BILL NUMBER:S4032

TITLE OF BILL:  An act to amend the administrative code of the city of
New York, in relation to requiring that the stabilization code provide
that  upon  the failure of the tenant to timely renew his or her lease
or rental agreement, such lease or agreement may  be  deemed  to  have
been renewed

PURPOSE OR GENERAL IDEA OF BILL:

To  amend  the  administrative code of the City of New York to provide
that tenants who remain  in  possession  of  their  apartment  without
signing  a  legally  delivered  renewal  lease shall be deemed to have
renewed their lease upon the same terms and conditions as the  renewal
lease had the renewal lease been timely accepted.

SUMMARY OF SPECIFIC PROVISIONS:

Section  1  This  bill  amends  subdivision c of section 26-511 of the
administrative Code of the City of New York to  provide  that  a  rent
stabilized  tenant  who (1) has received the requisite notice of lease
renewal, (2) has not responded to  the  owner  regarding  whether  the
tenant  intends  to  remain  in  occupancy after the expiration of the
lease and, if so, as to the length of such renewal, and (3) then  does
remain in occupancy after the expiration of their lease, may be deemed
to have their lease renewal by the owner subject to the same terms and
              

conditions  of  the  prior  renewal  lease. Such lease shall be deemed
renewed at the legal regulated rent together with any Rent  Guidelines
Board  increases  that  would  have been applicable had the offer of a
renewal lease been timely accepted.

Section 2 provides that the effective date shall be thirty days  after
enactment.

JUSTIFICATION:

Since  2000,  Section  2523.59 c(2) of the Rent Stabilization Code has
provided for the implementation of deemed leases in precisely the same
manner as set forth in the proposed legislation. However, in a  recent
decision  by the Appellate Division, Second Department, in the case of
Samson Management  v.  Hubert,  the  Code  provision  was  invalidated
because  of  the  Court's  ruling  that  the regulation conflicts with
Section 232-c  of  the  Real  Property  law.  The  Real  Property  Law
provision  states that "(w)here a tenant whose term is longer than one
month holds over. after the expiration of such term, such holding over
shall not give to the landlord the option to hold the tenant for a new
term solely by virtue of the  tenant's  holding  over."  Although  the
legislative  history  to  Section  232-c  indicates that "restrictions
provided by rent control statutes" supersede the provisions of Section
232-c, the Court's ruling is currently dispositive  (efforts  to  seek
leave to appeal were denied).

This  legislation  is important for several reasons. First, the Second
Department's ruling has cast doubt on countless deemed leases that are
currently in use in  that  Department.  The  status  of  these  leases
remains  uncertain and it is unclear whether tenants who are occupying
these apartments are subject to rent stabilization or whether they are


now month to month tenants. Second, the Court's ruling has also thrown
into question the status of deemed leases in the First Department  and
the rights and obligations of the affected owners and tenants as well.
Third,  both  tenants  and  property  owners will be operating under a
cloud of uncertainty as  to  their  rights  and  obligations  in  both
Departments  at  this  juncture.  And  lastly,  the Code provision was
adopted primarily to address a reality of landlord - tenant  practice.
Previously owners would commence litigation against tenants who failed
to renew. The outcome, after expending fees for attorneys and crowding
the  Housing  Court  calendar,  was that tenants would be provided the
opportunity to then execute the renewal lease to  forestall  eviction.
The  deemed lease provision of the Rent Code ensured that owners would
not need to pursue needless litigation and that tenants  would  remain
protected notwithstanding their failure to execute renewal leases.

This legislation will have the effect of establishing the deemed lease
mechanism  as a matter of law and remove any doubt as to the continued
effectiveness of deemed leases, including those  which  were  executed
previously,  or  are currently in effect, or which may be entered into
in the future.

PRIOR LEGISLATIVE HISTORY:

2012: S.7732     Referred to Rules

FISCAL IMPLICATIONS:

Undetermined savings from a reduction of caseload in Housing Court.

EFFECTIVE DATE:

This act shall take effect on the 30th day after it shall have  become
law, with provisions.