§ 286. Tenant protection. 1. It shall not be a ground for an action or
proceeding to recover possession of a unit occupied by a residential
occupant qualified for the protection of this article that the occupancy
of the unit is illegal or in violation of provisions of the tenant's
lease or rental agreement because a residential certificate of occupancy
has not been issued for the building, or because residential occupancy
is not permitted by the lease or rental agreement.

2. (i) Prior to compliance with safety and fire protection standards
of article seven-B of this chapter, residential occupants qualified for
protection pursuant to this article shall be entitled to continued
occupancy, provided that the unit is their primary residence, and shall
pay the same rent, including escalations, specified in their lease or
rental agreement to the extent to which such lease or rental agreement
remains in effect or, in the absence of a lease or rental agreement, the
same rent most recently paid and accepted by the owner; if there is no
lease or other rental agreement in effect, rent adjustments prior to
article seven-B compliance shall be in conformity with guidelines to be
set by the loft board for such residential occupants within six months
from the effective date of this article.

(ii) In addition to any rent adjustment pursuant to paragraph (i) of
this subdivision, on or after June twenty-first, nineteen hundred
ninety-two, the rent for residential units in interim multiple dwellings
that are not yet in compliance with the requirements of subdivision one
of section two hundred eighty-four of this article shall be adjusted as
follows:

(A) Upon the owners' filing of an alteration application, as required
by paragraphs (ii), (iii), (iv), (v), (vi), and (vii) of subdivision one
of section two hundred eighty-four of this article, an adjustment equal
to three percent of the rent in effect at the time the owner files the
alteration application.

(B) Upon obtaining an alteration permit, as required by paragraphs
(ii), (iii), (iv), (v), (vi), and (vii) of subdivision one of section
two hundred eighty-four of this article, an adjustment equal to three
percent of the rent in effect at the time the owner obtains the
alteration permit.

(C) Upon achieving compliance with the standards of safety and fire
protection set forth in article seven-B of this chapter for the
residential portions of the building, an adjustment equal to four
percent of the rent in effect at the time the owner achieves such
compliance.

(D) Owners who filed an alteration application prior to the effective
date of this subparagraph shall be entitled to a prospective adjustment
equal to six percent of the rent on the effective date of this
subparagraph.

(E) Owners who obtained an alteration permit prior to June
twenty-first, nineteen hundred ninety-two shall be entitled to a
prospective adjustment equal to fourteen percent of the rent on June
twenty-first, nineteen hundred ninety-two.

(F) Owners who achieved compliance with the standards of safety and
fire protection set forth in article seven-B of this chapter for the
residential portions of the building prior to June twenty-first,
nineteen hundred ninety-two shall be entitled to a prospective
adjustment equal to twenty percent of the rent on June twenty-first,
nineteen hundred ninety-two.

(iii) Any rent adjustments pursuant to paragraph (ii) of this
subdivision shall not apply to units which were rented at market value
after June twenty-first, nineteen hundred eighty-two and prior to June
twenty-first, nineteen hundred ninety-two. This paragraph shall not
apply to units made subject to this article by subdivision five of
section two hundred eighty-one of this article.

(iv) Payment of any rent adjustments pursuant to paragraph (ii) of
this subdivision shall commence the month immediately following the
month in which the act entitling the owner to the adjustment occurred.

3. Upon or after compliance with the safety and fire protection
standards of article seven-B of this chapter, an owner may apply to the
loft board for an adjustment of rent based upon the cost of such
compliance. Upon approval by the loft board of such compliance, the loft
board shall set the initial legal regulated rent, and each residential
occupant qualified for protection pursuant to this article shall be
offered a residential lease subject to the provisions regarding
evictions and regulation of rent set forth in the emergency tenant
protection act of nineteen seventy-four, except to the extent the
provisions of this article are inconsistent with such act.

4. The initial legal regulated rent established by the loft board
shall be equal to (i) the rent in effect, including escalations, as of
the date of application for adjustment ("base rent"), plus, (ii) the
maximum annual amount of any increase allocable to compliance as
provided herein; and (iii) the percentage increase then applicable to
one, two or three year leases, as elected by the tenant, as established
by the local rent guidelines board, and applied to the base rent,
provided, however, such percentage increases may be adjusted downward by
the loft board if prior increases based on loft board guidelines cover
part of the same time period to be covered by the rent guidelines board
adjustments.

