A Landlord’s Responsibilities

New York City is known to have one of the nation’s more favorable laws towards tenants in the country. If you are considering making a real estate investment in the city, it behooves you to understand the responsibilities you are undertaking. There are state laws that you must also comply with, and unique city rules for rent control and rent stabilization apartments.

Know the anti-discrimination laws 

The Federal Fair Housing Act, along with the New York State Human Rights Law and the New York City Human Rights Law, prohibits discrimination in housing. The Federal law makes it illegal to deny someone a rental by race, family status, color, national origin, religion, disability, or sex. New York State adds creed, age, sexual orientation, and military status to the list. While New York City also protects those from being discriminated against by citizenship status, gender identity, lawful occupation and lawful sources of income (e.g., public assistance, social security, supplemental security income, and unemployment benefits), A landlord cannot deny someone the rental opportunity based on those mentioned above. You also cannot make the rental terms or conditions different.

Regarding your advertising, you need to ensure it is not discriminatory. Of course, any harassing, threatening, or intimidating behavior to prevent someone from renting is strictly prohibited.

If the authorities find you have committed discrimination, the law requires you to take specific remedial action. This includes changing your practices and paying monetary damages (which may include attorney fees), as well as civil fines and penalties.

You can legally reject rental applicants for certain things. These include bad credit, bad references and poor rental history (e.g., late rent payments).

Dealing with problems

If you have a tenant that is not following the terms of his/her lease, including the non-payment of rent, there are specific actions you can take, but you are forbidden from doing certain things. You must give the tenant three days to pay back rent or move. Should he/she not do either, the landlord can start eviction proceedings. Laws are regulating how and when you may terminate a tenancy. This is an arduous process, however. While this is ongoing, you cannot try to force him/her to leave, such as shutting off the electricity or changing the locks.

You should spell out the terms of the rental lease agreement. This includes the amount of the monthly rent, when it is due, how payment is made how much notice you have to give a tenant before raising the rent, fees for a returned check, and what happens if your tenant does not pay rent on time (e.g., late fees and eviction). You need to make sure you comply with federal, state, and city laws. For instance, you have to provide your tenant at least one month’s notice before terminating the tenancy.

A landlord cannot raise the rent in a discriminatory manner (e.g., only for individual races or religions). It is also important to note that you cannot increase the rent to retaliate for your tenant for taking legal action, such as complaining to the authorities about the lack of heat.

Returning security deposits

This is a significant area of contention. A tenant hands over the security deposit before moving in to provide you with a degree of protection should they leave your property in disarray or skip paying rent. The security deposit covers damage beyond normal wear and tear.

Landlords have to disclose the name and address of the bank where the deposit is being held. In buildings with at least six units, the landlord is required to pay interest (either annually through subtraction of rent payment or at the end of the tenancy), although you also have the right to charge a yearly 1% administrative fee.

There is no legal statute limiting the amount of the security deposit. Traditionally, a tenant pays the first and last month before moving in. Under the law, it must get returned after a “reasonable” period after the tenant has returned the keys and left. This is open to interpretation, but it has typically meant 21 to 45 days.

You can try to avoid problems by photographing the apartment before the tenant moving in. Before moving out, you may wish to provide the tenant a list of your expectations. If you feel there is an issue when he/she moves out, once again you should take pictures before starting the repair work.

Make it livable

Landlords have a legal requirement to make sure the property is habitable. These are referred to as the implied warranty of habitability. Your tenant has the right to a livable, safe, and clean apartment. This means providing adequate heat, hot water, and getting rid of bug infestations. There are also requirements regarding lead paint, smoke and carbon monoxide detectors, locks, and window bars. Landlords also must protect from “reasonably predictable criminal harm.” If your tenant fell victim and was due to a criminal’s entry into the building because locks are not fixed, you could be liable for damages.

If you are not living up to your part, tenants can take several actions. These include withholding rent payments, or, if they repair it themselves, deducting this amount for rent.

You cannot force your tenant to give up this right, and even if you put this is in the lease, a court will side with your tenant.

Make your disclosures

There are disclosures a landlord is legally required to fulfill. Aside from those relating to security deposits, there is a federal law about lead-based paint and other hazards. If you are performing renovations on a building constructed before 1978, regulations require that you provide tenants with lead hazard information within 60 days of starting the work.

Rent control/stabilization

There are many units covered by rent control or rent stabilization. These have a set of regulations that a landlord must follow. A rent control building has limits on the amount of rent the owner can charge, along with certain restrictions on evictions. In a rent stabilization building, landlords are also limited to the rental amount, along with rules governing required services and terminating a tenancy. You can visit the New York City Division of Housing and Community Renewal’s Office of Rent Administration and the New York City’s Rent Guidelines Board for the rules that apply.

Top 5 Tips for First-time NYC Landlords

For almost every New Yorker, renting your first apartment is a rite of passage. Stay long enough in the city, and there may come a time when you switch sides from tenant to landlord. Whether you’re the owner or subletting here are some tips to get you started with being a landlord in NYC.

1. Know the rules

The first thing you’ll need to do is get approval from someone. This could be the board, your landlord or the management company and you’ll need to know the building’s rules as they can change from one to another.

A condo board has the right of refusal to rent the unit, meaning if they reject your proposed tenant they have to match your price. However, this rarely happens, most boards don’t care about the tenant so long as the necessary requirements are met.

Co-ops, on the other hand, are far more active with vetting prospective tenants and have the right to accept or refuse without any explanation. They also tend to limit the length of the sublease and the number of times you can sublet. Co-ops also typically charge the owner a sublet fee, usually a percentage of the gross monthly rental or profit.

2. Screen your tenants

Once you’ve attained permission as a rental housing provider and decided on a price, next comes finding the right tenants. The success of your market venture depends to a great extent on the tenants you choose and the best way to find good tenants is by using good screening practices.

Carefully look through every tenant application, paying close attention to the credit report, criminal history, and eviction reports. You can run a credit check through a screening service like Experian; the tenant pays the $15 fee.
It’s also good to ask for past landlord references, job references and anything else that can prove the quality of the tenant and their ability to meet the monthly payments.

3. Hold up your end of the deal

One of the biggest mistakes first-time landlords make is not understanding their full responsibilities. This should be made clear in the lease, stating which repairs you, as the owner, are responsible for both physically and financially.

If you’re a co-op or condo owner, you are responsible for ensuring all systems and amenities are functioning, such as gas, electricity, smoke detectors, etc. To better understand your responsibilities as a landlord read up on the New York State attorney general tenants’ rights guide.

4. Have a reserve fund

Your motto should always be “Hope for the best but plan for the worst.” Make sure you have a reserve fund for both planned and unplanned maintenance. Even if your tenant caused the damage, you might still have to pay out-of-pocket expenses.

5. Set up an easy rent collections method

Lastly, ensure you have a smooth rent collection method that works for both you and your tenant. These days it’s effortless to collect rent through online services such as PayPal, SquareCash or just a good old bank transfer.