Sec. 26-511. REAL ESTATE INDUSTRY STABILIZATION ASSOCIATION.
a. The real estate industry stabilization association
registered with the department of housing preservation and
development is hereby divested of all its powers and
authority under this law.
b. The stabilization code heretofore promulgated by such
association, as approved by the department of housing
preservation and development, is hereby continued to the
extent that it is not inconsistent with law. Such code may
be amended from time to time, provided, however, that no
such amendments shall be promulgated except by action of the
commissioner of the division of housing and community
renewal and provided further, that prior to the adoption of
any such amendments, the commissioner shall (i) submit the
proposed amendments to the commissioner of the department of
housing preservation and development and allow such
commissioner thirty days to make comments or recommendations
on the proposed amendments, (ii) review the comments or
recommendations, if any, made pursuant to clause (i) of this
subdivision and make any revisions to the proposed
amendments which the commissioner of the division of housing
and community renewal deems appropriate provided that any
such review and revision shall be completed within thirty
days of receipt of such comments or recommendations and
(iii) thereafter hold a public hearing on the proposed
amendments. No provision of such code shall impair or
diminish any right or remedy granted to any party by this
law or any other provision of law.
c. A code shall not be adopted hereunder unless it appears to
the division of housing and community renewal that such code
(1) provides safeguards against unreasonably high rent
increases and, in general, protects tenants and the
public interest, and does not impose any industry wide
schedule of rents or minimum rentals;
(2) requires owners not to exceed the level of lawful rents
as provided by this law;
(3) provides for a cash refund or a credit, to be applied
against future rent, in the amount of any rent
overcharge collected by an owner and any penalties
costs, attorneys' fees and interest from the date of
the overcharge at the rate of interest payable on a
judgment pursuant to section five thousand four of the
civil practice law and rules for which the owner is
assessed;
(4) includes provisions requiring owners to grant a one or
two year vacancy or renewal lease at the option of the
tenant except where a mortgage or mortgage commitment
existing as of April first, nineteen hundred sixty-
nine, provides that the mortgagor shall not grant a one
year lease;
(5) includes guidelines with respect to such additional
rent and related matters as, for example, security
deposits, advance rental payments, the use of escalator
clauses in leases and provision for increase in rentals
for garages and other ancillary facilities, so as to
insure that the level of fair rent increase established
under this law will not be subverted and made
ineffective;
(6) provides criteria whereby the commissioner may act upon
applications by owners for increases in excess of the
level of fair rent increase established under this law
provided, however, that such criteria shall provide (a)
as to hardship applications, for a finding that the
level of fair rent increase is not sufficient to enable
the owner to maintain approximately the same average
annual net income (which shall be computed without
regard to debt service, financing costs or management
fees) for the three year period ending on or within six
months of the date of an application pursuant to such
criteria as compared with annual net income, which
prevailed on the average over the period nineteen
hundred sixty-eight through nineteen hundred seventy,
or for the first three years of operation if the
building was completed since nineteen hundred sixty-
eight or for the first three fiscal years after a
transfer of title to a new owner provided the new owner
can establish to the satisfaction of the commissioner
that he or she acquired title to the building as a
result of a bona fide sale of the entire building and
that the new owner is unable to obtain requisite
records for the fiscal years nineteen hundred sixty-
eight through nineteen hundred seventy despite diligent
efforts to obtain same from predecessors in title and
further provided that the new owner can provide
financial data covering a minimum of six years under
his or her continuous and uninterrupted operation of
the building to meet the three year to three year
comparative test periods herein provided; and (b) as to
completed building-wide major capital improvements, for
a finding that such improvements are deemed depreciable
under the Internal Revenue Code and that the cost is to
be amortized over a seven-year period, based upon cash
purchase price exclusive of interest or service
charges. Notwithstanding anything to the contrary
contained herein, no increase granted pursuant to this
paragraph shall, when added to the annual gross rents,
as determined by the commissioner, exceed the sum of,
(i) the annual operating expenses, (ii) an allowance
