More rent-law fallout: Landlords back off “absentee” tenants

Major real estate law firms see fewer non-primary residence cases

TRD New York /
Oct.October 09, 2019 07:00 AM
Cases to challenge tenant residency have declined since June (Credit: iStock)

Cases to challenge tenant residency have declined since June (Credit: iStock)

Cases brought against rent-stabilized tenants who allegedly live elsewhere have become a thing of the past.

The reason is the new rent law, according to its proponents and critics alike.

Rent-stabilized apartments are required to be a primary residence. But enforcement is largely left to landlords, who can go to court to evict a tenant not living in a unit full-time. Landlords’ reward was a 20 percent rent increase and the chance to make renovations that substantially boost the rent even more, but the sweeping law passed in June wiped out those incentives.

“Now, clients don’t want to litigate a case where there’s no upside,” Rosenberg and Estis attorney Blaine Schwadel said. “So why bother?”

Schwadel said two of his clients abandoned non-primary residence cases the week after the rent law passed, part of a broad decline in such actions. Prior to the changes to the rent law, he said, it was common for landlords to check tenants’ residency even before buying a building, because “who [tenants] are and whether they’re going to stay affects the value of the building.”

“Back in the day, in the early 2000s, we had at any point in time 30 to 50 pending cases,” said Jeffrey Goldman, a partner at Belkin Burden Wenig and Goldman, which represents landlords. “Are those the kind of numbers now? Definitely not.”

Sam Himmelstein, an attorney whose firm Himmelstein, McConnell, Gribben, Donoghue and Joseph attorney represents tenants, said that before 1994, when vacancy became a way to remove a unit from rent regulation, “landlords never really cared if an apartment was a tenants’ primary residence.” But when vacancy decontrol was passed, that all changed.

“In the 1990s and 2000s I was in court on five non-prime [residency] cases a week,” Himmelstein said. “Now, I think I have two total. They’re just not there.”

Landlords who wanted to investigate rent-stabilized tenants would call their attorneys, who in turn would tap private investigators. Private investigator John Leto said his firm, JL and Associates, used a wide array of techniques to spot tenants who weren’t really living in their rent-regulated apartment.

Leto’s 31 investigators would scour databases, glean addresses from mail, install cameras outside apartments and even pose as potential subletters to record conversations. Most of the time, Leto said, those efforts succeeded.

“There’s always three sides to the story. What they allege, what the facts are and what we find out,” Leto said. “It’s like a divorce. If one party suspects there’s something going on … usually something’s going on.”

The residency requirement is intended to ensure that rent-regulated units do not serve as pieds-à-terre or sublets. Under the new law, the 20 percent vacancy bonus is gone, rent increases for improvements are limited to $83 a month until the expense is reimbursed, and it is nearly impossible to deregulate an apartment.

Real estate attorneys call the end of non-primary residency cases an “unintended consequence” of the rent law, but tenant advocates say it isn’t so bad for them.

Esteban Girón of the Crown Heights Tenant Union said he often saw landlords bring such cases to stop tenants from organizing. In his own building, key fobs and security cameras were used to “provide evidence for non-primary residence cases,” according to Girón, who was among scores of tenants arrested at a June 4 demonstration in Albany.

“I was getting my ass arrested in Albany to destroy their whole business model from the root,” Girón said. “Totally worth losing the key fob fight, I believe!”


Related Articles

arrow_forward_ios
Blackstone CEO Steven Schwartzman and Stuyvesant Town (Credit: Getty Images)

After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies

After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies
Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws

Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws

Tete-à-tete with TRD: How landlords are dealing with New York’s new rent laws
Real Capital Analytics data showed that New York’s multifamily market had a very slow July. (Credit: iStock)

New NYC rent law “beginning to shut down investment”

New NYC rent law “beginning to shut down investment”
Photo illustration of Judge Eric Komitee (iStock)

Rent law challenge dismissed; battle may go to higher court

Rent law challenge dismissed; battle may go to higher court
Keith Gelb and Bill Walton with 63 and 67 Wall Street (Rockpoint, Google Maps)

Rockpoint Group settles alleged rent-stabilization violations for $5M

Rockpoint Group settles alleged rent-stabilization violations for $5M
A U.S. District judge has given tenants a seat at the table in the legal challenges to New York’s rent law, defying attorneys representing landlords. (iStock)

Tenants get seat at table for legal challenges to rent law

Tenants get seat at table for legal challenges to rent law
Signature Bank CEO Joseph DePaolo and New York Community Bank CEO Joseph Ficalora (Photos via Getty; Facebook; iStock)

NYC’s multifamily lenders see shares tumble in 2020

NYC’s multifamily lenders see shares tumble in 2020
(iStock)

Proposed cost caps for MCIs deemed “lose-lose” for tenants, landlords

Proposed cost caps for MCIs deemed “lose-lose” for tenants, landlords
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...