5. An owner may apply to the loft board for rent adjustments once
based upon the cost of compliance with article seven-B of this chapter
and once based upon the obtaining of a residential certificate of
occupancy. If the initial legal regulated rent has been set based only
upon article seven-B compliance, a further adjustment may be obtained
upon the obtaining of a residential certificate of occupancy. Upon
receipt of such records as the loft board shall require, the loft board
shall determine the costs necessarily and reasonably incurred, including
financing, in obtaining compliance with this article pursuant to a
schedule of reasonable costs to be promulgated by it. The adjustment in
maximum rents for compliance with this article shall be determined
either (i) by dividing the amount of the cash cost of such improvements
exclusive of interest and service charges over a ten year period of
amortization, or (ii) by dividing the amount of the cash cost of such
improvements exclusive of interest and service charges over a fifteen
year period of amortization, plus the actual annual mortgage debt
service attributable to interest and service charges in each year of
indebtedness to an institutional lender, or other lender approved by the
loft board, incurred by the owner to pay the cash cost of the
improvements, provided that the maximum amount of interest charged
includable in rent shall reflect an annual amortization factor of
one-fifteenth of the outstanding principal balance. Rental adjustments
to each residential unit shall be determined on a basis approved by the
loft board. An owner may elect that the loft board shall deem the total
cost of compliance with this article to be the amounts certified by the
local department of housing preservation and development of such
municipality in any certificate of eligibility issued in connection with
an application for tax exemption or tax abatement to the extent such
certificate reflects categories of costs approved by the loft board as
reasonable and necessary for such compliance. Rental adjustments
attributable to the cost of compliance with this article shall not
become part of the base rent for purposes of calculating rents adjusted
pursuant to rent guidelines board increases.

6. Notwithstanding any provision of law to the contrary, a residential
tenant qualified for protection pursuant to this chapter may sell any
improvements to the unit made or purchased by him to an incoming tenant
provided, however, that the tenant shall first offer the improvements to
the owner for an amount equal to their fair market value. Upon purchase
of such improvements by the owner, any unit subject to rent regulation
solely by reason of this article and not receiving any benefits of real
estate tax exemption or tax abatement, shall be exempted from the
provisions of this article requiring rent regulation if such building
had fewer than six residential units as of the effective date of the act
which added this article, or rented at market value subject to
subsequent rent regulation if such building had six or more residential
units at such time. The loft board shall establish rules and regulations
regarding such sale of improvements which shall include provisions that
such right to sell improvements may be exercised only once for each unit
subject to this article, and that the opportunity for decontrol or
market rentals shall not be available to an owner found guilty by the
loft board of harassment of tenants.

7. The local rent guidelines board shall annually establish guidelines
for rent adjustments for the category of buildings covered by this
article in accordance with the standards established pursuant to the
emergency tenant protection act of nineteen seventy-four. The local rent
guidelines board shall consider the necessity of a separate category for
such buildings, and a separately determined guideline for rent
adjustments for those units in which heat is not required to be provided
by the owner, and may establish such separate category and guideline.
The loft board shall annually commission a study by an independent
consultant to assist the rent guidelines board in determining the
economics of loft housing.

8. Cooperative and condominium units occupied by owners or
tenant-shareholders shall not be subject to rent regulation pursuant to
this article.

9. No eviction plan for conversion to cooperative or condominium
ownership for a building which is, or a portion of which is an interim
multiple dwelling shall be submitted for filing to the department of law
pursuant to the general business law until a residential certificate of
occupancy is obtained as required by this article, and the residential
occupants qualified for protection pursuant to this article are offered
one, two or three year leases, as elected by such persons, in accordance
with the provisions for establishment of initial legal regulated rent
contained herein. Non-eviction plans for such buildings may be submitted
for filing only if the sponsor remains responsible for compliance with
article seven-B and for all work in common areas required to obtain a
residential certificate of occupancy. Cooperative conversion shall be
fully in accordance with section three hundred fifty-two-eeee of the
general business law, the requirements of the code of the local real
estate industry stabilization association, and with the rules and
regulations promulgated by the attorney general.

10. The functions of the local conciliation and appeals board of such
municipality regarding owners and tenants subject to rent regulation
pursuant to this article shall be carried out by the loft board until
such time as provided otherwise by local law.

11. Residential occupants qualified for protection pursuant to this
article shall be afforded the protections available to residential
tenants pursuant to the real property law and the real property actions
and proceedings law.

12. No waiver of rights pursuant to this article by a residential
occupant qualified for protection pursuant to this article made prior to
the effective date of the act which added this article shall be accorded
any force or effect; however, subsequent to the effective date an owner
and a residential occupant may agree to the purchase by the owner of
such person's rights in a unit.

13. The applicability of the emergency tenant protection act of
nineteen seventy-four to buildings occupied by residential tenants
qualified for protection pursuant to this article shall be subject to a
declaration of emergency by the local legislative body. In the event
such act expires prior to the expiration of this article, tenents in
interim multiple dwellings shall be included in coverage of the rent
stabilization law of nineteen hundred sixty-nine of the city of New
York.