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INSIDE THE COURTS

By: Hon. Stephen L. Ukeiley

 

LANDLORD AND TENANT LAW: NEW LEGISLATION

 

            This is the first of a two-part series on recent law changes regarding rental properties. This Part concentrates on changes to the Real Property Actions and Proceedings Law (RPAPL) and provides an overview of some of the new laws.  Part II will focus on changes to the Real Property Law (RPL) and the General Obligations Law (GOL).

The Housing Stability and Tenant Protection Act of 2019

            On June 14, 2019, the Statewide Housing Stability and Tenant Protection Act of 2019 (the Act) was signed into law.  Part M within the Act, titled The Statewide Housing Security and Tenant Protection Act, pertains to all premises, regulated and unregulated, except where indicated otherwise in the statute.

  1. Rent Re-Defined

            With respect to residential premises, the term “rent” is now defined as “[t]he monthly or weekly amount charged in consideration for use and occupation of a dwelling pursuant to a written or rental agreement” (RPAPL § 702).  The statute further provides that “no fees, charges, or penalties other than rent” may be sought in a residential non-payment proceeding, thereby limiting the money judgment.  A lease provision to the contrary is void (id.).

  1. Payment of Rent Prior to Hearing (Non-payment Proceeding)

            RPAPL § 731 has been amended to provide that the payment of rent prior to the hearing renders a non-payment proceeding moot.  In other words, the full payment made prior to an adjudication on the merits equates to making the landlord whole, and, as a result, the tenancy continues.

  1. Foreclosed Premises

            With regard to holdover proceedings, the Act provides that where an occupant is evicted following either a property or tax foreclosure, the Court records relating to the lessee are sealed and “deemed confidential” (RPAPL § 757).  Unlike a non-payment proceeding, the occupant in a post-foreclosure holdover proceeding may not avoid the eviction by paying the amount awarded prior to the issuance of the judgment because the holdover proceeding was commenced for reasons other than the non-payment of rent.

  1. Rent Demand

            A Landlord may no longer make an oral rent demand (RPAPL § 711(2)).  Instead, a written rent demand must be provided on at least fourteen (14) days notice (formerly was three (3) days) demanding “[t]he payment of the rent, or possession of the premises”.  The rent demand must be formally served (id.).

  1. Proceeding Against the Estate

            The legislation permits a landlord to commence a summary proceeding against the Estate where the tenant passes away during the tenancy and rent is owed.  Any other occupant lawfully in possession may be named in the non-payment proceeding, but the warrant may not be used to remove them (RPAPL § 711 (2)).  The new law eliminated the requirement that a landlord wait three (3) months prior to commencing a summary proceeding where an administrator had not been named.

  1. Return Date and Service

           RPAPL § 732 now provides that where required by the rules of the local Appellate Division, the Notice of Petition and Petition in a non-payment proceeding is returnable within ten (10) days of service (was previously five (5) days).  If the tenant fails to appear, a judgment must be entered in favor of the landlord and, absent a circumstance permitting a longer stay pursuant to RPAPL § 753, the Court may stay issuance of the warrant of eviction up to ten (10) days from the date of service (RPAPL § 732(3)).  If the landlord prevails and the tenant appears, then the Court may stay issuance of the warrant of eviction up to five (5) days from the date of the determination (RPAPL § 732(2)).

            Otherwise, the Act amends the service provisions by eliminating the “5 and 12" Rule.  Instead, a landlord must cause the Notice of Petition and Petition to be served via formal service no fewer than ten (10) days but not more than seventeen (17) days prior to the return date (RPAPL§ 733).

  1. Answer

            Pursuant to RPAPL § 743, a tenant is not required to interpose an Answer.  Rather, the tenant may assert an Answer on the return date, either orally or in writing, and the Answer may include any legal or equitable defenses, and/or counterclaims.  The new legislation eliminated the opportunity to demand an Answer when the Notice of Petition and Petition were served between eight (8) and twelve (12) days prior to the return date.

  1. Adjournments

            Each party in a summary proceeding is entitled to one (1) adjournment.  RPAPL § 745(1) was amended to provide that when issue is joined (e.g., return date), the Court must grant a request for an adjournment, and, absent consent to a shorter period, the adjournment must be not less than fourteen (14) days.  The law further provides that “[a] party’s second or subsequent request for adjournment” is left to the discretion of the Court (id.).

  1. Unlawful Evictions

            Only the Sheriff, pursuant to a lawful order of the Court, may return possession of the property to the landlord. An unlawful eviction (e.g., the use of self-help and changing of the locks without the tenant’s permission or providing access) is now classified as a Class A Misdemeanor (up to one (1) year in jail).  An offender may be liable for civil penalties of $1,000 - $10,000 for each violation (RPAPL § 768).

  1. Warrant of Eviction

            The warrant of eviction must state the earliest date the eviction may occur (RPAPL § 749(1)).  In addition, the 72-Hour Rule has been eliminated.  Now, the Sheriff must formally serve a Fourteen (14) Day Notice prior to performing the eviction, and the warrant must be executed on a business day (Monday - Friday) between sunrise and sunset (RPAPL § 749(2)(a)).

  1. Stays

            RPAPL § 749(3) permits the Court, for good cause shown, (1) prior to execution, to stay execution of or vacate the warrant of eviction or (2) following execution, to restore the tenant to possession.  The provision further provides that where the full amount of rent is paid or deposited with the Court prior to the execution of the warrant, the warrant must be vacated unless the landlord demonstrates that the rent had been withheld in “bad faith”.

