January 16, 2018
By Adam Leitman Bailey and Dov Treiman
2017 was an astounding year in New York City real estate. Especially on August 9, 2017, but to become effective at scattered times over the ensuing year, the City Council enacted numerous provisions falling into three distinct areas: general property owner/landlord and shareholder/unit owner/tenant relations, harassment centered provisions, and provisions to slow down or discourage construction and sales of properties and laws affecting cooperatives and condominiums and foreclosure procedures. This article shall examine these laws and their applicability to property owners and occupants and the vendors that service them.
THE AUGUST 9 LEGISLATION
Incredibly on one single day on August 9, 2017, the New York City Council passed the following legislation, all of which the Mayor signed into law including laws concerning smoking, harassment of tenants, applications for construction and final inspections of permitted work, vacate orders, a task force on construction work in occupied multiple dwellings, distressed buildings subject to foreclosure by action in rem, building violations, oversight of construction contractors who have engaged in work without a required permit increasing fines for working without a permit and stop work orders, a safe construction bill of rights, a denial of certain building permits where outstanding charges are owed to the city, creation of an office of the tenant advocate within the department of buildings.
GENERAL PROPERTY OWNER/LANDLORD AND SHAREHOLDER/UNIT OWNER/TENANT RELATIONS
Effective as of November 6, 2017, is Local Law 69, amending NYC Administrative Code §27-2018.1 and adding §27-2018.2, dealing with bedbugs. Unlike so many laws that affect buildings large enough to be subject to rent regulation—generally speaking, six residential units or more, this one applies to buildings that are three or more units, thus adding significantly to the regulatory burden of outer boroughs where these smaller buildings are more present.
The law requires owners to provide tenants with their leases and lease renewals reports of histories of bedbugs in the building, along with posting such reports “prominently” in the building. This adds to the lobby postings already present in both pre-2017 laws and the 2017 enactments. Additionally, the law calls for electronically filing with the City an annual report with the same, thus requiring owners of buildings large and small to own and use computers.
While this appears a relatively benign imposition, one must remember that many of these smallest affected buildings are the property of elderly non-computer-literate people who are not in any real sense commercial landlords. It has been the experience of these authors that many landlords in the group just described often find themselves painfully out of compliance with laws meant more for larger more commercial operations.
The law does not directly set forth penalties for noncompliance. It does require that the electronic filing shall be publicly available and at least implies that anyone doing electronic research will find all previous reports. Therefore, anyone purchasing a multiple dwelling should, during the due diligence period, be researching these postings. Larger owners have reported their probably justified fear that these reports will lower the value of affected properties.
As we shall see throughout the newly passed laws, reductions of buildings’ sale value will be a common effect of the various enactments.
One peculiar provision of the new law is Administrative Code §27-2018.2(d), providing, “Owners of multiple dwellings shall attempt to obtain the bedbug infestation history for the previous year for each dwelling unit from the tenant or owner, including whether eradication measures were employed during the previous year for a bedbug infestation.”
It is highly unusual for a law to require a person to “attempt” to do something and only case law will be able to develop what is and what is not enough of an “attempt.” However, we do note that when the law defines no particular time or manner of accomplishing a particular task, “reasonable” is read into the statute. Thus, we believe that this provision shall be interpreted to read, “Owners of multiple dwellings shall reasonably attempt to obtain the bedbug infestation histories.” Since during the course of a year since the last report, the building may be sold, “shall reasonably attempt” places a burden of obtaining that history on the purchaser, as a condition to closing. However, since the enactment requires that HPD post the electronic reports, it may be that doing the electronic research is enough to “reasonably attempt.”
The law specifies that the history shall, at a minimum, include the building’s address, the number of units, the number of units with bed bug infestations during the previous year, the number of units in which eradication measures were employed, and the number of units with continued infestations after eradication measures were employed.
