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Renewal of Lease - Preferential Rent

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

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Renewal of Lease - Preferential Rent

Postby NewTenant264 » Tue Aug 03, 2021 6:44 pm

Hi there,

I have signed a lease over a year ago and this lease is up for renewal. The building is rent stabilized (or the apartment I am in) and are receiving 421a benefits. The lease renewal form that was sent is the “THIS IS A NOTICE OF RENEWAL OF LEASE AND RENTAL LEASE FORM ISSUED UNDER SECTION 2523.5(a) OF THE RENT STABILIZATION CODE” form. An extra page was attached and contains the following wording:

The rent payments for the last two (2) months of the lease are waived. Tenant shall be permitted to amortize the credit over the duration of the lease. Net Rent payment due with credit amortized shall be $XXXX per month for each of the XX months of the lease.

The amount noted for $XXXX is substantially higher than the rent I was paying in my original lease. The original lease had a rent amount and a page attached to it with exactly the same wording but the $XXXX was much less.

The landlord delivered the lease renewal less than 90 days before the end of my lease. They refuse to allow me to see another unit which was just listed on StreetEasy on a higher floor which is much larger for the same price saying that it is in contract.

The land lord is now pressuring me to sign the lease renewal form with the rider which makes my "net rent due with credit amortized" to be much higher than what I was originally paying. To make things worse, I recently lost my job.

What advice would anyone have for me on this? I have read a lot of material about preferential rent I am confused on what to do next and would really appreciate some guidance.

Thank you
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Re: Renewal of Lease - Preferential Rent

Postby TenantNet » Tue Aug 03, 2021 7:44 pm

Your apt would be RS, not the building per se as there can be units that are not under RC or RS.

What you cite appears to be DHCR form RTP-8. All RS renewals must be offered on this form. See the latest version at https://hcr.ny.gov/system/files/documen ... llable.pdf

As a RS tenant, all renewals must be on "the same terms and conditions as the expiring lease," which essentially mean they can't change things other than rent increases authorized by the RGB, or by DHCR (like MCIs, etc.).

What you describe sounds like a waiver, in that the rent is waived for two months. This does not change the legal rent, just allows you to pay a lower amount for a few months, most likely prompted by COVID and difficulties tenants are having.

It sounds like the LL is offering a waiver on the legal rent, not the preferential rent. Since 2019, Pref Rents have been limited in that the LL can't go back to the original legal rent during the life of the tenancy, and any RGB increases are applied to the lower PR rents.

This is the first I've seen of this sort of thing. I can't be absolutely certain from your description and would have to see the lease, the original lease, the current notice and any Pref Rent notice on the original lease.

As far as we know, LLs are not required to show you other units, but understand that the rent history applies to your unit alone and not other units. It would be quite common for the rents for the two units to be different.

As for the 90 days, read the back of the RTP form and all the instructions there - most situations are covered. If the LL is late in offering you a renewal, then the start of the new term would be pushed back. Make sure you send the LL a note to that effect. I would not cross out what they offered you; ask them to send you an updated lease offer reflecting the correct dates. Your clock only starts once you get a legal offer.

Any language as to "net rent due with credit ..." in my opinion, should be on a separate page, not the RTP-8 form. Again, if they screw up, return it to them unsigned, by certified mail, tell them how they screwed up, and that a) you intend to sign a proper renewal when it is eventually offered, and b) any commencement of the new term has to be calculated from the date you get a proper offer.

As for Pref Rents, this Fact Sheet looks like it was published after the 2019 change in the law.

Also see https://www.brickunderground.com/blog/2 ... tial_rents written by a tenant attorney.
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Re: Renewal of Lease - Preferential Rent

Postby BubbaJoe123 » Wed Aug 04, 2021 10:39 am

Want to be clear what you're saying. Let us know if this is accurate (using made up numbers):

On your first lease, the lease listed the rent as $1,200 per month. The rider said "The rent payments for the last two (2) months of the lease are waived. Tenant shall be permitted to amortize the credit over the duration of the lease. Net Rent payment due with credit amortized shall be $1000 per month for each of the 12 months of the lease." So, you paid them $1000/month for 12 months.

The renewal has the same wording, but in the "Net Rent payment due with credit amortized" section, there's a much higher number than $1000.

Is this correct?

