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Lease assignment with preferential rent

NYC Rent Regulation: Rent Control/Rent Stabilized, DHCR Practice/Procedures

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Lease assignment with preferential rent

Postby darknesis » Sun Nov 13, 2016 12:25 pm

I'd like to take over a friend's rent stabilized lease. My friend is paying a preferential rent, which is guaranteed for the duration of his tenancy ("this preferential rent is guaranteed for the tenant's tenancy"). There is also a legal regulated rent in effect, but my friend pays the preferential rent. If his lease is assigned to me, I understand the landlord can collect a vacancy increase off the legal regulated rent. Can he also increase the preferential rent? And will this guarantee be extended when I take over the lease, and through subsequent renewals? Thanks.
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Re: Lease assignment with preferential rent

Postby JoeHayes » Thu Jan 26, 2017 8:32 pm

To my understanding if you are a roommate and don't qualify for succession rights the landlord can charge the vacancy increase

http://www.nycrgb.org/html/guidelines/vacancy.html
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Re: Lease assignment with preferential rent

Postby TenantNet » Thu Jan 26, 2017 9:33 pm

JoeHayes, this is not a roommate or succession situation based on what the OP posted. He wants to take over a lease, which would be an assignment.

I believe this would be a new tenancy with a vacancy increase and may - or may not - have a pref. rent, but not the same PR from the old tenancy.
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Re: Lease assignment with preferential rent

Postby darknesis » Wed Feb 01, 2017 3:12 pm

I was able to take over the lease while maintaining the previous preferential and legal rent. The owner did not charge a vacancy increase, though I believe he may have been legally able to. The owner crossed out the original tenant's name and wrote in my name, leaving the rest of the lease the in-tact. Am I correct to assume it would not be legal for the owner to take the vacancy increase in the future?

Another question: my brother is paying the legal regulated rent for his apartment, regulated under 421-a. His apartment is about to come up for renewal, and he has the choice of a 0% increase for 1-year, or 2% increase for 2-years. Of course, he would choose the 0% increase for 1-year. However, the building gave him the following option: "if you renew for 2-years, we won't increase your rent."

I'm trying to decipher what that means, legally. Could they, potentially, increase his legal rent 2% and institute a preferential rent that is equal to the current rent he is paying? His original lease has no preferential rent rider, so I am unclear if this is legal. Or, are they able to renew his lease for 2-years with a 0% increase--below the amount permissible by law? I am curious if both of these options are legal, or if there are other options, before we approach the building with a decision and/or ask for more details.

Thanks.
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Re: Lease assignment with preferential rent

Postby TenantNet » Wed Feb 01, 2017 3:35 pm

On your case it seems the LL gave you a gift, even though he could have taken a vacancy lease. Seems he's treating it as a continuation of the prior lease, not as a new lease. I would just be quiet about it and not give him cause to claim a vacancy down the road.

On your brother's case, the current RGB regs are 0/2%, so they have to follow that at a minimum for all leases that come up through Sept 30, 2017.

If they agree to not increase the rent for a 2 year renewal, that's the same as a 0%. It might be seen as a preferential, but it depends on what is put on paper, in the renewal lease form if they mention "preferential" and/or if they issue a separate rider. You don't want that.

If they just issue a renewal lease at 0% for 2 years (on the official RTP-8 form) without issuing a rider, and without reserving a higher legal rent on the form, they that should be what you want.

Of course even if they issue a formal preferential rent, that is still better than what would be the normal 2% RGB increase.

And more to the point, I do not know if they can issue a new preferential well into the tenancy.

I would go along for the best deal now, and if it gets to be an issue, get a legal opinion.
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Re: Lease assignment with preferential rent

Postby darknesis » Wed Feb 01, 2017 7:45 pm

If they issue a renewal lease at 0% for 2-years on the RTP-8, keeping the legal rent the same and not issuing a preferential rent, how would this look? Would they check box #5 "lower rent to be charged" yet specify the 2% increase under #2 column F? If no rider is attached, is it assumed to become the new legal regulated rent?
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Re: Lease assignment with preferential rent

Postby TenantNet » Wed Feb 01, 2017 7:52 pm

One can speculate on many scenarios. But look at the DHCR PR Fact Sheet. Unless they comply with the rules, then IMHO that would be the new legal rent. That's why we suggest that if they are leaning in that direction, you don't do anything that would upset the apple cart.
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