We note that bedbugs are more stubborn than other kinds of infestations and therefore require that the landlord employ not mere generic pest eradicators, but those with the training and expertise necessary for bedbugs. These are expensive procedures and the new law grants no exemption for landlords who cannot afford the process.
Effective August 28, 2018 is Local Law 147, dealing with smoking policies, amending NYC Administrative Code §17-502 and §17-508, and adding §17-506.1. Taking at the time of its enactment a full year to become effective, it is generous in its timing for affected building owners to comply. The law has one of the broadest possible definitions of an “owner” and of a building to which the law applies—finding applications to all classes of ownership. The law applies to privately owned buildings as well as cooperatives and condominiums. Without dictating what the policy shall be, it requires all affected buildings – all Class A multiple dwellings – to adopt policies with regard to smoking. While requiring that it be incorporated in leases, it exempts from incorporation any rent regulated or publicly rented units, their tenants, and their successors. The policy affects both leases and subleases and therefore applies to both owners of a large building and to individual occupants who rent out their apartments.
In spite of the fact that a board of directors of a cooperative or a board of managers of a condominium is free to govern buildings with general wide latitude, this law requires them to vote for a smoking policy, without specifying what the smoking policy is.
The law, while creating an obligation to have a smoking policy and to inform people what the policy is, does not dictate what that policy is to be and does not specify whether occupants of a building that has adopted such a policy shall have third party beneficiary status to compel the building’s ownership to enforce the policy it adopts.
Under the law, it is perfectly legal for a building to adopt a policy that smoking is completely allowed except where prohibited by law.
While the law requires that the landlord specify exact locations where smoking is prohibited and permitted in and around the building, for the very reason that the law does not specify third party enforcement, the safest policy, from a legal point of view, is one that simply allows smoking. Of course, from a health point of view and from a marketing point of view, such a policy is less desirable.
To the extent that the law requires enforcement of the policy, it merely requires that “the owner … shall incorporate the building’s smoking policy into any agreement to rent or lease a dwelling unit…” or “shall incorporate the building’s smoking policy into any agreement to rent or purchase the dwelling unit.” However, it also sets penalties of $100 for each instance of failing to adopt or disclose the smoking policy and specifies that those shall be the only penalties for violation.
Consider a simple case in which the smoking policy is “there shall be no smoking in the apartments.” Now consider the phrase “shall incorporate the smoking policy.” Does this mean that with such a smoking policy, it is sufficient that the lease now state, “it is the policy of this building that there shall be no smoking in the apartments?” Or, must the lease now state, “there shall be no smoking in the apartment?”
Under one possible reading of this new ordinance, it is enough for a lease to state what the building’s policy is without requiring that the occupant actually obey the policy. However, another possible reading of the law is that the lease must both state what the building’s policy is and that it will be enforced, presumably with threat of eviction. Only case law can tell us which meaning the drafters intended, but we note that the courts of New York City are generally resistant to finding new grounds for evicting people. So, the interpretation that the lease only has to announce the policy and not enforce it may actually be the one that the courts require.
Unlike the bedbug history, this law does not require posting of the policy in a prominent place in the building, but allows posting as an alternative to distributing copies of it to all the occupants and maintaining records of such distribution. With stiff fines for failure to abide by these provisions, owners should be careful not to post a summary of the smoking policy, but the actual verbatim policy itself. For this reason, the policy should be written with as few words as possible and posted in as large print as possible.
