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BLOG / 02.25.20 /Eric P. Blaha

NYS’s Latest “Guidance” Raises New Concerns Under the Tenant Protection Act

For real estate owners, managers and brokers seeking to make sense of (and engage in damage control from) the Housing Stability and Tenant Protection Act of 2019 (“TPA”) passed nearly 8 months ago, the clarity provided by the NY Department of State in its latest “Guidance for Real Estate Professionals” issued on January 31, 2020, offers little welcome news.

It is now clear under the TPA that a landlord cannot compel a tenant to pay the landlord’s real estate broker’s fee for signing a lease for an apartment.   Instead, the fee must be collected by the broker from the landlord; meanwhile the landlord, in turn, must try to recover the amount of the fee by charging and collecting increased rents from the tenant over the course of the lease term.  Of course, landlords of rent stabilized and rent controlled apartments are never able to pass on these costs to tenants participating in those programs.

Also, it is well known in the industry that the TPA – as passed in June 2019 — prohibits collection from tenants of a security deposit in excess of 1 month’s rent.  Now the Department of State has taken the position that no additional fee can be collected in advance in the form of a pet deposit or a move-in/move-out deposit.  Conversely, sums for damage caused by tenants’ pets or moving in or out may not be deducted from the security deposits unless those damages exceed “ordinary wear and tear.” We wonder whether pet urine in the elevator would now be considered an “ordinary” consequence of ownership. We also find it hard to understand how any damage caused when a tenant moves in or out could be considered “ordinary wear and tear.”

Under the TPA, landlords and agents may still collect up to $20 from tenants as reimbursement for fees actually incurred for background checks and credit checks.  And yet, even this modest fee may be reduced or even eliminated upon application of possible exceptions laid out by the State Department in its latest “Guidance”.  [NOTE: in a recent article we reported that until a court or other body with jurisdiction states otherwise, the Department of State will not enforce this limitation against fees charged by Condo and Co-op Boards and their managing agents to process purchase and lease application fees so long as the board is not the owner of the unit.]

A copy of the latest Guidance is availableHERE. The interpretations of the Department of State also remain subject to court guidance as well. Please contact us for further information on how evolving interpretations of the TPA may impact your business.