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[0:00] Michelle Itkowitz: Can your landlord upcharge you for paying rent electronically? Boy, those charges sure do add up over time. For that matter, can the landlord charge you an extra fee for paying manually with a check, cash, or money order? Can the landlord prevent you from paying manually with a check, cash, or money order? And if you don't pay electronically, how can you document that you've paid? And do the answers to these questions change if your rent is stabilized? How about if you're a subtenant? I'm Michelle Itkowitz, and these are just some of the questions that we're tackling in this episode of Learn to Live Better, a housing law podcast.

[0:39] Michelle Itkowitz: New York City tenants have more rights than tenants anywhere else in America. But New York City tenants are also shockingly uneducated about what those rights are. A right you don't know you have is the same as no right at all. And there are so many bits of incomplete information out there. This podcast will change all that. In each episode, we look at current legal cases and statutes and the real-life apartment stories they give rise to here in the greatest city on earth. And every episode ends with a tenant takeaway so you have actionable information to help you make better choices. The law belongs to you, New York City, but your ownership of the law is only as great as your understanding of the law. So let's learn to live better. I am Michelle Itkowitz, and this is Learn to Live Better, a housing law podcast.

[1:34] Michelle Itkowitz: Okay, first as always, let's set the stage with some context. There's this really great column in the New York Times called Ask Real Estate, written by journalist Jill Ramos. And I've been honored that on five different occasions I've been tapped to help answer reader questions. And a recent question that I answered or helped answer for that column gave me the idea for this episode. When you pay your rent electronically, the landlord may get charged a third-party processing fee. And they often attempt to pass that on to tenants. And that's not exactly what we're talking about today. What we're talking about today is the legality of when a landlord does more than just pass along a fee from a third party.

[2:18] Michelle Itkowitz: Some landlords simply apply a flat fee, maybe $5 per transaction. So that's $60 a year or $300 over five years out of your pocket and into the landlord's or more if the charge is more. For that matter, because electronic payments are now really the norm for most people, and because obviously electronic payments are easier for landlords, some landlords will attempt to prohibit tenants from paying manually. And by manually, I mean cash, check, money order. The question is, what are your rights here? And this is costing you money. Is this legal? And the answer is it depends. It's going to depend on whether or not you're rent stabilized or whether you're free market or good cause eviction law.

[3:07] Michelle Itkowitz: So before we get into the weeds, let's quickly answer the question in general for our one million rent stabilized apartments out there. The New York State Division of Housing and Community Renewal is the state agency that has auspices over New York's 1 million rent stabilized apartments. And the agency puts out some very helpful fact sheets which summarize the law on important topics. And fact sheet 44 covers the issue of extra fees that landlords are allowed to charge rent stabilized tenants. I have fact sheet 44 on this slide. If you're not watching me, it doesn't matter. And I will put a link in the show notes to fact sheet 44.

[3:53] Michelle Itkowitz: Landlords are always looking for ways to make more money on rent stabilized tenants because obviously the rent is stabilized. It can only go up by so much by rent guidelines board increases. So landlords are always looking for a way to get a little bit extra. And DHCR is always pushing back on that. And as fact sheet 44 tells us, there are only a very few extra permissible fees that a landlord is allowed to charge a rent stabilized tenant. And here's a partial list from fact sheet 44 of what landlords can't charge for: background checks for roommates, pet security deposits, damage fees, repair fees, painting fees, cleaning fees. So not a lot of extra fees are allowed to be charged to rent stabilized tenants.

[4:40] Michelle Itkowitz: But let's go behind the fact sheet and look at the law that supports this for just two seconds. I like to do that here. A fact sheet is good. It tells you what the deal is, but where is that coming from? So what we're talking about here is rent stabilization code 2522.1 that states in full the legal regulated rents may be increased only as here and after specified. Okay, so what's here and after specified? And for that, we go to 2522.4, which lists the categories of situations where a landlord can legally add to a rent stabilized tenant's rent. And let's just make this simple and say it certainly doesn't include a category that's an extra charge based on the tenant's method of payment.

