Fair Debt Collection Practices Act
Realty Law Digest
By Scott E. Mollen
The New York Law Journal, October 7, 1998

A tenant involved in a summary proceeding, moved for an order vacating a final judgment and warrant of eviction, dismissing the petition and restoring the tenant to possession, on the ground that the five-day rent demand notice violated the Fair Debt Collection Practices Act (FDCPA).

The tenant argued that the notice did not advise the tenant that it "was an attempt to collect a debt or that respondent had the right to dispute the validity of the debt within 30 days (the so-called "validation" notice), as required by the FDCPA." The notice, which had been signed by the owner's counsel, did not contain a FDCPA validation notice.

The owner argued that the notice did not violate the FDCPA since the owner, had typed its name on the notice by the title, "landlord." The owner contended that the notice was therefore not a communication from a "'debtor collector' but instead was a communication from the actual creditor -- who concededly does not need to comply with the provisions of the FDCPA."

The owner further argued that dismissal would be an inappropriate remedy since it would cause " 'complete chaos and anarchy in the courts.' " Finally, the owner argued that the notice had been served on the same date as the date of a federal decision that held that a rent demand notice served pursuant to Real Property Actions and Proceedings Law 711(2) is subject to the FDCPA.

The court explained that it is "now well-settled that an attorney who, acting on behalf of a creditor, regularly engages in consumer debt collection activities through litigation is a "debt collector" under the FDCPA." Several recent federal cases have held that unpaid rent is a "debt" under the FDCPA.

The court found that the notice violated the FDCPA and that the notice was not salvaged by the actual creditor's name appearing on the notice. The court stated that the FDCPA applies when a creditor " 'in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.' " The court observed that "the only address and hand-written signature which appear on the rent demand notice is that of the attorney debt collector." The court believed that the tenant had properly perceived that the notice was sent by the owner's attorney.

A prior judicial decision has held that a written demand notice that violates the FDCPA may not serve as an adequate predicate for a nonpayment proceeding. Soho Tribeca Corp. v. Mills, NYLJ, May 13, 1998, p. 28, col. 6 (Civ.Ct., N.Y. Co.)

Citing prior judicial precedent and the "operative effect of" the FDCPA, "which expressly provides that the FDCPA preempts any 'inconsistent' state law," the court held that the attorney-signed notice violated the FDCPA and may not serve as a predicate for a nonpayment proceeding.

The court said that its decision would not lead to chaos since the FDCPA applies only when a written rent demand is signed and sent by a debt collecting attorney. Owners can simply sign the written rent demand themselves, or personally demand the rent consistent with RPAPL 711(2). The court further noted that notices signed by owners' attorneys do not, on their face fail to comply with the FDCPA.

Such notices are defective only when the tenant submits "supporting proof that the attorney who signed the demand regularly engages in consumer debt collection activities through litigation -- facts which can only be found upon a motion by respondent or after an inquiry by the Court." Thus, a written rent demand is not rendered defective by the mere fact that it may have been signed by an attorney. Rather, proof of "more facts is required."

Finally, the owner argued that the Federal case of Romea v. Heiberger & Assoc., 989 F.Supp. 712 (SDNY 1997) should be applied retroactively. Romea, which held that unpaid rent is a debt under the FDCPA, had been decided on the same day that the attorney signed notice had allegedly been served on the tenant. The court explained that Romea interpreted a federal statute that had taken effect well before the date of the notice and that statutes are generally presumed to operate prospectively from the date of the statute's effective date.

Moreover, Romea was not the first case to hold that "rent" is a "debt" subject to the FDCPA. Accordingly, the court held that the application of the FDCPA to rent demand notices does not run from the date that Romea was decided, but from the effective date of the FDCPA.

The court granted the tenant's motion for an order vacating the final judgment and warrant of eviction. The court held that the lease between the owner and a successor tenant is "now unenforceable in light of the Court's ruling herein."

Comment: The court noted that Romea v. Heiberg & Assoc., 988 F.Supp. 712 is on appeal before the Second Circuit. The court explained that should Romea be modified on appeal, the court would be inclined to revisit the subject case based on a motion to renew.

Eina Realty v. Calixte, NYLJ, Aug. 19, 1998, p. 24, col. 1, Civ.Ct., Kings Co., Acosta, J.