New Loft Law FAQ
FAQ ON THE NEW LOFT LAW
DISCLAIMER: This FAQ is presented for general informational purposes only. It is not intended as legal advice. Individual situations may have peculiar facts that may change the application of the law; courts or the Loft Board may render rulings that may change the application of the law. Therefore, everyone should seek legal advice and guidance on their own situation before proceeding.
What has changed?
The most significant change in the law – and the one that brings new units under coverage – is in the occupancy “window period.” Under the original Loft Law, only units occupied during 1980 and 1981 were eligible for coverage, which is the reason lofts converted to residential use in the 1990’s or 2000’s in Williamsburg, Greenpoint, Bushwick and other places were not covered.
The new occupancy window period, explained in further detail below, is 2008 and 2009. Units occupied during this period are eligible now for coverage. The new law, however, excludes some units that would have otherwise been covered from protection. Details below.
What units are covered?
Subject to the exclusions explained below, the new law extends Loft Law protection to units located in commercial buildings without a residential certificate of occupancy that were residentially occupied by three or more families living independently of one another for at least twelve consecutive months during the period January 1, 2008 – December 31, 2009, the “residential occupancy window period.”
The law carves out a slightly different standard for a portion of Manhattan bounded by Eighth Avenue, Eleventh Avenue, West 24th Street and West 27th Street. For this area, the minimum number of occupied units during the residential occupancy window period is just two.
What units are excluded?
In a departure from current law, the amendments exclude certain units from coverage based upon physical characteristic or location.
As to physical characteristics, lofts located in a basement or cellar, which do not have a window opening onto a street or courtyard, which are less than 550 square feet or which can only be accessed through another occupied unit are not protected. These units, even if not protected, may still be used as one of the required units for coverage.
The law also excludes buildings located in most of the special “Industrial Business Zones” from coverage. Here is a link to the list of IBZ’s. http://www.nyc.gov/html/imb/html/ibz/ibz_maps.shtml . This exclusion does not apply to the IBZ’s for Williamsburg/Greenpoint, North Brooklyn [Bushwick] or parts of Long Island City. Thus, units located in these zones are covered.
Finally, the new law excludes units in buildings that, as of the effective date, contain commercial or industrial uses that are “inherently incompatible with residential use in the same building.” The law leaves it up the Loft Board to craft regulations defining what uses fall under this category.
Who’s protected?
To be protected by the new law, an occupant must have been residing in his or her unit on June 21, 2010, the date the law passed. In other words, a protected tenant does not have to have been in occupancy during the window period. A tenant will be protected whether or not there is a current lease in effect. That is, tenants with expired leases are subject to protection.
Assuming the amendments are construed in the same way as the current law, subtenants in occupancy of covered units may also be eligible for protection.
Finally, in limited circumstances, tenants who move in after the law became effective may also be protected.
How do we get covered?
Coverage can be obtained by filing an application with the NYC Loft Board. However, in a significant change from current law, there is now a time limit for tenants to apply for protection. The Loft Board will only entertain coverage applications for six months after it passes regulations to implement the new law. Thus, the time period has not yet begun to run. It is difficult to predict exactly when the Loft Board will enact the regulations, but it is expected to take it anywhere from three to nine months.
For tenants seeking coverage, however, there is no need to wait. It is advisable to file
an application as soon as possible.
Can my landlord evict me if I apply for coverage?
No, absolutely not.
What happens after building or unit is brought under the new law?
Once the building is found covered, the landlord must bring the building up to residential code. After a residential certificate of occupancy is issued, the covered units are transferred into rent stabilization. This is a process that will likely take years.
The law and Loft Board regulations establish procedures and timetables for legalization. The amendments give the Loft Board greatly enhanced authority to enforce the law, including legalization requirements, by increasing the statutory penalty for non-compliance from $1000 to $17,500. The expectation is that the increased financial penalty will provide a greater incentive for landlords to actually legalize the buildings.
Tenants must cooperate with the landlord’s effort to legalize. Tenants also have a right to participate in the process by commenting on, and even challenging, a landlord’s proposed legalization plan, known as a “narrative statement.”
What about the rent?
For most tenants, for the near-term rents will be frozen at their current levels. However, tenants with leases that contain rent increases may be required to pay those increases.
Tenants who have been withholding rent due to the lack of a residential certificate of occupancy will now be legally required to pay rent. As long as the landlord is in compliance with the legalization timetables, it may collect rent notwithstanding the lack of a certificate of occupancy. If, however, a landlord is out of compliance with those timetables or is not making all “reasonable and necessary” efforts to legalize the building, tenants may be entitled to withhold rent.
Landlords also have the right to increase the rent by fixed percentages when they achieve certain milestones during the legalization process. Experience under the current law suggests that many landlords may never seek to collect these increases or, if they do, the time periods between them will be lengthy.
What about evictions?
Any occupant protected by the new law is not subject to eviction merely because his or her lease expires or, for occupants without leases, based upon service of a 30-day notice of termination. Nor may any protected occupant be evicted because of “illegal” occupancy.
As long as protected occupants continue to pay the rent and otherwise comply with their leases and the Loft Law, they are shielded from eviction.
Protected occupants may be subject to eviction if they fail to occupy the loft as their primary residence, they sublet all or a portion of the premises without the landlord’s written consent, they overcharge subtenants or roommates or they make unauthorized alterations.
What about subtenants and roommates?
This is going to be one of the thorniest areas under the new law. The Loft Law provides protection to any residential occupant in a covered unit regardless of whether they are designated “tenants” or “subtenants”. Occupants who are “roommates” may not qualify. The difficult question arises in distinguishing a roommate from a subtenant. Generally, a roommate shares a space as opposed to occupying a separate, free-standing unit. But, given the many different living arrangements carved out of lofts, these issues are going to have to be reviewed on a case-by-case basis.
What about units already covered by the Loft Law?
They remain covered and the tenants remain protected, though the increased fines may spur landlords to speed up legalization efforts.
