Landlords: Are Your Leases Up to Snuff?
Landlord-tenant relationships are governed by a patchwork of state and federal laws, including statutes specifying items that must be included in residential lease agreements, along with items that are void if included.1 Due to the makeshift structure of laws governing residential leases, it can be difficult to know whether a lease complies with all applicable laws. Landlords, are your leases up to snuff? Below is an overview of items that must be included in a residential lease, or that would be trumped by statute if the terms of the lease are conflicting.2
New York Requirements
As a general matter, New York law requires that lease agreements be clear and coherent. The lease agreement should use words with common and everyday meanings and the font should be large enough to read easily. Landlords should update and review their forms with an attorney on a regular basis. With the advent of online sites that enable landlords to download generic sample forms, landlords need to be cautious and avoid using online forms that are not specific to New York State or old forms that no longer comply with New York law.
Landlords should be aware that in New York they are required to do the following: (1) prior to signing a lease agreement for a building with three or fewer units, a landlord must either provide notice to the tenant that a certificate of occupancy (“C of O”) is in place if one is required by law, or provide the tenant with a copy of the C of O; and (2) for leases entered into on or after December 3, 2014, the lease must include a sprinkler system notice indicating whether there is an operative sprinkler system and if so, specify the last date of maintenance and inspection. In the City of Rochester, non-owner occupied one or two-family dwellings require a new C of O every six years, with few exceptions that require a C of O more frequently. Multiple dwelling units and mixed occupancy buildings with one or more dwelling units require a C of O every three years. In addition, if a dwelling has been vacant for more than two months, the City requires a new C of O if one has not been issued in the past year. Both landlords and tenants can now look online to see if a property is code-compliant.
It is fairly common for lease agreements to include language limiting who can occupy the property. In New York, a lease cannot limit occupancy to the tenant named in the lease or to the tenant’s immediate family. A landlord must allow immediate family of the tenant, as well as one additional occupant and that occupant’s dependent children. A landlord can, however, limit the total number of occupants to comply with overcrowding standards. Landlords should be careful not to improperly restrict occupancy of a unit if requested by the tenant so as to avoid potential claims of discrimination based on familial status.
Most leases also include restrictions on assignment and subletting, so landlords should be aware of a tenant’s right to sublet or assign a lease. Regardless of the language in a lease, a tenant in a building with at least four units has the right to sublet upon the landlord’s written consent, which consent cannot be unreasonably withheld. A tenant may assign a lease with the consent of the owner, but the landlord is free to withhold consent for any reason. If the withholding of consent is reasonable, the tenant remains obligated under the lease. If the withholding is unreasonable, the tenant must be released from the agreement upon 30 days’ notice. Landlords who are inclined to deny a tenant’s request to sublet or assign a lease should consider consulting with an attorney on what constitutes reasonable grounds for denial, especially if they want the tenant to remain obligated under the lease.
Landlords should ask their attorneys to review the fees chargeable to a tenant under their lease agreements. For example, leases typically allow the landlord to collect a fee for returned checks. While most fees tend to vary from lease to lease, New York law places a cap of $20.00 on such fees. In addition, if a landlord is forced to bring a legal action to enforce the terms of a lease, he or she cannot seek recoupment of the legal fees incurred unless the lease specifically allows it. It should be noted that if a lease allows a landlord to recoup attorney’s fees, the tenant would automatically be entitled to do the same.
Under federal law, before signing or renewing a lease, a landlord must disclose the presence of any known lead-based paint or lead-based paint hazards on the property.3 Both the landlord and tenant must sign an EPA-approved disclosure form to prove that the landlord met his or her disclosure obligations. Property owners are required to retain the form for the three-year period after the lease commences. Beyond the disclosure form, a landlord must also provide the tenant with an EPA pamphlet titled “Protect Your Family From Lead in Your Home” or a state-approved version of the pamphlet, which are available online. One way to help ensure compliance with the federal mandate is to include the disclosure as an attachment to the lease. There are several exemptions to the lead-based paint disclosures requirements: (1) property constructed after 1978; (2) lofts and studio apartments; (3) short-term vacation rentals of 100 days or less; (4) single rooms rented in a residential dwelling; (5) housing certified as lead-free by a state-accredited lead inspector; and (6) housing designed for persons with disabilities and retirement communities, unless any child less than six years old lives or is expected to live there.
The consequences for failing to have a lease that complies with the items discussed above are varied. On the federal level, a landlord’s failure to comply with the federal lead-paint statute could be severe. A landlord who fails to comply with the EPA regulations could face penalties of up to $16,000 per violation. Further, a landlord found liable for tenant injuries resulting from lead may have to pay three times what the tenant suffered in damages. In the case of provisions on subletting, assignment, or returned check fees, for example, the consequence would likely be that the provisions would not be enforced by a court if challenged. Regarding the ability to collect attorney’s fees, a landlord would be remiss to lose out on the ability to potentially recoup fees expended in evicting a tenant.
With tenant rights’ advocacy groups gaining local recognition and the potential for a new housing court, it is now more important than ever for landlords to ensure that they are following the rules imposed by state and federal law and our local City of Rochester Charter. In an age where property information is readily available online and reviews of individual landlords and property management companies are influencing a tenant’s decision to rent, we highly recommend consulting with an attorney well-versed in landlord-tenant relations. Whether you are new to the investment game or have been around the proverbial city block, it is important to have an attorney who understands your real estate needs.
1 Tenants in rent regulated or government-subsidized apartments have special rights, which are beyond the scope of this article.
2 The overview provided by this article is not comprehensive and should be used as a general guide. It is recommended that landlords have legal counsel review and update lease agreements prior to use.
3 There are also disclosure requirements when a landlord renovates rental units or common areas in buildings constructed before 1978, which is beyond the scope of this article.
This article is intended for general informational purposes only and should not be considered legal advice or counsel, nor does it create an attorney-client relationship.
Serena Compitello is an attorney who focuses her practice in real estate, estate planning, and landlord-tenant relations. Serena advises her clients with respect to residential and commercial lease agreements and represents landlords before local town and city courts.