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LL demands that 'preferred rent' rider be signed

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

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LL demands that 'preferred rent' rider be signed

Postby sr77 » Sat Oct 13, 2018 2:18 pm

Can a landlord arbitrarily recharacterize an existing rent reduction agreement that was never stated to be a 'preferential rent' as a 'preferential rent' agreement?

That is, does a 'preferential rent' agreement have to be specifically stated as being a preferential rent agreement at the time it comes into being?

DHCR's definition appears to include any rent reduction under the definition of 'preferential rent,' regardless of whether or not it was stated to be a 'preferential rent' at the time it went into effect (or whether the existing reduction that the landlord now wants to call a 'preferential rent' was ever referred to as a preferential rent previously):

"A preferential rent is a rent which an owner agrees to charge that is lower than the legal regulated rent that the owner could lawfully collect." (Fact Sheet #40)
http://www.nyshcr.org/Rent/factsheets/orafac40.htm

The existing agreement was created in a 'letter of agreement' that simply stated that a permanent rent reduction (as a % of the legal rent) would be in effect.

Rent reduction has been in effect for ten years without the rider. Although the rider has been sent before (at previous renewals), I ignored it. Lease was renewed anyway. This is a new unexplained demand by the landlord.

Also, landlord is justifying by claiming that a preferential lease rider (agreed to & signed by tenant) is required by law when a unit has a preferential rent. Is that true?

Thanks.
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Re: LL demands that 'preferred rent' rider be signed

Postby TenantNet » Sat Oct 13, 2018 2:29 pm

Isn't - or shouldn't - this topic already covered in a different thread? Was this answered before?

When you say "rent reduction agreement," do you mean a DHCR rent reduction order? Please try to make this more clear. A PR is not a rent reduction.
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Re: LL demands that 'preferred rent' rider be signed

Postby sr77 » Sun Oct 14, 2018 3:06 pm

TenantNet wrote:Isn't - or shouldn't - this topic already covered in a different thread? Was this answered before?

When you say "rent reduction agreement," do you mean a DHCR rent reduction order? Please try to make this more clear. A PR is not a rent reduction.

I posted about having been sent numerous documents to sign along with a renewal lease. However, I didn't refer to the 'preferential rent' document that was one of them and I don't recall it entering the discussion at all.

The main issues are:

(i) whether an existing rent reduction agreement (via an agreement letter signed by landlord and tenant) that wasn't in any way designated as a 'preferential rent' agreement can later be deemed as one by the landlord; and if so

(ii) whether it's true (as the landlord asserts) that a 'preferential rent' rider that the tenant is compelled to sign can be added to the renewal lease (i.e., at a point long after the rent reduction has already been in effect without any 'preferential rent' agreement/rider).

No involvement of/by DHCR up to the current time.

Thanks.
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Re: LL demands that 'preferred rent' rider be signed

Postby TenantNet » Sun Oct 14, 2018 3:35 pm

It's important to get your terms correct.

A "rent reduction" is something ordered by DHCR or the courts (although most of the time it's DHCR). It's a reduction of the collectible rent and the legal rent stays the same. When the rent is restored (by a restoration of the service in question), the rent would go back up to the legal rent.

You don't give us enough information on this agreement. Was it the result of a court proceeding, i.e., a stipulation? Were you represented by an attorney? Was it "so ordered" by a judge? Or did the LL get religion and just send you a letter? What was the dispute and what was the nature of the agreement.

Some times there are abatements that don't change the legal rent. Was it an agreement to actually change the legal rent, or just collectibility for a period of time?

A Pref Rent is a specific type of waiver or concession on collectibility. The rider would specify if the LL can disregard it at a subsequent renewal, or if it's for the life of the tenancy. The PR rider has to be on the initial lease and all subsequent renewals.

A LL cannot change the terms of the lease, including the language of the PR rider.

If it was something other than a typical PR rider, what you (probably incorrectly) call a rent reduction agreement, still RS rules require lease renewals to be offered on the same terms and conditions as the expiring lease (or initial lease).