If the landlord had offered a $1000/month preferential rent (rather than making that the effective preferential rent by waiving two months' rent), then the $1000/month would be the baseline rent going forward (through the end of your tenancy), and could only go up by the RGB annual increase percentage. I would imagine the same should be true for a "2 months free, so effective rent is 5/6 of legal rent" scenario, but I don't know of any caselaw to that effect.
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Re: Renewal of Lease - Preferential Rent

Postby NewTenant264 » Wed Aug 04, 2021 10:51 am

Thank you BubbaJoe123 and TenantNet for the answers.

Yes, BubbaJoe123. That is correct.
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Re: Renewal of Lease - Preferential Rent

Postby TenantNet » Wed Aug 04, 2021 1:08 pm

Bubba, you've made it more confusing. To NewTenant264, is the waiver on the initial lease in addition to the renewal?

If the LL added the words "Net Rent payment due with credit amortized" to the initial lease (and on the lease itself), that might be construed as a Pref Rent. If it's a separate document and not part of the Pref. Rent rider, then it would be in addition to the Pref Rent. That's why the only way to offer reasonably correct advice is to see the documents. I have a feeling the descriptions here might not accurately describe the papers themselves.

And even with all that, I don't think "Net Rent payment due with credit amortized" could be construed as a Pref. Rent. Remember, with the new laws, Pref. Rents become the "legal rent" for the duration of the tenancy. So mention of a "credit" is meaningless if the LL intends it to be part of a PR ... or he's trying a way to get around the law.

So lets' not make this even more complication unless we can see the lease, renewal lease and any waivers. NewTenant264, if you wish to share those, you can upload them using the Private Mail button, do not post them on the public area of the forum.
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Re: Renewal of Lease - Preferential Rent

Postby BubbaJoe123 » Wed Aug 04, 2021 2:06 pm

TenantNet wrote:Bubba, you've made it more confusing. To NewTenant264, is the waiver on the initial lease in addition to the renewal?


Yes. "The original lease had a rent amount and a page attached to it with exactly the same wording but the $XXXX was much less."

TenantNet wrote:And even with all that, I don't think "Net Rent payment due with credit amortized" could be construed as a Pref. Rent.


Why not? A preferential rent is just a discount below the legal rent. The purpose of the law change was to keep protect tenants from facing sharp rent increases in cases where the legal rent is well above market when the tenant moves in (so a discounted rent is needed to find a tenant), but then market rents rise rapidly, so the LL eliminates the preferential rent.

If a landlord could get around the "preferential rent becomes the baseline for the rest of the tenancy" requirement by just saying "Legal rent is $1200, and I'm not going to give you a preferential rent, but I will give you two months' free rent, and you can spread that discount across the 12 months, so you'll actually pay me $1000/month, but remember, that isn't a preferential rent," that would defeat the purpose of the law entirely. As I said, though, I'm not aware of any case where this has been tested in court.
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Re: Renewal of Lease - Preferential Rent

Postby TenantNet » Wed Aug 04, 2021 10:13 pm

How would you know, you haven't seen the papers yet - or have you? A PR is much more than just a temporary discount. It creates an alternative legal structure through the duration of the tenancy, and now all increases are on top of the PR, not the old legal rent. Only when a new tenant move in can the old legal rent be reimposed.

If you want to see a discount, see the recent Catsimatidis case at https://therealdeal.com/2021/07/23/john ... to-appeal/

I haven't read the actual decision, only the press reports, but my understanding was that he offered the tenants what amounted to a temporary discount due to COVID, not a permanent restructuring of the lease that is good for the duration of the tenancy.

But this issue here isn't about PR, it's about a VERY screwy renewal offer. So let's stop bickering about PR - I'm not in the mood for it. A PR is one thing; a temporary credit is something else. My concern is that one isn't construed as the other. So if the legal rent is $4,000 and the LL offers a PR of $1,000, then the rent is $3,000. A credit of $200 would reduce the rent further to $2,800, ether for specific months, or itemized months.

In this case the rents don't appear to be following the RGB orders, they start/stop mid-month, The tenant is not given 90 days notice, the terms are for less than one year or for periods between 12 and 24 months. It's VERY screwy. And since the rent is very high, I wonder how the LL presents it as still RS. The tenant needs to see the rent history.

I don't know if a DHCR overcharge complaint would make sense - depends on what the tenant is actually paying.
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