increases to the legal regulated rent pursuant to this

subparagraph shall be permanent;

(5) the increase in the legal regulated rent for the affected housing

accommodation shall be one-one hundred forty-fourth, in the case of a

building with thirty-five or fewer housing accommodations or one-one

hundred fifty-sixth in the case of a building with more than thirty-five

housing accommodations where such increase takes effect on or after the

effective date of the chapter of the laws of two thousand twenty-four

that amended this paragraph, of the total actual cost incurred by the

landlord up to fifty thousand dollars in providing such reasonable and

verifiable modification or increase in dwelling space, furniture,

furnishings, or equipment, including the cost of installation but

excluding finance charges and any costs that exceed reasonable costs

established by rules and regulations promulgated by the division of

housing and community renewal;

(6) costs shall only be recoverable by a landlord pursuant to this

subparagraph for an individual apartment improvement if, immediately

prior to undertaking such individual apartment improvement, the landlord

submits to the division of housing and community renewal any evidence

that the division of housing and community renewal deems necessary and

requests pursuant to regulation, operational bulletin or other guidance,

demonstrating that the improvement was necessitated by a sub-standard

condition or exceeding its useful life immediately prior to the

landlord's work to improve the unit and the landlord's planned work to

improve the unit. Such evidence shall include, but shall not be limited

to, photos of any areas, aspects or appliances in the apartment that

will be improved, and any necessary permits required to undertake the

improvements;

(7) costs shall only be recoverable by a landlord pursuant to this

subparagraph for an individual apartment improvement if, immediately

subsequent to undertaking the individual apartment improvement, the

landlord submits to the division of housing and community renewal any

evidence that the division of housing and community renewal deems

necessary and requests pursuant to regulation, operational bulletin or

other guidance, evidence of the completed work. Such evidence shall

include, but shall not be limited to, photographs of the completed work,

itemized receipts for all parts, materials, appliances, and labor costs,

and proof of payment. Provided further, the division of housing and

community renewal shall require the payment of a fee that equals one

percent of the amount claimed for the individual apartment improvement

at the time of such filing;

(8) for costs recoverable pursuant to item (ii) of clause two of this

subparagraph, the fifty thousand dollars may be expended, in the

aggregate, on any number of separate individual apartment improvements

in a fifteen-year period, but in no event shall costs above fifty

thousand dollars be recoverable in a fifteen-year period pursuant to

this subparagraph;

(9) the division of housing and community renewal may perform an audit

of any individual apartment improvement conducted pursuant to this

subparagraph to determine whether the individual apartment improvement

was undertaken in the manner described and to the extent claimed by the

landlord, whether the costs claimed were substantiated by records, and

whether the rent was properly adjusted. Such audit may incorporate an

inspection of the accommodation at bar. The landlord and the tenant

living in the accommodation may participate in such audit. In the event

the audit finds that the recoverable costs claimed by the landlord

cannot be substantiated, the resulting overcharge shall be considered to

be willful. In addition, the division of housing and community renewal

may issue any fines or penalties set forth in regulations;

(10) the division of housing and community renewal shall perform

random on-site inspections, as it deems necessary, for any unit for

which the owner seeks to recover costs pursuant to this subparagraph;

and

(11) no owner shall be eligible for the rent increase based on

individual apartment improvements pursuant to this subparagraph if,

within the five year period prior to filing such individual apartment

improvement, any unit within any building owned by any owner of the

building in which the unit for which the owner seeks an individual

apartment improvement is located, including but not limited to partial

or beneficial owners, has been the subject of an award or determination

by the division of housing and community renewal or a court of competent

jurisdiction for treble damages due to an overcharge or the owner of the

building in which the unit is located has been the subject of an award

or determination by the division of housing and community renewal or a

court of competent jurisdiction for harassment of any tenants, provided

that such owner shall provide an affidavit confirming such owner's

eligibility under this clause to the division of housing and community

renewal at the same time as, and in addition to, any other materials the

division of housing and community renewal shall require an owner to

submit pursuant to clause six of this subparagraph, and provided further

that such affidavit shall not be deemed to be evidence of compliance

with this clause or a defense in any subsequent rent overcharge

proceeding, determination, or audit.