for management services as determined by the
commissioner, (iii) actual annual mortgage debt service
(interest and amortization) on its indebtedness to a
lending institution, an insurance company, a retirement
fund or welfare fund which is operated under the
supervision of the banking or insurance laws of the
state of New York or the united states, and (iv) eight
and one-half percent of that portion of the fair market
value of the property which exceeds the unpaid
principal amount of the mortgage indebtedness referred
to in subparagraph (iii) of this paragraph. Fair market
value for the purposes of this paragraph shall be six
times the annual gross rent. The collection of any
increase in the stabilized rent for any apartment
pursuant to this paragraph shall not exceed six percent
in any year from the effective date of the order
granting the increase over the rent set forth in the
schedule of gross rents, with collectibility of any
dollar excess above said sum to be spread forward in
similar increments and added to the stabilized rent as
established or set in future years;
(6a) provides criteria whereby as an alternative to the
hardship application provided under paragraph six of
this subdivision owners of buildings acquired by the
same owner or a related entity owned by the same
principals three years prior to the date of application
may apply to the division for increases in excess of
the level of applicable guideline increases established
under this law based on a finding by the commissioner
that such guideline increases are not sufficient to
enable the owner to maintain an annual gross rent
income for such building which exceeds the annual
operating expenses of such building by a sum equal to
at least five percent of such gross rent. For the
purposes of this paragraph, operating expenses shall
consist of the actual, reasonable, costs of fuel,
labor, utilities, taxes, other than income or corporate
franchise taxes, fees, permits, necessary contracted
services and noncapital repairs, insurance, parts and
supplies, management fees and other administrative
costs and mortgage interest. For the purposes of this
paragraph, mortgage interest shall be deemed to mean
interest on a bona fide mortgage including an allocable
portion of charges related thereto. Criteria to be
considered in determining a bona fide mortgage other
than an institutional mortgage shall include; condition
of the property, location of the property, the existing
mortgage market at the time the mortgage is placed, the
term of the mortgage, the amortization rate, the
principal amount of the mortgage, security and other
terms and conditions of the mortgage. The commissioner
shall set a rental value for any unit occupied by the
owner or a person related to the owner or unoccupied at
the owner's choice for more than one month at the last
regulated rent plus the minimum number of guidelines
increases or, if no such regulated rent existed or is
known, the commissioner shall impute a rent consistent
with other rents in the building. The amount of
hardship increase shall be such as may be required to
maintain the annual gross rent income as provided by
this paragraph. The division shall not grant a hardship
application under this paragraph or paragraph six of
this subdivision for a period of three years subsequent
to granting a hardship application under the provisions
of this paragraph. The collection of any increase in
the rent for any housing accommodation pursuant to this
paragraph shall not exceed six percent in any year from
the effective date of the order granting the increase
over the rent set forth in the schedule of gross rents,
with collectibility of any dollar excess above said sum
to be spread forward in similar increments and added to
the rent as established or set in future years. No
application shall be approved unless the owner's equity
in such building exceeds five percent of (i) the arms
length purchase price of the property; (ii) the cost of
any capital improvements for which the owner has not
collected a surcharge- (iii) any repayment of principal
of any mortgage or loan used to finance the purchase of
the property or any capital improvements for which the
owner has -not collected a surcharge and (iv) any
increase in the equalized assessed value of the
property which occurred subsequent to the first
valuation of the property after purchase by the owner.
For the purposes of this paragraph, owner's equity
shall mean the sum of (i) the purchase price of the
property less the principal of any mortgage or loan
used to finance the purchase of the property, (ii) the
cost of any capital improvement for which the owner has
not collected a surcharge less the principal of any
mortgage or loan used to finance said improvement,
(iii) any repayment of the principal of any mortgage or
loan used to finance the purchase of the property or
any capital improvement for which the owner has not
collected a surcharge, and (iv) any increase in the
equalized assessed value of the property which occurred
subsequent to the first valuation of the property after
purchase by the owner.