So whatever this thing is, it can't be "converted" to something else. A PR rider has specific consequences as to a tenant's rent. This other agreement might also have consequences, but probably different consequences.

As you probably know, with a PR rent, the LL can end the concession at any future renewal. If your agreement was for the life of the tenancy, then the LL can't end it.

See the DHCR FAQ on PR at http://www.nyshcr.org/Rent/Factsheets/orafac40.pdf

It sounds as if the LL wants to replace the old agreement with a new PR rider.

Now, is it possible for a PR agreement to be entered into at some point after the vacancy lease? It might be possible. But do you have to agree to it? In my opinion, no.

The above discussion is without the benefit of knowing the nature of the agreement or the terms.
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Re: LL demands that 'preferred rent' rider be signed

Postby sr77 » Sun Oct 14, 2018 10:08 pm

TenantNet wrote:If it was something other than a typical PR rider, what you (probably incorrectly) call a rent reduction agreement, still RS rules require lease renewals to be offered on the same terms and conditions as the expiring lease (or initial lease).

Thanks for that. It was just a direct agreement between myself and the landlord in the form of a 'letter of agreement' signed by both of us that stated that my rent at the time of any future lease renewal would be reduced by 10% from whatever the legal rent would have been (as per RGB increases) and that the 10% reduction was to be permanent (i.e., not applied only to any particular renewal lease).

The same preferential rent rider that was sent to me this time (along with all those other documents) has been sent to me many times before at the time of renewal leases. I never returned it, sometimes included an explanation why, and it never led to the lease not being renewed. Your suspicion about the landlord trying to change it is quite possibly accurate, certainly logical, and has of course occurred to me as well, though nothing has happened that would seem to explain why they're putting the screws on now after not having done so for the decade the reduction had been in effect.

Anyway, it sounds like you're confirming that without a formal designation of a 'preferred rent' at the time this agreement went into effect, the agreement letter which stated the terms of the reduction can't be deemed to have created a 'preferential rent,' which is what I would have thought, except for DHCR's all-purpose definition that seemed to say that any reduction from the legal rent is viewed as having created a 'preferential' rent.
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Re: LL demands that 'preferred rent' rider be signed

Postby TenantNet » Mon Oct 15, 2018 8:36 am

OK, that is not a "rent reduction" as commonly used. I would have to see the actual document to really say anything more, but from your description, it could be taken a number of ways. Is the legal rent changed? Is that reflected on the annual DHCR registration? (the LL would have to be stupid to agree to that). Does the legal rent continue to go up and up every year pursuant to RGB increases, and then 10% is deducted to determine a collectible amount? Or does the 10% reduction happen just once, with subsequent RGB increases being added as normal? You could have different results depending on how the agreement is interpreted.

And does the document allow for the LL to rescind it at some future date, or is it for the life of the tenancy? Again, I'd have to see the document.

But it's NOT a preferential rent in my opinion. Usually PR are set on a tenant's initial lease, and then they have to be cited on each and every renewal lease.

Having said that, it might be possible to start a PR at a subsequent renewal if it wasn't started at the initial lease. Read the DHCR FAQ carefully. I think they leave to door open to a PR being agreed-to at a subsequent renewal. But then the same rules would apply: it would have to be cited at each subsequent renewal. Read the PR rules.

And as I opined above, the tenant would have to agree as it would be a change in the terms of the lease. Also, there is plenty of case law that changes to lease terms are null and void (see Riverside v. Monroe at https://www.law.cornell.edu/nyctap/I08_0007.htm).

So you could just tell the LL, "no thanks." I would do what you've done in the past - just ignore it. And as you haven't signed it, the LL can't claim it's an agreed-to rider. Even then - if you ever landed in court - you could claim it's an impermissible change in the terms of the lease.
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Re: LL demands that 'preferred rent' rider be signed

Postby sr77 » Tue Oct 16, 2018 5:11 pm

Thanks for that. To clarify some points you raised:

Is the legal rent changed? . . . No, both the legal rent and the reduced rent have been shown on all renewal leases since the agreement went into effect.

