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[0:00] Michelle Itkowitz: Today we are looking at a case and a regulation that reminds us of a tenant's rights when the landlord renews a rent stabilized lease late. We're going to try to clear up some confusion and save tenants a few bucks. 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.

[1:14] Michelle Itkowitz: First as always, let's set the stage with some context. It's been a while since we've given any attention exclusively to our friends in the nearly one million rent stabilized apartments out there. If you want to learn more about how rent stabilization fits into the context of all the different types of housing in New York City, like good cause eviction law apartments and free market apartments, then go back and listen to episode 55, New York City Rental Housing Types Demystified. That was a good episode. First, as always, let's set the stage with some context. Rent stabilization limits the percentage rent increases an owner may charge for an apartment. Rent stabilization restricts the right of an owner to evict a tenant for no cause.

And rent stabilization imposes other requirements on landlords and tenants. Lots and lots of requirements in rent stabilization. Rent stabilization is overseen by the New York State Division of Housing and Community Renewal, the DHCR. Rent stabilized tenants are entitled to leases and lease renewals, and rent increases for rent stabilized tenants are controlled by the New York City Rent Guidelines Board. The New York City Rent Guidelines Board sets maximum rates for rent increases once a year.

[3:03] Michelle Itkowitz: For any leases beginning in that window, the allowable one-year lease increase is 3%, and the allowable two-year lease increase is 4.5%. By the way, who decides if a tenant gets a one-year lease or a two-year lease? The tenant. It's exclusively the tenant's decision whether or not they're going to choose the one year or the two year. Under rent stabilization, there is a very specific procedure for renewing a lease, and it includes the requirement that a landlord has to send the lease renewal offer between 150 and 90 days before the expiration of the current lease. The tenant then has 60 days to make a choice and return the lease signed to the landlord. If the landlord sends the tenant a legally proper lease renewal offer, and the tenant refuses to execute and send the renewal back in a timely fashion, then the rent stabilization code allows for the landlord to send the tenant a 15-day notice of termination of the tenancy and then bring a holdover proceeding if the tenant doesn't get out in 15 days, i.e., an eviction case against the tenant.

[4:18] Michelle Itkowitz: So here's the question for today. So what if the landlord doesn't do that? What if they don't send you a renewal offer and time goes by, you're outside of the 90 to 150 day window, and then they send it to you? What happens then? And that's what today's case gets into. And it might not sound like a big deal until we start getting into the math, and you'll see it can be something that ultimately can cost the tenant money that shouldn't. So with that, we are into today's case. Today's case is New Start Properties Inc. versus Hill. It's a civil court case out of Bronx County. It's a housing court case from, I believe it's December of 2025. Okay, so today's case was a holdover case, an eviction case based on, as we were just talking about, a 15-day notice that was served upon the tenant terminating her tenancy allegedly for her failure to return a renewal lease offer to the landlord.

And the court explained that the only issue in this case is as follows. The issue to be decided here is whether the renewal lease that landlord offered tenant and which tenant acknowledged receipt of conforms to the requirements of the rent stabilization code. That's it. That's the whole case. So if the renewal offer was proper, possibly the tenant could be evicted. And if the renewal offer was improper, the case will probably be dismissed.

[6:04] Michelle Itkowitz: Okay, so let's do a little chronology here. The tenant in this case, her lease expired in December of 2021. December of 2021. And then, you know, the time just came and went. 2022 came and went, 2023 came and went. It wasn't until May of 2024 that the landlord tendered this tenant a renewal offer. There's no explanation why it took two and a half years, but that's what happened. So here's the thing. And if you're watching, and you don't have to watch, but if you're watching, I have a pretty good slide for this. So the May 2024 renewal offer, that was governed by rent guidelines board order number 55. The one year lease renewal was 3%, and a two year lease renewal would have been 2.75% for the first year and 3.2% for the second year.

Okay, so what's the problem? Here's the problem, and it's very interesting. Had the landlord timely offered this tenant a renewal lease in 2021, then it would have been governed by rent guidelines board order number 53 that would have been zero a 0% increase for the first six months and a 1.5% increase for the second six months, and a two-year lease at 2.5%. So what do you notice? You notice that if this had been renewed in a timely fashion, the percentage increases would have been smaller. So in a way, the tenant is penalized by the landlord waiting and when they renew, renewing at a higher percentage.

[7:45] Michelle Itkowitz: Of course, DHCR has a rule for this. They have rent stabilization code 2523.5(c)(1). I'm going to put, of course, a link to this in the show notes. So this rule tells us like this. And this isn't the words of the statute I'm about to give to you, not what I'm putting on the screen or what I'm reading. I just tried to paraphrase it in the way I think it's most understandable. And here's the rule. Then the lower percentages must be utilized. The lower percentages must be utilized. That's the bottom line. Whatever the lower percentages are, you're going to use them. And that's not what happened in today's case. Rather, in today's case, the landlord used the higher percentage increases in effect at the time the renewal was made, not the lower percentage increases in effect when the renewal offer should have been made. So the court dismissed the case. Now, this actually leads to a bunch of subtle and important tenant takeaways. So stick around for those. First, the housekeeping.

[9:12] Michelle Itkowitz: This is not legal advice. I am not your lawyer, but because I am a lawyer, this might be considered legal advertising. If this is 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. This is simply one of the podcasts that I always wanted to make. What I would like to hear from you on is what topics you would like me to cover. My email is in the show notes. This is the seventh time I'm dropping a Learn to Live Better episode in the Tenant Law Podcast feed. What you could do if you want to help me out is if you're listening on the Tenant Law Podcast feed, you could go over to the Broadway Podcast Network, which you should be there anyway.

