Including 2013 Amendments
Updated: August 28, 2013
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.
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 400 square feet or which can only be accessed through another occupied unit are not protected. The 400-square foot minimum was reduced from 550 square feet by the January 2013 amendments.
The law also excludes buildings located in most of the special Industrial Business Zones from coverage. 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.” Under the 2010 law, the incompatible use had to be operational on June 21, 2010, the 2013 amendments added the additional requirement that the incompatible use had to be active on the date of the coverage application. The 2013 amendments also gave the Loft Board the authority to exempt undefined categories of buildings from this rule, though at this point in time it is anyone’s guess as to how the Loft Board will exercise this authority.
What uses are “inherently incompatible?”
On March 10, 2011, the Loft Board passed the “inherently incompatible” use regulations. You can view the regulations here. The Appendix to the regulations contains a list of commercial or industrial uses that, in certain circumstances, may disqualify a building – and all the units in it – from coverage. If your building has, or may have, a use listed in the Appendix, it is important that you consult an attorney before filing a coverage application with the Loft Board.
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 occupant does not have to have been in occupancy during the window period. An occupant 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 provided they have been recognized as tenants by the owner. Consult an attorney to be sure.
How do I 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 completes the regulations to implement the 2010 amendments. The Loft Board has now established an application deadline of March 11, 2014. If you apply after that date, you will not be protected.
For tenants seeking coverage, however, there is no need to wait. In most circumstances, it is advisable to file an application as soon as possible.
What’s the application procedure?
The first step is to complete a coverage application. The application is available on line. Before filing the application with the Loft Board, copies must be mailed to all “affected parties,” which include the landlord and all other occupants of the building, residential or commercial. You must then file the application with the Loft Board together with four copies, proof of mailing to the affected parties and $25 for each unit applying for coverage.
The affected parties, including the landlord, have 35 days to file an answer. Once an answer has been filed, the Loft Board refers the application to the Office of Administrative Trials and Hearings [“OATH”] for processing. OATH is a city agency consisting of administrative law judges who adjudicate a variety of disputes. Currently, the Loft Board takes about 3-4 months from filing the application until it refers the matter to OATH.
OATH is a two-step process. You will first have a conference at which a judge will attempt to settle the matter. Settlements typically take one of three forms: a) the landlord agrees to register the units under the Loft Law; b) the landlord “buys out” the occupants or c) the landlord and occupants agree to a long-term continued occupancy outside the Loft Law. If the case does not settle, the OATH judge will then schedule the matter for a trial at which the applicants must prove their entitlement to coverage.
For simple cases, it is possible for tenants to navigate this process without an attorney, though legal representation is always advisable. It is especially important if the case involves legally and factually complicated issues such as incompatible use.
Can my landlord evict me if I apply for coverage?
No, absolutely not. Any attempt to evict a tenant based on a Loft Law filing would be deemed retaliatory and subject to dismissal by the Housing Court.
Can my landlord retaliate against me in other ways if I apply for coverage?
No. The “Essential Services Law,” Multiple Dwelling Law Sec. 282-a(2), makes it unlawful for any landlord to deprive essential services [e.g., water or electricity] to a loft tenant who has applied and who has obtained a Loft Board docket. This is another reason to apply sooner rather than later: it protects you from landlord harassment.
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 the amount paid in June 2010. 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 has properly registered the unit with the Loft Board and 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, ”“subtenants” or “roommates.” If the person was actually residing in the loft on June 21, 2010, then he or she is almost certainly protected.
In this regard, it’s important to note that prime tenants or leaseholders who do not actually reside in the unit, or reside in only a portion of the leased space, may lose their rights to the loft. If on June 21, 2010, a prime tenant had subleased the loft and cannot prove that he or she was absent for some bona fide temporary reason [e.g., a sabbatical], then the prime tenant will likely not qualify for protection. Similarly, if a prime tenant has subdivided space into smaller separate units but only occupies one unit as his or her primary residence, the prime tenant will be recognized only as the protected occupant of the space he or she actually occupies for residential purposes.
What happens if I don’t apply for protection?
If you do not apply for protection by the expiration of the application deadline, March 11, 2014, then you will be forever barred from coverage under the Loft Law. You will be in a more insecure position than before. That is, you will still be a residential tenant living unlawfully in a commercial space without any of the rights of residential tenants [e.g., the right to insist on repairs under the warranty of habitability]. The landlord will continue to have the right to insist on arbitrary rent increases at the expiration of your lease or, if you do not have a lease, at any time at all.
More than this, however, the landlord will have an even greater incentive to evict you as the new Loft Law imposes severe fines on landlords who continue to rent to unprotected residential tenants. In addition, the City has indicated that, once the Loft Law application window closes, it intends to more aggressively enforce the laws on illegal occupancy. This means that tenants who do not apply are at much greater risk of the City slapping a vacate order on their unit.
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.