EXPANDED DEFINITIONS OF HARASSMENT
Local Laws 162, 163, and 164 all expand the definition of harassment as found in New York City Administrative Code §27-2004(48) and all took effect on December 28, 2017. Local Law 184 of 2017, effective February 5, 2018, Local Law 24 of 2018, effective April 30, 2018, and Local Law 48 of 2018, effective May 11, 2018 also expanded the definition. The expansions appear as follows:
48. Except where otherwise provided, the term “harassment” shall mean any act or omission by or on behalf of an owner that (i) causes or is intended to cause any person lawfully entitled to occupancy of a dwelling unit to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy, and (ii) includes one or more of the following acts or omissions, provided that there shall be a rebuttable presumption that such acts or omissions were intended to cause such person to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy except that such presumption shall not apply to such acts or omissions with respect to a private dwelling, as defined in paragraph six of subdivision a of section 27-2004: (the foregoing italic material and all text below being the new material)
a-1. knowingly providing to any person lawfully entitled to occupancy of a dwelling unit false or misleading information relating to the occupancy of such unit;
a-2. making a false statement or misrepresentation as to a material fact regarding the current occupancy or the rent stabilization status of a building or dwelling unit on any application or construction documents for a permit for work which is to be performed in the building containing the dwelling unit of any person lawfully entitled to occupancy of such dwelling unit if such building is governed by the New York city construction codes;
b-1. an interruption or discontinuance of an essential service that (i) affects such dwelling unit and (ii) occurs in a building where repeated interruptions or discontinuances of essential services have occurred;
b-2. repeated failures to correct hazardous or immediately hazardous violations of this code or major or immediately hazardous violations of the New York city construction codes, relating to the dwelling unit or the common areas of the building containing such dwelling unit, within the time required for such corrections;
b-3. repeated false certifications that a violation of this code or the New York city construction codes, relating to the building containing such dwelling unit, has been corrected;
b-4. engaging in repeated conduct within the building in violation of section 28-105.1 of the New York city construction codes;
d-1. commencing a baseless or frivolous court proceeding against a person lawfully entitled to occupancy of such dwelling unit if repeated baseless or frivolous court proceedings have been commenced against other persons lawfully entitled to occupancy in the building containing such dwelling unit;
e & f, f-1, f-2.
f-3. offering money or other valuable consideration to a person lawfully entitled to occupancy of such dwelling unit to induce such person to vacate such dwelling unit or to surrender or waive any rights in relation to such occupancy while engaging in any of the following types of conduct:
f-4. repeatedly contacting or visiting any person lawfully entitled to occupancy of such unit (i) on Saturdays, Sundays or legal holidays, (ii) at times other than the hours between 9 a.m. and 5 p.m. or (iii) in such a manner as can reasonably be expected to abuse or harass such person, provided that if such person has notified such owner in writing that such person consents to being contacted or visited at specified hours or in a specified manner, such owner may also contact or visit such person during such specified hours and in such specified manner, and provided further that an owner may contact or visit such person for reasons specifically authorized or mandated by law or rule; or
f-5. threatening any person lawfully entitled to occupancy of such dwelling unit based on such person’s actual or perceived age, race, creed, color, national origin, gender, disability, marital status, partnership status, caregiver status, uniformed service, sexual orientation, alienage or citizenship status, status as a victim of domestic violence, status as a victim of sex offenses or stalking, lawful source of income or because children are, may be or would be residing in such dwelling unit, as such terms are defined in sections 8-102 and 8-107.1 of the code;
f-6. requesting identifying documentation for any person lawfully entitled to occupancy of such dwelling unit that would disclose the citizenship status of such person, when such person has provided the owner with a current form of government-issued personal identification, as such term is defined in section 21-908, unless such documentation is otherwise required by law or is requested for a specific and limited purpose not inconsistent with this paragraph.
Presumption of Intent
While under previous law, it had been the burden of the complainant to prove that the forbidden actions taken (being those of the pre-amendment law), were for the purpose of getting tenants to vacate their apartments or give up residential rights, under these amendments, the complainant need only prove the acts themselves, now being entitled to a presumption of the forbidden intent. Effectively, this means that the complainant has the initial burden of proving prima facie that the forbidden activities took place and once that prima facie burden is met, the owner now has the burden of disproving the forbidden intent.
In order to see this in action with a specific example, repeated lack of heat would be presumed to be with harassing intent, but such intent could be disproven by the landlord’s diligence in trying to get the boiler replaced.