There's a bunch of great shows there. And also subscribe to Learn to Live Better over there. Don't unsubscribe from the Tenant Law Podcast feed because I don't want to lose everything that I've built up over here. But if we can get the numbers up on the Broadway Podcast Network, we can get to more people. It's time for the tenant takeaway.

[10:09] Michelle Itkowitz: Okay, tenant takeaway time. Takeaway number one, we're just going to repeat the rule from rent stabilization code 2523.5C1. Link in the show notes. Again, I'm not reading this. This is me reading my paraphrasing to make the rule as simple as I think it could be for our purposes today. When a rent stabilized renewal lease offer is made late, meaning not between 90 and 150 days from the end of the current lease, and if the lease renewal offer had been made on time, the percentage increases would have been lower than they are at the time the late offer is made, then the lower percentages must be utilized.

[10:56] Michelle Itkowitz: Takeaway number two. If you find an error when you get a rent stabilized lease renewal offer, document the error in writing and inform your landlord. Explain what the landlord did wrong. Show them this section of the rent stabilization code that I'm going to link you to. It's possible they don't know about it. Don't simply ghost the landlord on the renewal and wait till the landlord sends you a 15-day notice of termination or, God forbid, starts a holdover. So communicate if you find this error.

[11:43] Michelle Itkowitz: Takeaway number three and four. Even people who have been rent-stabilized tenants for decades, and they get very upset if the landlord hasn't tendered their renewal in a timely fashion. Oh no, my landlord didn't give me a renewal, and they feel very vulnerable. But the landlord more than it protects the tenant. If you don't have a properly renewed lease, your landlord's hands are all kind of tied. Without a lease in place, the landlord can't get a rent increase, and the landlord can't sue you for arrears or for eviction. A properly renewed rent stabilized lease is a part of a case for a landlord. Without that, they're not doing anything. And there's other problems. They've got a new law now that for every month every rent stabilized apartment isn't registered with DHCR, the landlord gets, I think it's a $500 fine.

And what are they registering at DHCR? They're registering the lease. So if there's no lease, there can't be any registration. There's a powerful incentive now for these leases to be properly renewed. So honestly, your rights as a rent stabilized tenant are coming from the statute. The statute's protecting you. You can't be evicted because someone didn't send you a lease renewal. I hear so much angst so often about that. I just wanted to include as a takeaway this fact.

[13:33] Michelle Itkowitz: Takeaway number five is kind of a little story to sum up with, and also one of my many settlement suggestions, negotiation suggestions. You know how I love to give you these tips for making a deal because ultimately that's what landlord-tenant is all about. It's not about winning, it's not about blazing a path of glory, it's about getting it done. It's about making a deal so that you are protected and you can move on with your life. All right, so here we go. I do a lot of consulting for multifamily buildings in transition. So, like I'm hired by purchasers, lenders, investors, estates to look at buildings and report to whoever's hiring me on the regulatory status of the tenancies and some other things.

So I see a lot of buildings in distress where the current owner has not renewed many of the rent stabilized leases. And when I'm in advising investors on this topic, I always tell them, look, you're getting a building or you're inheriting a building, you're buying a building, you're foreclosing on a building, whatever it is, you're getting a building into your life where the owner very negligently did not renew the leases.

[14:45] Michelle Itkowitz: So here's my tip. When you send lease renewal offers to the tenants, don't engage in mental gymnastics. Just send them a renewal offer that has a 0% increase for a one-year lease and a 0% increase for a two-year lease. Why? Because really what you want as the landlord in this situation is you're going to want the leases to get renewed to get the train back on the track. And how does it get any better for a tenant than zero and zero in terms of a renewal? And from the tenant's point of view, you know, maybe it's even something that they'll say, hey, maybe this new landlord isn't so bad. And you guys can start a new relationship; it's a new day. And it's kind of a mutually beneficial solution for everyone because it's not complicated for your management staff to do.

And then tenants are going to sign it, and then you don't have to end up in court. The tenant doesn't have to end up standing online outside the housing court in the rain and the cold for hours. They're going to miss days and days of work for it. Just there's no upside to anybody. So if you're trying to put a train on the track, I tell these people when they're dealing with situations where there's long unrenewed leases, just do zero and zero. Let people do a zero percent increase for two years. And at least the lease is renewed.

[16:07] Michelle Itkowitz: The reason I'm telling you this story is if you as a tenant find yourself in a situation where you know your building's been neglected, it's changed hands, maybe it's been foreclosed, it's been sold, whatever, whatever's going on. And all of a sudden the new landlord's there, and they send you a complicated thing, and you look at it and you say, I'm not sure this is right. Oh, they think I renewed my lease in 2021, but really the last time it was renewed was 2019, and this math is wrong and this and that. Look, understand. You have to always understand what the other guy is thinking. The landlord is thinking this. I need these leases renewed because until I renew them, I can't register them.

Until I register them, I could be liable for $500 a month for each apartment. And then I have to enter into lawsuits with all these people. So you could make the overture to the landlord and say, look, I'm not even going to wait the 60 days. I'll just sign this thing. But this is what I want. I want a two-year lease with a 0% increase. So it's kind of my suggestion that I'm making to landlords coming into these situations. You can make the same suggestion. Zero percent is good. Can be very good.

[17:21] Michelle Itkowitz: All right, well, there you have it. Remember, New York City, the law belongs to you, 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.