(7) establishes a fair and consistent formula for
allocation of rental adjustment to be made upon
granting of an increase by the commissioner;
(8) requires owners to maintain all services furnished by
them on May thirty-first, nineteen hundred sixty-eight,
or as otherwise provided by law, in connection with the
leasing of the dwelling units covered by this law;
(9) provides that an owner shall not refuse to renew a
lease except:
(a) where he or she intends in good faith to
demolish the building and has obtained a permit
therefor from the department of buildings, or
(b) where he or she seeks to recover possession of
one or more dwelling units for his or her own
personal use and occupancy as his or her primary
residence in the city of New York and/or for the
use and occupancy of a member of his or her
immediate family as his or her primary residence
in the city of New York provided however, that
this subparagraph shall not apply where a tenant
or the spouse of a tenant lawfully occupying the
dwelling unit is sixty-two years of age or
older, or has an impairment which results from
anatomical, physiological or psychological
conditions, other than addiction to alcohol,
gambling, or any controlled substance, which are
demonstrable by medically acceptable clinical
and laboratory diagnostic techniques, and which
are expected to be permanent and which prevent
the tenant from engaging in any substantial
gainful employment, unless such owner offers to
provide and if requested, provides an equivalent
or superior housing accommodation at the same or
lower stabilized rent in a closely proximate
area. The provisions of this subparagraph shall
only permit one of the individual owners of any
building to recover possession of one or more
dwelling units for his or her own personal use
and/or for that of his or her immediate family.
Any dwelling unit recovered by an owner pursuant
to this subparagraph shall not for a period of
three years be rented, leased, subleased or
assigned to any person other than a person for
whose benefit recovery of the dwelling unit is
permitted pursuant to this subparagraph or to
the tenant in occupancy at the time of recovery
under the same terms as the original lease. This
subparagraph shall not be deemed to establish or
eliminate any claim that the former tenant of
the dwelling unit may otherwise have against the
owner. Any such rental, lease, sublease or
assignment during such period to any other
person may be subject to a penalty of a
forfeiture of the right to any increases in
residential rents in such building for a period
of three years; or
(c) where the housing accommodation is owned by a
hospital, convent, monastery, asylum, public
institution, college, school dormitory or any
institution operated exclusively for charitable
or educational purposes on a nonprofit basis and
either:
(i) the tenant's initial tenancy commenced
after the owner acquired the property and
the owner requires the unit in connection
with its charitable or educational purposes
including, but not limited to, housing for
affiliated persons; provided that with
respect to any tenant whose right to
occupancy commenced prior to July first,
nineteen hundred seventy-eight pursuant to
a written lease or written rental agreement
and who did not receive notice at the time
of the execution of the lease that his or
her tenancy was subject to nonrenewal, the
institution shall not have the right to
refuse to renew pursuant to this
subparagraph provided further that a tenant
who was affiliated with the institution at
the commencement of his or her tenancy and
whose affiliation terminates during such
tenancy shall not have the right to a
renewal lease; or
(ii) the owner requires the unit for a
nonresidential use in connection with its
charitable or educational purposes; or
(d) on specified grounds set forth in the code
consistent with the purposes of this law; or
(e) where a tenant violates the provisions of
paragraph twelve of this subdivision.
(9a) provides that where an owner has submitted to and the
attorney general has accepted for filing an offering
plan to convert the building to cooperative or
condominium ownership and the owner has presented the
offering plan to the tenants in occupancy, any renewal
or vacancy lease may contain a provision that if a
building is converted to cooperative or condominium
ownership pursuant to an eviction plan, as provided in
section three hundred fifty-two-eeee of the general
business law, the lease may only be canceled upon the
expiration of three years after the plan has been
declared effective, and upon ninety days notice to the
tenant that such period has expired or will be
expiring.