One of the more peculiar provisions of the new suite of laws is that a landlord cannot more than once contact a tenant with a buyout offer if such contact is made outside of the most usual 9 to 5 business day. This is strange for a number of reasons, including the fact that many tenants in the City work at shifts other than 9 to 5 and mandating contacts during 9 to 5 for these tenants can make it required to contact them during their sleep time. Further, while case law for the service of process takes into account commuting time, this ordinance does not. For purposes of the ordinance, it is as if people beamed themselves to and from work. The entire ensemble of the ordinance makes buyout negotiations highly hazardous for landlords, greatly to their consternation, but to the consternation of tenants as well who, now having to take the initiative, weaken their hands in negotiation.
Gift to Tenant Organizers
Two provisions of these enactments immediately stand out as providing distinct advantages to organizations and law firms that, as a business model, organize the entire tenancy of a particular building—advantages over firms that only do occasional tenant representation.
The first of these is §27-2004(48)(b-1)(ii) that enables a tenant to claim harassment for a one-shot loss of essential service if the interruption has taken place in a building where there are other interruptions of essential services, regardless of whether those other interruptions affect the complaining tenant. Obviously, if a tenant-oriented firm is working in the building, the firm is more aware of the building’s overall history than the individual tenants are.
Nothing in this provision requires that the interrupted service be building-wide in nature. Nothing in this provision allows for clearly excusable interruptions of essential services, such as the replacement of an elevator, an interruption that, by its nature, goes on for months at a time. However, as above stated, it appears that good faith and diligent repair or improvement to the building is, however, a sufficient defense.
The second is §27-2004(48)(d-1) that enables a tenant to claim harassment for one “baseless or frivolous” court proceeding, if there have been other “baseless or frivolous” proceedings in the building, specifically ones that have not affected the complaining tenant. Tenant-oriented firms are clearly better positioned to know of such lawsuits than individual tenants are. The other notable feature, however, is that the law has no requirement for a previous adjudication that the previous lawsuit was “baseless or frivolous.” While such a finding in the prior action would bind the Owner by principles of collateral estoppel, since the complaining tenant is not a party to the prior action, there is no such collateral estoppel effect and the complaining tenant can therefore choose to relitigate the propriety of somebody else’s lawsuit afresh. However, under the law of unintended consequences, in buildings with significant distrust between the Owner and the tenants, Owners are, by this provision, strongly disincentivized to settle a run-of-the-mill nonpayment or holdover case on any terms that do not include a clear statement that the case had some merit to it. Tenants, for their part, thus have an additional bargaining chip.
PENALTIES FOR HARASSMENT
Effective December 1, 2017, Local Law 165 amends Administrative Code §27-2115 to increase the penalties for a judicial finding of harassment based on repeated commencement of baseless or frivolous lawsuits against one particular tenant from one to two thousand dollars minimum for initial violations and four thousand dollars for repeatedly doing so. For both the initial and repeated finding, the ceiling on the penalty is ten thousand dollars.
Note that the specific conduct penalized here is “commencing repeated baseless or frivolous court proceedings against any person lawfully entitled to occupancy of such dwelling unit.” Note that the basis for sanctions includes when the lawsuit “is completely without merit in law.” Imposition of a penalty under this amended ordinance would not seem to preclude an award of sanctions under the existing New York Court Rule §130-1, and even disciplinary action under Rule 3.1 of the Rules of Professional Conduct.
CERTIFICATES OF NO HARASSMENT
Effective on September 27, 2018, Local Law 1 of 2018, the City’s new legislation with regard to Certificates of No Harassment (CONH) falls under the categories of anti-harassment legislation and of anti-construction legislation. In order to effect such a division, we focus on the prohibited conduct to establish the anti-harassment laws of the ordinance and on the consequences of such behavior in order to establish the anti-construction aspects of the legislation.
