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NYC Real Estate Law: Buying Lofts and Townhouses in NYC

DO YOU NEED A LAWYER TO APPLY FOR PROTECTION UNDER NYC LOFT LAW?

In theory, for $25, you can file with the NYC Loft Board your own application for protection under the NYC Loft Law.  The loft law is designed to protect live/work loft tenants in commercial loft buildings, which do not hold a certificate of occupancy and are often not in compliance with NYC safety and fire laws.      

But pending the Loft Board’s approval of their application, loft tenants seeking to legalize their unique NYC lofts stand on shaky legal ground.  The law protects them only if it is found to actually apply.  During the pendency of the application, their lofts are still officially illegal residences and, as such, the tenants are not entitled to basic residential rights such as hot water and protection from sudden eviction or rent hikes.  Plus the NYC loft law subjects landlords to costly alterations of their loft buildings, including sprinkler systems, intercoms and the like.

Not surprisingly, then, landlords may be inclined to fight legalization of their industrial lofts for rent and, consequently, tenants may end up in a situation where retaining a NYC lawyer is no longer an option but rather a necessity.

So how do you make sure your application for the protection of the NYC loft law will be granted Before you apply and potentially fall out of favor with your landlord?

THE NYC LOFT LAW REQUIREMENTS

To be protected under the NYC Loft Law, you must file an application with the NYC Loft Board (there is no automatic loft law protection).  To qualify for the Loft Law protection, industrial loft building tenants* need to show the following:

  • their loft building does not have a residential certificate of occupancy;
  • their loft building was formerly used for manufacturing or commercial purposes;
  • their loft building has at least three** units that were occupied residentially for 12 consecutive months during the window period from January 1, 2008 – December 31, 2009;
  • the loft tenant lived in the particular loft on June 21, 2010 with landlord’s consent (as exhibited by an executed lease and/or cancelled rent checks); and
  • their loft is at least 400SF, has at least one window and can be accessed without going through someone else’s loft.

*the NYC Loft Law also covers subtenants and roommates residing in the loft on June 21, 2010 but, by the same token, it may not cover primary tenants who do not actually reside in the loft (consult a NYC real estate attorney to be sure).    ** for industrial loft buildings between Eighth Avenue, Eleventh Avenue, West 24th Street and West 27th Street, the minimum number of occupied units during the residential occupancy is only two.

HOW WILL MY STATUS CHANGE AFTER APPROVAL?

Once approved, you will become a protected occupant and your landlord will be required to obtain a residential certificate of occupancy.  For NYC industrial lofts to be eligible for a certificate of occupancy, they must comply with NYC fire and safety laws. 

In the interim, your loft will become an Interim Multiple Dwelling, in which the landlord cannot raise the rent without the Loft Board’s approval and your basic tenants rights are protected.

Once a certificate of occupancy is issued, the covered lofts will become rent stabilized.  While this process may take years, the rents will be frozen at the amount in effect on June 1, 2010 (unless the lease contained a rent escalation provision).

The downside is that if you’ve been withholding rent because of a lack of certificate of occupancy, you will now have to start paying.  BUT your landlord will now be responsible for supplying hot water, drainage, heat, electricity, gas, smoke detectors, public lighting, entrance door security (intercoms), elevator service (if applicable) and window guards (for children under the age of 11).  

As a residential tenant, you are also entitled to livable standards of living base on implied Warranty of Habitability, which includes environment free of rodents, cockroaches, excessive noise, noxious fumes etc.

However, NYC loft tenants protected under the Loft Law may subject to temporary rent increases to cover the cost of compliance.

LIVE/WORK PRIVILEGES UNDER THE LOFT LAW

NYC Loft Law coverage does not in any way terminate your Live/Work loft status.  In fact, the whole idea behind the loft law is to protect artists and other entrepreneurs working from home.  The only issue is whether the loft is used primarily (as in 51%) for residential purposes and whether the commercial purpose is:

  • clearly incidental to the residential use;
  • taking no more than 49% of the space;
  • with no more than 3 employees; and
  • be carried on by the residential occupant of the loft

RENTING A LOFT IN A LOFT BUILDING RECENTLY PROTECTED BY NYC LOFT LAW – RENT INCREASES

Barring a sale of rights or a claim of abandonment, incoming loft renters in industrial lofts inherit the prior tenant’s rights (consult your NYC attorney to make sure your rights as incoming tenant will be protected). 

The new rent in loft buildings protected under NYC loft laws must be based on the June 2010 rate plus any increases approved by the NYC Loft Board (if the building applied for loft coverage under the 1980 loft law, the rent will clearly also be based on the 1980 rate).

This means that if your landlord overcharges you for rent in a protected NYC loft, you have a valid claim to recover those overcharges.  In many cases you don’t even need a lawyer although the fastest and most effective way to get your money back is to have a NYC real estate lawyer write your lawyer threatening litigation.

Finally, in limited circumstances, tenants who moved in after the loft law went into effect may also be protected (consult a NYC lawyer with your particular situation).  

NYC LOFTS NOT COVERED BY LOFT LAW

The following NYC lofts are not covered NYC Loft Law Coverage:

  • Lofts located in a basement or cellar;
  • Lofts without a window opening onto a street or courtyard;
  • Lofts less than 400 square feet;
  • Lofts which can only be accessed through another occupied loft;
  • Lofts in loft buildings located in special Industrial Business Zones;
  • Lofts with commercial or industrial uses that are “inherently incompatible with residential use in the same building.” 

NYC LOFT LAW ENFORCEMENT

As is true for most other NYC real estate laws, the Loft Law is only as good as its enforcement.  The NYC real estate laws authorize the Loft Board to issue penalties of up to $17,500 to non-complying landlords.Moreover, loft tenants must cooperate with compliance efforts and have a right to participate in, comment on, and even challenge the process of compliance by submitting a “narrative statement” to the Loft Board.

NYC LOFT LAW APPLICATION DEADLINE

The Loft Law application deadline is March 11, 2014.  If you do not apply timely, you will be forever barred from coverage under the NYC Loft Law and remain a residential tenant residing unlawfully in a commercial loft building.  This will provide your landlord with a strong incentive to evict you as the new Loft Law imposes severe penalties on landlords who continue to rent to unprotected residential tenants.  

Register for a Complimentary Consultation

To discuss these and any other Real Estate legal issues email us for a free 20 minute initial consultation. We will be happy to set you on the right track so that your home-buying experience is fun and stress-free.
Disclaimer: Attorney advertisement. The information contained on this website is intended for informational purposes only and is not intended to solicit clients for matters outside of the State of New York. Nothing contained herein should be construed as legal advice or the formation of an attorney-client relationship. Should you require expert assistance, please contact a New York Real Estate attorney for a formal opinion