[5:32] Michelle Itkowitz: So for a rent stabilized tenant, they cannot be upcharged based upon how they pay their rent. Now we're going to go into the main segment. But rent stabilized tenants don't leave just yet because we're going to cover a bunch of things in the next segment that actually will also apply to you and maybe make your life a little easier. Okay, enter stage right. 235G. Electronic billing and/or payment of rent. So let's go over this. Just give me two seconds here, guys. The law is words, and your landlord is reading the words, so we're going to read the words as well. Just stick with me.

[6:20] Michelle Itkowitz: A landlord shall not require a tenant to use an electronic billing and/or payment system as the only method for payment of rent. A landlord shall not assess any fee or other charge for a tenant that chooses not to use an electronic billing and/or payment system. Okay, so that's our rule. And then the law goes on to say that any lease that tries to cut this statute out is void against public policy. The point is you can avoid a landlord's fees for electronic payments by paying manually with check, cash, or money order. And if you choose to go that route, the landlord can't charge you an extra fee for paying manually with check, cash, or money order.

[7:11] Michelle Itkowitz: Okay, so it's time for an anecdote. And I was in housing court anecdote. If you've followed me on my previous podcast, the Tenant Law Podcast, you know I tell these anecdotes. So I was waiting for my turn in housing court recently, and I overheard a conversation that I've heard many times before in the hallways of housing court. But this one stuck in my head because I was helping the New York Times answer this question. So the law secretary, that's what the judge's assistant is called in housing court. That person is a lawyer. So the law secretary was conferencing a case between a landlord lawyer and an unrepresented tenant. And the landlord lawyer was saying that the tenant had not paid a whole bunch of rent.

[8:12] Michelle Itkowitz: But she was sure that she had given these money orders to the landlord and they weren't listed on her rent ledger. They were showing as arrears. So the law secretary was asking the tenant if she had put a trace on the money orders. And I was curious. So I opened my phone and asked my chat GBT, what does it take to trace the money order? And it was like a whole production. It doesn't seem like something anybody would really want to be doing the tenant on whether she's tracing these money orders, why not ask the landlord's lawyer why didn't they provide the tenant with receipts?

[8:56] Michelle Itkowitz: So the point is you can avoid landlord fees for electronic payments by paying manually with cash, check, or money order. But that opens up a whole new can of worms. That there's a whole new set of problems here, which is how do you keep track of that? Obviously, if you pay electronically, instantly there's a record of your payment. But if you're mailing in a money order or dropping off cash, then how can you document that you've paid? So assuming you want to pay manually, assuming you don't see that as more trouble than it's worth, and for some people that's a choice they're going to make.

[9:37] Michelle Itkowitz: How is it that you document that you have paid? And so for that, enter stage right, real property law section 235E. Okay, so let's look at that. So real property law 235E is the duty to provide a written receipt. And it says upon receipt of the payment of rent for a residential premises in the form of cash, or any instrument other than a personal check. Now, I just said personal check is a form of manual payment, and we're going to get to that. The statute treats personal checks differently. So let's start again. Upon the receipt of the payment of rent for residential premises in the form of cash or any instrument other than personal check, it shall be the duty of the landlord to provide the tenant with a written receipt containing the following: the date, the amount that was paid, the identity of the premises, so the address and apartment number, and a signature.

A signature and the title of the person who is receiving the rent. Now, for personal checks, 235E goes on to say that if you want to pay with personal checks, you can put in a one-time request to the landlord saying, I'm going to be paying with personal checks. Please always send me a receipt. So it's almost like a standing order. So that's what the statute allows you to do.

[11:12] Michelle Itkowitz: Okay, so timing becomes important here. Real property law 235E goes on to tell us that if the payment of rent, the manual payment of rent, the check, the cash, the money order is made personally, then you get the receipt immediately. There's none of this. You come in with the money order, and the landlord says, Oh, I'm so busy, I'll deal with that receipt thing later. No, that's not how it works. The whole point is you get it immediately. Now, if you mail it in, the rule is the landlord has to send you a receipt within 15 days of receipt of the payment. So we're going to talk about best practices with respect to that in a minute. Now, here's what's interesting. There's no penalty built into real property law 235E for when a landlord doesn't give the receipt to the tenant. And there's no appellate case law. But there's a couple of lower court cases, and they pretty consistently hold the following.