(2) there has been since January first, nineteen hundred seventy-four

an increase in the rental value of the housing accommodations as a

result of a substantial rehabilitation of the building or the housing

accommodation therein which materially adds to the value of the property

or appreciably prolongs its life, excluding ordinary repairs,

maintenance, and replacements, or

(3) there has been since January first, nineteen hundred seventy-four

a major capital improvement essential for the preservation, energy

efficiency, functionality, or infrastructure of the entire building,

improvement of the structure including heating, windows, plumbing and

roofing, but shall not be for operation costs or unnecessary cosmetic

improvements. An adjustment under this paragraph shall be in an amount

sufficient to amortize the cost of the improvements pursuant to this

paragraph over a twelve-year period for a building with thirty-five or

fewer housing accommodations, or a twelve and one-half period for a

building with more than thirty-five housing accommodations and shall be

removed from the legal regulated rent thirty years from the date the

increase became effective inclusive of any increases granted by the

applicable rent guidelines board, for any determination issued by the

division of housing and community renewal after the effective date of

the chapter of the laws of two thousand nineteen that amended this

paragraph. Temporary major capital improvement increases shall be

collectable prospectively on the first day of the first month beginning

sixty days from the date of mailing notice of approval to the tenant.

Such notice shall disclose the total monthly increase in rent and the

first month in which the tenant would be required to pay the temporary

increase. An approval for a temporary major capital improvement increase

shall not include retroactive payments. The collection of any increase

shall not exceed two percent in any year from the effective date of the

order granting the increase over the rent set forth in the schedule of

gross rents, with collectability of any dollar excess above said sum to

be spread forward in similar increments and added to the rent as

established or set in future years. Upon vacancy, the landlord may add

any remaining balance of the temporary major capital improvement

increase to the legal regulated rent. Notwithstanding any other

provision of the law, the collection of any rent increases for any

renewal lease commencing on or after June 14, 2019, due to any major

capital improvements approved on or after June 16, 2012 and before June

16, 2019 shall not exceed two percent in any year for any tenant in

occupancy on the date the major capital improvement was approved, or

(3-a) an application for a temporary major capital improvement

increase has been filed, a tenant shall have sixty days from the date of

mailing of a notice of a proceeding in which to answer or reply. The

state division of housing and community renewal shall provide any

responding tenant with the reasons for the division's approval or denial

of such application; or

(4) an owner by application to the state division of housing and

community renewal for increases in the rents in excess of the rent

adjustment authorized by the rent guidelines board under this act

establishes a hardship, and the state division finds that the rate of

rent adjustment is not sufficient to enable the owner to maintain

approximately the same ratio between operating expenses, including taxes

and labor costs but excluding debt service, financing costs, and

management fees, and gross rents which prevailed on the average over the

immediate preceding five year period, or for the entire life of the

building if less than five years, or

(5) as an alternative to the hardship application provided under

paragraph four of this subdivision, owners of buildings acquired by the

same owner or a related entity owned by the same principals three years

prior to the date of application may apply to the division for increases

in excess of the level of applicable guideline increases established

under this law based on a finding by the commissioner that such

guideline increases are not sufficient to enable the owner to maintain

an annual gross rent income for such building which exceeds the annual

operating expenses of such building by a sum equal to at least five

percent of such gross rent. For the purposes of this paragraph,

operating expenses shall consist of the actual, reasonable, costs of

fuel, labor, utilities, taxes, other than income or corporate franchise

taxes, fees, permits, necessary contracted services and non-capital

repairs, insurance, parts and supplies, management fees and other

administrative costs and mortgage interest. For the purposes of this

paragraph, mortgage interest shall be deemed to mean interest on a bona

fide mortgage including an allocable portion of charges related thereto.