Substantively, “harassment” for purposes of this ordinance is made by reference to Administrative Code §27-2004(48) which, as we saw, was amended in this same package of legislation from August 9, 2017 and subsequent enactments, some of which are currently phasing in. However, that presents a problem in that while some of the conduct from §27-2004(48) would have been illegal without that ordinance, such as plugging locks, other conduct prohibited by §27-2004(48) is not illegal except for §27-2004(48).
That kind of “harassment” includes, for example, making a buyout offer to a tenant after having been asked not to (§27-2004(48)(f-2). While only adjudications of harassment after the effective date of this ordinance can be counted to be “harassment” for purposes of this ordinance, the conduct to which it relates is, of course, prior to the adjudication and therefore could have been prior to the effective date of this ordinance. In fact, under the ordinance, it can be as much as five years prior to the passage of this ordinance.
Some of the new definitions of harassment being phased in are going to require considerable case law to flesh them out. For example, Subsection f-5 of the definition of harassment includes “threatening” people “based on” “age, race, creed, etc.” But it does not say threatening with what. For example, if a landlord honestly believes that younger persons require greater vigilance on the landlord’s part in collecting rent due to youth-induced forgetfulness, are such collection efforts “harassment”? Since subdivision (a) of the same section already says that implied threats “of force” are harassment, this means that the protected class threats are threats of some other nature than force, but what that other nature is, the legislation leaves to the imagination. Clearly, denying an Owner a building permit because the Owner engaged in conduct only vaguely defined in the statute is going to create significant constitutional issues. Under all understandings of due process, you cannot punish people for something you have not specifically told them they are not allowed to do. “A fundamental principle in our legal system is that laws which regulate persons or entities must give fair notice of conduct that is forbidden or required.”
Against adjudication of harassment, there are no current steps that an owner can take to purge the record. Therefore, for any building effected by this kind of history of harassment, the building’s sale value just took a precipitous fall and there is nothing anybody can do to fix that.
In the third and final part of this article, we will look at these enactments as the curbs they appear to be placing around construction generally.
NEW STATE COOPERATIVE/CONDOMINIUM LAWS
Added by L. 2017, c. 305, effective January 1, 2018, under new Not-For-Profit Corporation Law §519-a and Business Corporations Law §727, Cooperative Board of Directors members and Condominium Board of Managers members are required to disclose those contracts that they were involved in between the Board and outside vendors or other contractors with whom the Directors and Managers have a relationship. That relationship is defined by reference to Business Corporations Law §713 that uses as a standard “a substantial financial interest.” While the statute does not define any of those terms, there is an adequate body of case law that does so.
Under the amended Not For Profit Corporation Law both the Boards and under the Business Corporations Law their individual members have requirements. The Boards themselves are required to report each meeting, including director attendance, voting records for contracts, and how each director voted on such contracts. They are also required to furnish annually to the directors copies of Business Corporations Law §713 and Not For Profit Corporation Law 715, the law that defines Board members acting in their personal interest and to require of the directors that they report their self-interested transactions. The Board members are also required to sign reports including information on the contract recipient, contract amount, and the purpose of entering into the contract, along with the date of each vote for a contract and the starting and ending dates of the contracts’ validity.
There are no penalties stated in the statute for violation of either of these laws.
 Local Law 162 of 2017.
 Local Law 184 of 2017, effective February 5, 2018.
 Local Law 24 of 2018.
 Local Law 24 of 2018.
 Local Law 164 of 2017.
 Local Law 24 of 2018.
 Local Law 24 of 2018.
 Local Law 24 of 2018.
 Local Law 164 of 2017.
 Local Law 163 of 2017.
 Local Law 163 of 2017.
 Local Law 48 of 2018, effective May 11, 2018.
 Local Law 48 of 2018, effective May 11, 2018.
 Bass v. Blumenthal, 27 HCR 681A, NYLJ 12/2/99, 35:5 (App.T. 9th & 10th Jud. Dists.)
 F.C.C. v. Fox Television Stations, Inc., 567 U.S. 239, 132 S.Ct. 2307, 183234 (2012).