[12:19] Michelle Itkowitz: So the landlord says, Hey, this tenant didn't pay, and the tenant says, No, I paid, and the landlord lost my check, lost my money order, didn't take the didn't register the cash. So where there's contradictory testimony and where the landlord has clearly violated section 235E of the real property law, the doubt should be resolved in favor of the tenant. And then another judge ruled that this statute creates a rebuttable presumption in favor of the tenant. So if the landlord wasn't giving receipts at all, and then the tenant can basically say, I paid, and there's a presumption in favor of the tenant that they paid. All of this needs now to be pulled together into some very important tenant takeaways. But first, let's get the housekeeping out of the way.

[13:07] Michelle Itkowitz: This is not legal advice. I'm not your lawyer, but because I am a lawyer, this might be considered legal advertising. If it's legal advertising, it's terrible because I'm asking you not to contact me. This podcast is not a commercial for me or my law firm. It's simply the podcast that I always wanted to make. What I would like to hear from you on is what topics would you like to hear more about? My email is in the show notes. If you're listening or watching on my old tenant law podcast feed, please hop on over to one of the many places that Learn to Live Better is distributed by the Broadway Podcast Network and subscribe there as well. Like, subscribe, review, share. These are all good ways to get this important information to more New Yorkers who need it.

[13:54] Michelle Itkowitz: It's time for the tenant takeaway. Okay, tenant takeaway time. Tenant takeaways number one and two. Rent stabilized tenants cannot be upcharged for paying their rent electronically. No extra fees for rent stabilized tenants. For all other tenants, you can be charged an extra fee for paying electronically, but you always have the option to avoid that fee by paying manually by check, cash, or money order. The landlord cannot prevent you from paying by check, cash, or money order, and they can't charge you a fee for it.

[14:32] Michelle Itkowitz: Tenant takeaway number three. If you do pay in a non-electronic way, if you pay manually, you're entitled, and indeed you must make it part of your workflow to get a receipt from the landlord. Remember, if you go in in person, you are going to get that immediately, which brings us to tenant takeaway number four. Obviously, as a best practice, I would say just make it part of your monthly routine to go and make this payment in person and get your receipt immediately. But if that's not what you're going to do, you're going to maybe pay by check and you're going to do the standing order that the landlord should send you a receipt. Just put it in a little tickler in your calendar. So if you haven't gotten the receipt in a couple of weeks, you follow up.

You might be saying, if I'm paying by a check, why would I need a receipt? Because my bank statement is going to show that the check was negotiated, that the check was cashed, and that's great unless something goes wrong in the landlord's office and somebody in the landlord's office is taking and cashing those checks and running away with the money and stuff like that happens. So if you're going to not pay electronically and get an immediate electronic record, if you're going to pay by check, you should build in the receipt process.

[15:51] Michelle Itkowitz: Okay, so takeaway number six, subtenants. As I always say, when a tenant sublets, the tenant becomes the landlord, and the subtenant becomes the tenant. So if you're a tenant listening to this, now you have everything I said here today that is the landlord's responsibility. Now that's yours. You have to allow your subtenant to pay manually if they want to. You can't charge them for it if you're subletting in rent stabilization, no extra fees. You have to give a receipt if they pay manually. And if you're a subtenant, everything I said here today that applies to the tenant, those are also your rights as well.

[16:31] Michelle Itkowitz: Takeaway number seven. If you do find yourself, God forbid, in court, and you've been paying manually, and the arrears statement shows that you didn't get credit for money orders or checks or cash that you paid. And if you can't back that up easily with a bank statement in the case of a check, don't be shy about letting the court know about real property law 235E. I mean, it's not showing up in that many cases. And I'm sure there are a lot of people paying non-electronically who would like to have the benefit of this. Don't be shy about letting a judge know what the law is. For that matter, if you are working with a private lawyer, don't be shy about letting them know either. A lot of private lawyers might not know. Just make everybody aware of 235E, and especially if you've made a paper trail of the fact that you're asking for receipts and not getting receipts. That can end up being very powerful.

[17:46] Michelle Itkowitz: Takeaway number eight, this is important. Keep your eyes open for new legislation in this area. And that bill seems to still be sitting in a committee in Albany. But it significantly strengthens Real Property Law 235G that we started talking about today about payment methods. It makes it a lot more favorable for tenants. And there you have it. But your ownership of the law is only as great as your understanding of the law. So let's learn to live better. I'm Michelle Itkowitz, and this is Learn to Live Better, a housing law podcast.