State Sen. Julia Salazar introduced a bill in the New York State Senate yesterday to place new limitations on buyouts of rent-regulated apartments. The legislation, if approved, would go into effect July 1, 2020.
Salazar, a Democratic socialist, proposed penalties of up to $1,000 for buyout offers that qualify as harassment. Providing false information about an offer, contacting a tenant at their place of work without their permission or contacting a tenant who has rejected a buyout offer too soon could all result in a steep fine.
The proposed law also adds a lot more paperwork to the buyout process. Under the proposed bill, landlords would have to make the buyout offer to the tenant in writing, and include the name of the person who made the offer, the offer date, the dollar amount and the reason for the offer. Landlords will have to submit documentation to the state’s Homes and Community Renewal agency within 90 days of the offer. The agency, according to the proposed bill, would in turn be responsible for providing an annual report to the State Assembly and the State Senate on buyout offers for each census tract.
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At the time of this article Senator Salazar did not offer comment on her proposed bill.
As justification for the bill, the memo makes mention of a July 12 article in The Real Deal, which documented a landlord-focused seminar explaining the changes to the rent law. At the seminar, industry experts predicted a return of buyout offers, as landlords scramble to turn a profit under the new framework.
According to real estate attorney Sherwin Belkin, while some landlords may wait for the stars to align to combine vacant rent-regulated units and set a new first rent, others may be looking to accelerate vacancies. (As TRD reported, under the new framework, vacant units can be combined into “frankenstein apartments” to bump up the rent and set a new first rent.)
Belkin said Salazar’s proposed bill is “overstepping” and “overkill,” and added that the proposed change would have a chilling effect overall on buyout offers.
“The memorandum seems to imply that there is widespread harassment associated with buyouts,” he said. “I think that’s a nice phrase, but I don’t believe it’s the case. I believe it is anecdotal.”
Setting a first rent is one of the few remaining avenues to increase rent, after a tectonic shift in the state’s rent laws saw the demise of the vacancy bonus and vacancy deregulation, and set new limits on rent increases due to major capital improvements and individual apartment improvements.