Is that reflected on the annual DHCR registration? . . . Yes, the legal rent has always been shown on the Annual Apartment Registration. Interestingly, Box 8b (where Preferential Rent gets entered) is blank (i.e., no entry) on the latest one (from April 2018) & was probably the same on those from previous years.

Does the legal rent continue to go up and up every year pursuant to RGB increases, and then 10% is deducted to determine a collectible amount? . . .
Exactly. That’s how it’s been done from the outset -- not necessarily every “year,” but at the time of every lease renewal. Just a straight 10% reduction from the legal rent under the applicable RGB percentage for whichever lease term was chosen.

Or does the 10% reduction happen just once, with subsequent RGB increases being added as normal? . . . No. That the 10% reduction endures permanently is clear in the agreement letter.

And does the document allow for the LL to rescind it at some future date, or is it for the life of the tenancy? . . . No, clearly stated as permanent.

And as I opined above, the tenant would have to agree as it would be a change in the terms of the lease. Also, there is plenty of case law that changes to lease terms are null and void (see Riverside v. Monroe at https://www.law.cornell.edu/nyctap/I08_0007.htm).

Haven’t read the case in full but didn’t seem like either party actually 'won', or what “affirmed with costs” meant in the context of the decision. Did it refer to an award of attorney’s fees to the prevailing side (which didn't appear to be the tenant)? (I understand that you cited the case with reference to the issue of whether changes to lease terms are valid.)
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Re: LL demands that 'preferred rent' rider be signed

Postby TenantNet » Tue Oct 16, 2018 7:29 pm

The point of Riverside is that you can't change the terms of the lease. There are many cases like that.

Again, just ignore the rider the LL sent you. You don't have to agree with it.
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Re: LL demands that 'preferred rent' rider be signed

Postby BubbaJoe123 » Tue Oct 16, 2018 8:27 pm

In substance, what you have is a preferred rent (rent is lower than the legal rent by agreement between landlord and tenant, both legal and actual rents are included on the lease, etc.). The format (a flat % discount) is a little unusual, as is the fact that it's for the life of the tenancy, but it's a preferential rent in all relevant aspects, even if you've never signed the actual rider form. I don't really see what the downside to you of signing the actual rider would be, so long as the amount of the discount, the structure (% off) and the fact that it applies for the life of the tenancy are all clear.

Really, it's a judgment call, is this something you want to make an issue out of or not. You're likely in the right, legally. so up to you to decide whether to stick to your guns. If you do, LL might just give up, or might take the position that the pref rent is only valid with the rider, or that the renewal isn't valid at all. You'll very likely win, but there's at least some hassle involved.
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Re: LL demands that 'preferred rent' rider be signed

Postby TenantNet » Tue Oct 16, 2018 9:44 pm

Bubba. you're wrong on this. What the LL is demanding is not a preferred rent. Are you trying to (intentionally) confuse the OP? Are you trolling again? (SR77, if you don't know, Bubba is one of our landlord apologists.)

Bubba, I don't mind your taking a LL-view on all this, but when you lie to the poster, you're crossing the line.

Any agreement has to be signed by both parties (so far that hasn't happened). You imply that it's a PR even if not signed. On basic contract law, you're wrong on this. Plus, plenty of case law exists that terms of the lease cannot be changed.

Nor should you be intimidating the tenant here (i.e., you might win, but there's a lot of hassle).

If the LL refuses to execute and return the renewal lease, then the tenant is actually better off as the rent cannot increase. I know this as I've been through this scenario a few times. LL loses rent increases as long as they refuse to execute a least. Tenant should complete and return the signed lease by certified mail, but ignore any rider. If LL then refuses to execute the lease, tenant can do nothing (what I recommend) or file a complaint with DHCR (in some situations that might make sense). Without a lease, you are still RS and your rent cannot legally go up.
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