Just months after the state legislature passed a landmark bill to strengthen New York’s rent laws, a state senator wants to take stronger action to prevent harassment from landlords who are seeking buyouts from their rent-stabilized tenants.
Buyouts between rent-regulated tenants and their landlords are not currently overseen by government agencies, and renters at times face harassment from landlords to accept an agreement. And in the wake of the new rent reforms, property owners may be looking to buyouts as a way to implement increases that previously would have happened via major capital improvements or the preferential rent loophole.
“A vacancy is now the only path to raise rents to the legal rent if a tenant has preferential rent—so you’re going to see a return of buyouts,” John Horowitz from investment firm Marcus & Millichap, told landlords and investors in a July presentation, according to The Real Deal.
Salazar says that due to the large amount of rent-stabilized units in the North Brooklyn district she represents, her constituents have been increasingly confronted with buyout offers, with property owners “overtly threatening to use buyouts more as a mechanism to remove tenants.”
“There’s a history of property owners trying to pressure tenants to take these buyouts, [which] really are not significant enough to justify the loss of a rent-stabilized apartment for a tenant who needs it,” Salazar says. “Often what can happen in those cases is the tenant takes a buyout; [it’s] a great deal for the landlord, but not great for [the tenant], and they can’t afford to live in their neighborhood anymore.”
The bill proposes amending the Emergency Tenant Protection Act of 1974 to establish specific rules for buyouts; namely, that landlords must make the offer in writing, include information regarding the nature of the proposal, and inform the tenant of their rights to reject the proposal and consult an attorney. The bill would also give tenants, at minimum, 90 days to accept or reject the agreement.
The purpose of these requirements, Salazar says, is “to make sure that any buyouts that are happening are not exploitative or minimally exploitative, and try to protect tenants from being potentially deceived or taken advantage of.”
Landlords could face penalties if they don’t report the buyout to the state’s Division of Housing and Community Renewal (DHCR) within 90 days of the agreement. The law also stipulates that landlords could be penalized for harassing tenants, including providing false information, contacting a tenant at their workplace without their authorization, or continuing to pester the tenant within 180 days after they stated they’re not interested in the buyout.
The bill also requires DHCR to submit annual reports to the state legislature with the number of buyout agreements and their details. These reports, Salazar says, will allow the Senate “to actually quantify how significant the problem may be and just what the impact is of buyouts, because right now it is somewhat anecdotal, we don’t have really comprehensive data.”