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Deregulation of rent-stabilized apartments: how does it work?

In our last post, we spoke about a New York City real estate firm which is currently under scrutiny for its alleged strategy of evicting tenants or pressuring them to vacate their apartments in order to raise rents and increase profits. We have mentioned this kind of thing previously on our blog. The fact that this kind of activity is not uncommon in New York City is a good reason to be aware of one’s rights as a rent-stabilized tenant, particularly with respect to deregulation. Specifically, how do apartments become rent-stabilized and how can they become deregulated?

According to the New York City Rent Guidelines Board, there are several categories of circumstances where rent stabilization is recognized. These include buildings with at least six units built between February 1, 1947 and December 31, 1973 and buildings with at least three apartment units built or extensively renovated on or after January 1, 1974 and which are eligible for special tax benefits. Rent stabilization also applies to tenants who live in buildings construction prior to February 1, 1947 and who moved in after June 30, 1971. 

Issues with real estate firm reportedly no better one year after monitoring

Rent-stabilization, as New York readers know, is frequently the subject of debate and controversy. There are various reasons for this, one of which is that rent-stabilization involves a class of citizens who are more vulnerable than other populations because of their economic situation. Owners of rent-stabilized buildings are consequently under additional scrutiny to ensure that their tenants’ rights are being respected.

The actions of one particular landlord—an owner of over 50 rent-stabilized buildings in New York—have shined a light once again on the vulnerabilities of rent-stabilized tenants. The landlord, Castellan Real Estate Partners, was reportedly placed on independent monitoring last year after a probe by the Tenant Protection Unit revealed Castellan had been routinely subjecting immigrant tenants to intimidation with the aim of having them evacuate their apartments so that higher rents—in some cases up to 50 percent higher—could be charged.   

Dealing with construction disputes and mechanic’s liens, P.2

In our last post, we began discussing the topic of mechanic’s liens. A mechanic’s lien is essentially a security interest in a property to which a contractor or other laborer has contributed time and materials to improving.  As we mentioned last time, liens are most often enforced by means of foreclosure actions.

One important point to remember about mechanic’s liens is that they are not valid indefinitely. Under New York law, a lawsuit to foreclose on a lien must be filed within one year of filing the lien, though extensions can be filed. In cases where the construction contract requires arbitration of disputes, contractors often will file a lawsuit to foreclose on the lien, have those proceedings stayed by the court, and then go ahead with the arbitration. Afterward the contractor can have the arbitration award turned into a judgment. 

Dealing with construction disputes and mechanic’s liens, P.1

Disagreements can and do occur when businesses work with contractors on projects. To protect their own interests in labor and materials provided for a project, contractors, subcontractors and other laborers have the ability to file a mechanic’s lien on the property on which they are working.

A good example of the kinds of disputes that can sometimes arise with mechanic’s liens is a case involving a luxury, boutique hotel in Saratoga Springs. A construction company and commercial real estate developer are reportedly engaged in a dispute regarding how much money is owed for construction work performed by the primary contractor and subcontractors in the construction of the 48-suite hotel. 

Housing court eviction decision could harm Airbnb in NYC

We previously wrote about the house-sharing company Airbnb and the legal concerns with the company’s business model or approach. Specifically, the problem was noted to be the increasing prevalence of illegal subletting in New York City. Because of that and the business’ negative impact on the New York Housing crisis, legal opposition to the company has been in the works.

The company has already agreed to turn over data regarding hosts who have violated the city’s subletting law. At this point, the company also provides warnings to its hosts regarding the need to comply with the city’s subletting law, though the company has been criticized for failing to enforce compliance with the law. 

Can a rent-controlled tenant lose his/her apartment in bankruptcy?

Last week, our posts looked at the question of whether and under what circumstances a struggling homeowner is able to prevent foreclosure by filing for bankruptcy. This week, we want to discuss recent court decisions dealing with bankrupt tenants. Specifically, the question deal with by the cases is whether landlords in the state of New York may evict rent-controlled tenants who file for bankruptcy when the tenant is current on rent.

The issue was taken up in two different decisions, one made by a federal appeals court and the other made by a state appeals court. The federal decision ruled that federal courts do not have the ability to consider rent-stabilized apartments as property that can be sold to the landlord during the bankruptcy process. 

Can I save my home from foreclosure by filing for bankruptcy? P.2

In our last post we began discussing the issue of filing for bankruptcy in order to prevent a foreclosure from occurring. As we noted last time, Chapter 7 bankruptcy is not a good solution in many cases since it only succeeds in buying the debtor a little time. The key to being able to effectively preserve one’s home in any bankruptcy case is keeping up with the mortgage payments.

In Chapter 7 cases where the debtor is able to keep up with mortgage payments, they may be able to save their home under the applicable homestead exemption if the amount of non-exempt equity is small enough. More often than not, though, it is going to be debtors in Chapter 13 bankruptcy who have a better shot at saving their home. This is because Chapter 13 bankruptcy does not involve the liquidation of assets, and because these debtors often have a greater ability to keep up with mortgage payments throughout the bankruptcy, though not all of them do. It depends on the debtor’s financial profile. 

Can I save my home from foreclosure by filing for bankruptcy?

In a recent post, we spoke briefly about some of the options homeowners have when it comes to avoiding foreclosure. One of the options we did not mention was bankruptcy. As readers may know, personal bankruptcy is sometimes used as a way to avoid foreclosure, though this is not an effective strategy in every case. We’ll explain why in this and our next post.

Personal bankruptcy comes in two basic forms: Chapter 7 and Chapter 13. The basic difference between the two is that Chapter 7 involves the liquidation of all non-exempt assets and using the proceeds to satisfy creditors, while Chapter 13 involves establishing a three to five year debt management plan to repay creditors with disposable income. Both forms of bankruptcy involve discharge of all or part of their debts at the end of the process. 

Keep in mind the consequences of short sale, deed in lieu of foreclosure

In our last post, we began speaking about some of the alternatives for homeowners who are delinquent on their mortgage payments. Here we’d like to pick up on the topic of another possible alternative to foreclosure: deed in lieu of foreclosure. This is an arrangement in which the lender allows the homeowner to sign their home over to the lender rather than going through a foreclosure, allowing the lender to sell the home to make up for what was lost.  

One important point to make about short sales and deeds in lieu of foreclosure is that there is a good possibility that the lender will suffer a loss and seek a deficiency judgment from the borrower. A deficiency judgment is a court order that requires the borrower to pay back the loss suffered by the lender at the sale of the home. 

Considering alternatives to foreclosure

According to RealtyTrac, the current rate of foreclosure is below the national average, but overall foreclosure activity has been on an increasing trend over the last six months. Given that fluctuations in the foreclosure rate are always occurring, it is hard to tell exactly where we will be in another six months.

What we can say is that there are still a good number of homeowners out there who are struggling to keep their homes and who need advice on how to keep their home or advocacy pursuing foreclosure-related legal options. What exactly are these options, though?

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Gary J. Wachtel, Esq.
450 Seventh Avenue,
Suite 1905,
New York, NY 10123
Phone: 917-503-9616
Fax: 212-371-7722

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