            RPAPL§ 753 governs stays on “issuance” of the warrant of eviction and collecting costs regarding residential premises for up to one (1) year (was previously six (6) months).  To grant the stay, the occupant must demonstrate: (1) the premises are used for residential purposes (other than hotels or rooming houses); (2) the application is made in good faith; and (3a) “due and reasonable efforts” were unsuccessfully taken to find similarly suitable alternative housing in the neighborhood or (3b) denial would cause “extreme hardship” to the applicant or the applicant’s family (RPAPL § 753(1)).  Outside a city of more than one (1) million residents, for those with a school-aged child, the term “neighborhood” is defined as “school district”.

            If the summary proceeding was predicated upon a breach of the rental agreement, the Court must stay issuance of the warrant of eviction for thirty (30) days to afford the tenant an opportunity to cure the breach (RPAPL § 753(4)).  A lease provision waiving the occupant’s rights under RPAPL § 753 is void as against public policy (RPAPL § 753(5)).

            Pursuant to RPAPL § 756, a summary proceeding involving residential property is stayed where the utilities are shut off due to the landlord’s failure to pay.  The stay remains in effect until such time as the utilities are paid and restored to “working order” (RPAPL § 756).

            In closing, the changes to the RPAPL are substantial. Counsel should thoroughly review the new laws and adjust accordingly.

Note: The Honorable Stephen L. Ukeiley is a Suffolk County Acting County Court Judge and Suffolk County District Court Judge. Judge Ukeiley is also an adjunct professor at the Touro College Jacob D. Fuchsberg Law Center and the author of numerous legal publications, including his most recent book, The Bench Guide to Landlord & Tenant Disputes in New York (Third Edition)©.

 

* The information contained herein is for informational and educational purposes only. This column should in no way be construed as the solicitation or offering of legal or other professional advice. If you require legal or other expert advice, you should consult with an attorney and/or other professional.

 

FREEDOM OF CONTRACT ENDS YELLOWSTONE INJUNCTIONS, WHAT'S NEXT?

      The Court of Appeals has affirmed the Second Department's holding in 159 MP Corp v Redbridge Bedford LLC and as a result, has ended Yellowstone Injunctions statewide when such injunctions are waived by sophisticated parties during commercial lease negotiations.  Previously, in the March 2018 edition of the Suffolk Lawyer, we discussed the Second Department's holding in the article "The End of Yellowstone Injunctions."Now, we address the Court of Appeal's holding, which is a far broader precedent, reaching issues of freedom of contract, beyond Yellowstone Injunctions.  In fact, as the dissent is quick to piont out, the majority has determined that freedom of contract may only be overcome by either a competing public policy if such policy is expressly set forth in a statute as a preclusion to contract or where the contractual provision at issue involves criminality.

     Initially, and as background on the core certified issue, the court explained that a Yellowstone Injunction is "a 'creative remedy' crafted by the lower courts to extend the notice and cure period for commercial tenants faced with lease termination... [while] permitting a tenant who loses on the merits of the lease dispute to cure the defect and retain the tenancy."  The specific issue certified before the court was whether a waiver of "the right to commence a declaratory judgment action as to the terms of a commercial lease is "void as against public policy."  The express rider language, at issue, was that "Tenant waives its right to bring a declaratory judgment action with respect to any provision of this Lease or with respect to any notice sent pursuant to the provisions of this Lease...[i]t is the intention of the parties hereto that their disputes be adjudicated via summary proceedings." The stated public policy that was set forth as contravening such language was that declaratory relief provides the benefit of "stabilizing uncertainty in contractual relations."

     The underlying dispute, between the parties, emerged when the tenant, in response to receipt of a notice to cure, moved the Supreme Court, by order to show cause, seeking "a declaratory judgment that they were not in default" together with a Yellowstone Injunction.  Initially, the Supreme Court denied the order to show cause and dismissed the case.  Then, the Appellate Division affirmed.  However, a dissenting Appellate Division Justice argued that "a tenant's ability to litigate in summary proceedings commenced by the owner was not a sufficient substitute for the ability to commence a declaratory judment action."  Therefore, the Appellate Division certified the question, whether its order was propertly made, to the Court of Appeals. 

     In affirming, the Court of Appeals looked to its holding in Matter of American Broadcasting Cos., Inc. v. Roberts.  Therein, the court stated "that a public interest is present does not erect an inviolable shield to waiver." Next, the court articulated two bases to override freedom of contract while stating that neither existed before the court.  The two bases were if either the legislature had identified a Yellowstone Injunction as being non-waivable or if it involved illegality.  Therefore, this holding reaches far beyond Yellowstone Injunctions and instead, sets precedent for when freedom of contract should give way to other public policy interests.  As such, the main takeaway from the holding was not merely the glacial shift in commercial landlord/tenant practice, but instead the court's reaffirmation of its adherence to the principles of freedom of contract.  As the court explained, freedom of contract must prevail for "New York's status as the preeminent commercial center in the United States, if not the world," to remain in place.  Moving forward, litigators should only argue that public policy overcomes freedom of contract if one of the two articulated bases exist.

Note:  Andrew M. Lieb is the managing Attorney at Lieb at Law, P.C. a law firm with offices in Smithtown and Manhasset.  He is a past co-chair of the Real Property Committee of the Suffolk County Bar Association and has been the Special Section Editor for Real Property for The Suffolk Lawyer for years.

This Blog/Web Site is made available by the Suffolk County Bar Association and or the Suffolk Academy of Law. It is intended for educational purposes only. It is intended to provide general information and a general understanding of the law. It is not intended to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship created between you and the Suffolk County Bar Association and or the Suffolk Academy of Law, the Blogger/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney. Any reliance on the information contained in the Blog/Web Site is undertaken at the users own risk.

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