Criteria to be considered in determining a bona fide mortgage other than

an institutional mortgage shall include; condition of the property,

location of the property, the existing mortgage market at the time the

mortgage is placed, the term of the mortgage, the amortization rate, the

principal amount of the mortgage, security and other terms and

conditions of the mortgage. The commissioner shall set a rental value

for any unit occupied by the owner or a person related to the owner or

unoccupied at the owner's choice for more than one month at the last

regulated rent plus the minimum number of guidelines increases or, if no

such regulated rent existed or is known, the commissioner shall impute a

rent consistent with other rents in the building. The amount of hardship

increase shall be such as may be required to maintain the annual gross

rent income as provided by this paragraph. The division shall not grant

a hardship application under this paragraph or paragraph four of this

subdivision for a period of three years subsequent to granting a

hardship application under the provisions of this paragraph. The

collection of any increase in the rent for any housing accommodation

pursuant to this paragraph shall not exceed six percent in any year from

the effective date of the order granting the increase over the rent set

forth in the schedule of gross rents, with collectability of any dollar

excess above said sum to be spread forward in similar increments and

added to the rent as established or set in future years. No application

shall be approved unless the owner's equity in such building exceeds

five percent of: (i) the arms length purchase price of the property;

(ii) the cost of any capital improvements for which the owner has not

collected a surcharge; (iii) any repayment of principal of any mortgage

or loan used to finance the purchase of the property or any capital

improvements for which the owner has not collected a surcharge; and (iv)

any increase in the equalized assessed value of the property which

occurred subsequent to the first valuation of the property after

purchase by the owner. For the purposes of this paragraph, owner's

equity shall mean the sum of (i) the purchase price of the property less

the principal of any mortgage or loan used to finance the purchase of

the property, (ii) the cost of any capital improvement for which the

owner has not collected a surcharge less the principal of any mortgage

or loan used to finance said improvement, (iii) any repayment of the

principal of any mortgage or loan used to finance the purchase of the

property or any capital improvement for which the owner has not

collected a surcharge, and (iv) any increase in the equalized assessed

value of the property which occurred subsequent to the first valuation

of the property after purchase by the owner.

This subdivision shall apply to accommodations outside a city of one

million or more.

e. Notwithstanding any contrary provisions of this act, on and after

July first, nineteen hundred eighty-four the legal regulated rent shall

be the rent registered pursuant to section twelve-a of this act subject

to any modification imposed pursuant to this act.

f. Notwithstanding any inconsistent provision of law, rule,

regulation, contract, agreement, lease or other obligation, no owner, in

addition to the authorized collection of rent, shall demand, receive or

retain a security deposit or advance payment which exceeds the rent of

one month for or in connection with the use or occupancy of a housing

accommodation by (i) any tenant who is sixty-five years of age or older

for any lease or lease renewal entered into after July 1, 1996 or (ii)

any tenant who is receiving disability retirement benefits or

supplemental security income pursuant to the federal social security act

for any lease or lease renewal entered into after July 1, 2002.

f-1. An owner, lessor or agent thereof shall be prohibited from

assessing a lessee any fee, surcharge or other charges for legal

services in connection with the operation or rental of a residential

unit unless the owner, lessor or agent has the legal authority to do so

pursuant to a court order. Legal services include, but are not limited

to, court fees, legal representation, attorney fees, notary public

charges, and administrative fees incurred by the owner, lessor or agent

in connection with management of the building, including actions and

proceedings in a court of law. Any agreement or assessment to the

contrary shall be void as contrary to public policy.

g. No owner of a housing accommodation subject to the provisions of

this section shall impose any surcharge for the installation and use of

a tenant-installed air conditioner unit where the tenant pays for

electric utility service.