NYS ASSEMBLY PASSES 2 BILLS

What Happened...There was an emergency NY State Assembly session last night that resulted in passing two bills that open stabilized and destabilized owners up to significant liability.

FYI - To become law, a bill must pass NYS Senate, NYS Assembly, and then be approved by the Governor. These specific bills have now passed the Senate and the Assembly and rest on Gov. Hochul’s desk. This does NOT mean the bills are now law. Hochul now has the power to sign the bills into law or veto. If she doesn’t veto, they will become law. She can do so anytime between now and the end of 2023.

I'm not an attorney, so keep that in mind, but I'm going to try to explain, in plain English, what happened last night and why it matters. Not trying to scare you, but I would not be doing my job if I didn’t bring this to your attention. I personally read the bills and watched the assembly live-stream last night, so give me a call if you want to discuss details. (Link to bills here - A4047 | A06216)

What the bills do:

• Re-open the rent overcharge lookback period indefinitely
• Eliminate Substantial Rehabs and unit combinations

Here’s the back-story...

Prior to 2019, property owners had to maintain renovation records and leases for a period of 4 years and register their rents with DHCR. After 4 years, it was legal to throw away that paperwork. If someone came forward with an overcharge case, you were only able to look back to whatever the registered rent and stabilization status was 4 years ago. Nothing beyond that. Whatever it was 4-years ago, is what it is. So, If a unit was improperly destabilized 30 years ago by some other owner, it didn’t matter.

Then…the rent laws of 2019 eliminated the four-year lookback period to identify an overcharge liability. If owners couldn’t produce the necessary paper trail of leases and renovation records for a unit, they would be susceptible to an overcharge. Problem being owners weren’t legally required to keep those records. All the deals I was selling with destabilized units blew up. Buyers were asking me for 30 years-worth of leases to prove that units destabilized a few owners, and decades, ago were done legally. RS values plummeted and transactions dropped.

Luckily, in 2020 , the Regina Metro case re-instated the 4-year lookback period.

This brings us to last night…The bills passed last night would re-eliminate the 4-year lookback period. Additionally, the bills would eliminate the substantial rehabilitation and unit-combination provisions that exist to set a first rent in stabilized units.

Why this matters…If it passes, formerly and currently stabilized buildings would lose significant value and owners of these properties would be wide open for significant overcharge risk

What you can do – flood Governor Hochul’s inbox directly here - ny.gov/governor-contact-form