Rent Deposits: Closing the Courthouse Door to Tenants

by Seth A. Miller, Esq.

One of the most odious parts of the new rent law is the provision requiring tenants in Housing Court to deposit their rent with the court--or be evicted without getting a trial. This "rent deposit" law effectively shuts the courthouse door on the rights of tenants.

The new law establishes an inflexible mechanism under which a tenant must deposit "the rent" into court the second time they ask for "an adjournment" of the case (in other words, more time to prepare for trial, to obtain a lawyer, to obtain witnesses, or to put together money to pay) or 30 days after the first time that parties appear in court. It requires the deposit of "the rent," even though the amount of "the rent" is the very issue that is supposed to be determined after hearing both sides of the case.

Few Exceptions

The only exception to the rent-deposit requirement is where the tenant establishes "at an immediate hearing" that they have one of four very limited defenses: 1) that the case was not brought by their actual landlord; 2) that they have had to leave the premises due to conditions so bad that they can be described as an "actual eviction," "constructive eviction," or "actual partial eviction"; 3) that the city Department of Social Services, if it is the party that is required to pay the rent, has refused to pay the rent based on the deteriorated condition of the building; or 4) that the court "lacks jurisdiction"--if the tenant has not been properly served or the case does not belong in Housing Court.

There are some allowances for tenants on limited incomes, but the tenant must still generally make a deposit. For example, a tenant in a SCRIE program must deposit the portion of the rent they pay themselves; a tenant on public assistance must deposit an amount equal to the shelter allowance portion of their grant; and a tenant receiving SSI must deposit one-third of their monthly check. If the rent is paid by two-party check, they receive relief under the Jiggetts case, or their rent is directly paid to the landlord, they will not be required to deposit amounts directly paid by the Department of Social Services.

In buildings with 12 units or less, the new law is particularly harsh. If there is an amount of rent that is not in dispute, that amount must be paid to the landlord. The amount that is in dispute must be deposited in court. What this means is that, unlike in larger buildings, the amount to be deposited is not merely "the rent" as determined at an immediate hearing. Instead, it is any amount that the landlord decides to claim. The new law gives landlords of small buildings (who may not be "small landlords," but owners of many small buildings) an open invitation to lie. Under the law’s literal terms, a landlord who picks a rent figure out of the clear blue sky can sue the tenant for that amount, even if it has no relationship to the rent required by the lease or under the rent laws, and the tenant must deposit the full amount or be evicted.

Eviction Without Trial

If a tenant does not make the initial deposit, the law requires that the landlord be granted possession of the apartment. The tenant may raise his or her side of the story in a separate action at a later date, but this is a meaningless right when they have already been evicted without being heard. If the tenant makes the initial deposit, but is late with any later deposit, the landlord can obtain an "immediate trial."

The new law is a massive assault on the right of tenants to make claims against their landlords. Even tenants who have defenses that allow them not to pay any rent at all, such as defenses under the Loft Law or defenses that come from living in illegal apartments, will still have to pay.

The new law also completely eliminates tenants’ well-established rights to get an "Order to Show Cause" to reopen their case or dispute court orders to pay rent. Now, if a tenant in a nonpayment proceeding has appeared in court and has had a judgment entered against him or her, they may not obtain an Order to Show Cause to stop an eviction unless they pay the full amount that has been awarded to the landlord. In other words, under the new law the tenants are to be evicted first; and only afterward (if they can afford further legal proceedings while dealing with being newly homeless) can they obtain any opportunity to tell their side of the story.

The rent-deposit law goes into effect on October 14. It will probably be challenged as a violation of tenants’ rights to due process of law and of violation of judges’ constitutional right to exercise discretion in the interests of justice. Until that lawsuit succeeds, however, tenants’ right to obtain repairs or to recover overcharges they have paid will exist more on paper than in reality.

Seth A. Miller is an attorney who specializes in representing tenants and tenants’ groups.