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New York

City Council advances protections for lease-breakers

Bill would prevent residential landlords from seeking early termination fees

From left: Luise Barrack of Rosenberg & Estis, Bronx City Council member Kevin Riley and Tashi Lhewa of the Legal Aid Society (New York City Council, Getty Images, the Legal Aid Society, iStock)
From left: Luise Barrack of Rosenberg & Estis, Bronx City Council member Kevin Riley and Tashi Lhewa of the Legal Aid Society (New York City Council, Getty Images, the Legal Aid Society, iStock)

Landlords’ leverage over lease-breakers has been slipping away like a tenant in the night.

Security deposits once offered months of cushion. And if a renter cut out early, an owner could sue for the remaining balance rather than hustle for a replacement.

Then state lawmakers took landlords behind the woodshed in 2019. Landlords can no longer demand advance payment of the final month’s rent in addition to a security deposit. Another state measure forced upon owners the “duty to mitigate damages” — that is, re-rent the unit for a fair-market rate or whatever the previous tenant paid, whichever is lower. A new renter would let the previous one off the hook.

Monday, the City Council advanced an addition to those tenant protections. The Housing and Buildings Committee passed a bill that limits the fees a landlord can recover from a departing tenant to the “fair market cost” of getting the apartment in good-enough shape to relist. The bill also requires owners to give tenants an itemized list of what the charges would be.

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Luise Barrack, attorney at Rosenberg & Estis, says the change is no great divergence from the 2019 overhaul of rent stabilization.

“I’m not really sure what [the City Council] thinks it added to the New York state law,” she said. “We’re all clear about it now. Owners can’t take advantage of a tenant who leaves an apartment early.”

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The city’s bill applies to all apartments, not just rent-stabilized ones. But it may be more window dressing than anything — a resume-padder for the two-thirds of City Council members term-limited out of office next month, when the full chamber could vote on the bill.

Tashi Lhewa, consumer attorney at the Legal Aid Society, said generally, her organization does not see landlords suing for early termination fees when a residential tenant breaks a lease.

“These fees primarily arise in a commercial lease context,” she said.

And the city’s tweaks do not preclude a landlord from suing for rent or for the costs of finding a new tenant, such as advertising or repairs.

The difference is that the new law would clarify for the court what tenants owe. Lhewa siad “fair market cost” is an easier standard than the existing one, established via case law.

Councilmember Kevin Riley, who introduced the bill, was not present at the hearing held Monday, when the bill passed 8-0 alongside another bill that aims to put artwork on construction fences.

Barrack added that even before the rent law passed, most owners opted for re-renting an apartment quickly over trying to sue for damages. Litigation, she said, risks “the chance that you bring an action to recover the money, but don’t recover the money.”

“Most wise owners typically don’t want to sue people,” she said.

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City CouncilCommercial Real EstatePoliticsRent Law