(10) specifically provides that if an owner fails to comply
with any order of the commissioner or is found by the
commissioner to have harassed a tenant to obtain
vacancy of his or her housing accommodation, he or she
shall, in addition to being subject to any other
penalties or remedies permitted by law, be barred
thereafter from applying for or collecting any further
rent increase. The compliance by the owner with the
order of the commissioner or the restoration of the
tenant subject to harassment to the housing
accommodation or compliance with such other remedy as
shall be determined by the commissioner to be
appropriate shall result in the prospective elimination
of such sanctions;
(11) includes provisions which may be peculiarly applicable
to hotels including specifically that no owner shall
refuse to extend or renew a tenancy for the purpose of
preventing a hotel tenant from becoming a permanent
tenant- and
(12) permits subletting of units subject to this law
pursuant to section two hundred twenty-six-b of the
real property law provided that (a) the rental charged
to the subtenant does not exceed the stabilized rent
plus a ten percent surcharge payable to the tenant if
the unit sublet was furnished with the tenant's
furniture; (b) the tenant can establish that at all
times he or she has maintained the unit as his or her
primary residence and intends to occupy it as such at
the expiration of the sublease; (c) an owner may
terminate the tenancy of a tenant who sublets or
assigns contrary to the terms of this paragraph but no
action or proceeding based on the nonprimary residence
of a tenant may be commenced prior to the expiration
date of his or her lease; (d) where an apartment is
sublet the prime tenant shall retain the right to a
renewal lease and the rights and status of a tenant in
occupancy as they relate to conversion to condominium
or cooperative ownership; (e) where a tenant violates
the provisions of subparagraph (a) of this paragraph
the subtenant shall be entitled to damages of three
times the overcharge and may also be awarded attorneys
fees and interest from the date of the overcharge at
the rate of interest payable on a judgment pursuant to
section five thousand four of the civil practice law
and rules; (f) the tenant may not sublet the unit for
more than a total of two years, including the term of
the proposed sublease, out of the four-year period
preceding the termination date of the proposed
sublease. The provisions of this subparagraph shall
only apply to subleases commencing on and after July
first, nineteen hundred eighty-three (g) for the
purposes of this paragraph only, the term of the
proposed sublease may extend beyond the term of the
tenant's lease. In such event, such sublease shall be
subject to the tenant's right to a renewal lease. The
subtenant shall have no right to a renewal lease. It
shall be unreasonable for an owner to refuse to consent
to a sublease solely because such sublease extends
beyond the tenant's lease; and (h) notwithstanding the
provisions of section two hundred twenty-six-b of the
real property law, a not-for-profit hospital shall have
the right to sublet any housing accommodation leased by
it to its affiliated personnel without requiring the
landlord's consent to any such sublease and without
being bound by the provisions of subparagraphs (b), (c)
and (f) of this paragraph. Commencing with the
effective date of this subparagraph, whenever a not-for-
profit hospital executes a renewal lease for a housing
accommodation, the legal regulated rent shall be
increased by a sum equal to fifteen percent of the
previous lease rental for such housing accommodation,
hereinafter referred to as a vacancy surcharge, unless
the landlord shall have received within the seven year
period prior to the commencement date of such renewal
lease any vacancy increases or vacancy surcharges
allocable to the said housing accommodation. In the
event the landlord shall have received any such vacancy
increases or vacancy surcharges during such seven year
period, the vacancy surcharge shall be reduced by the
amount received by any such vacancy increase or vacancy
surcharges.
d. (1) Each owner subject to the rent stabilization law
shall furnish to each tenant signing a new or renewal
lease, a rider describing the rights and duties of
owners and tenants as provided for under the rent
stabilization law of nineteen hundred sixty-nine. Such
publication shall conform to the intent of section 5-
702 of the general obligations law and shall be
attached as an addendum to the lease. Upon the face of
each lease, in bold print, shall appear the following:
"Attached to this lease are the pertinent rules and
regulations governing tenants and landlords' rights
under the rent stabilization law of nineteen hundred
sixty-nine".
(2) The rider shall be in a form promulgated by the
commissioner in larger type than the lease and shall be
utilized as provided in paragraph one of this
subdivision.
e. Each owner of premises subject to the rent stabilization law
shall furnish to each tenant signing a new or renewal lease,
a copy of the fully executed new or renewal lease bearing
the signatures of owner and tenant and the beginning and
ending dates of the lease term, within thirty days from the
owner's receipt of the new or renewal lease signed by the
tenant.