New York State Bill A3992

New York State Bill A03992

Summary of Bill A03992

BILL NO   A03992

SPONSOR   Perry

COSPNSR

MLTSPNSR

Add S732-a, RPAPL
Requires a tenant to pay the court all rent due in proceedings between an owner
or owners of a building with six rental units or less or an owner occupied
three unit or less building which is the owner`s primary residence and a tenant
and the court shall place such amount in an interest bearing account with
interest earned being used for the administration of such accounts.

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Actions on Bill A03992

BILL NO   A03992

02/10/97  referred to housing

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Votes on Bill A03992

Vote record not found for bill A3992

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Memo on Bill A03992

BILL NUMBER: A3992
PURPOSE:
To  assist  homeowners  with  rental units at their primary residence in
recovering rent which is past due or become due during a  court  action,
and  to  prevent  financial hardship and loss of home due to uncollected
rent by requiring the court to mandate deposit of disputed  rent  in  an
escrow account under the control of the courts.
SUMMARY OF SPECIFIC PROVISIONS:
This bill amends the Real Property Actions and Proceedings Law by adding
a  new  section  732-a  to require that in all court proceedings between
homeowner and tenant where rental units is at the primary  residence  of
the  homeowner,  the  court shall require that all rent past due and due
during the proceedings  be  deposited  in  an  interest  bearing  escrow
account  pending  final  adjudication,  at  which  time  the court shall
determine appropriate disbursement of the deposits.
Under this bill, deposit of rent must be ordered by  the  court  if  the
homeowners petition or answer states that payment of rent is in dispute,
and  that the tenant is in arrears for more than thirty days and that no
other arrangement concerning payment of disputed rent  has  been  agreed
upon between homeowner and tenant.  In addition the provision will apply
only  to  owners  and  tenants  of  residential property with six rental
units, or less, where the owner resides as a primary residence.
To provide some protection for tenants,  this  legislation  would  allow
that  in the event the tenant asserts rent was paid and provide proof to
the court thereof, the court shall order that only prospective  rent  be
placed in escrow.
JUSTIFICATION:
Article  7  of the New York State Real Property Actions, and Proceedings
Law (RPAPL) was enacted to allow the use of  summary  proceedings  as  a
vehicle  for  efficient  and  expedient  resolution  of  landlord-tenant
disputes.  However this does not happen.
Today more than 300,000 actions are brought yearly in the Housing  Parts
of  the  Civil  Court  of  New  York; and the vast majority of the cases
processed in Housing Court are non-payment summary proceedings which are
usually initiated after a  tenant  is  three  months  or  more  in  rent
arrears.
Non-payment actions are characterized by extraordinary delays with cases
averaging  at  least  six  months  and lasting up to two years.   When a
property owner ultimately prevails or a tenant defaults in  the  action,
the rent is generally not available to the owner.  Although current law,
which  does  not  require  mandatory  rent deposits, allows the court to
demand the deposit of rent after  the  tenant  has  requested  a  second
adjournment,  the judge may nevertheless refuse to direct the deposit of
rent where the tenant makes a showing of good cause as a result.    Many
of  the  300,000  or  more  actions brought each year are filed by small
property owners who in many cases own no other property  and  experience
severe financial difficulty if tenants withhold rent during the action.
Residential  property  owners  lose  hundreds  of  millions  of  dollars
annually as a result of the failure of the law to protect small property
owners from severe financial loss as a result  of  unpaid  rent.    Rent
money  lost  through  non-payment  proceedings  result in the neglect of
necessary repairs and maintenance of the property, but another  casualty

is  often the small property owner who faces the crises of losing a home
because of dependence on the rent receipts to  meet  mortgage  expenses.
Lost  rents  also  contribute  to  deteriorated housing conditions, real
estate tax delinquencies and ultimately housing abandonment.
Many  tenants  who  are not required to make rent deposits are unable to
repay the accumulated rent arrears when,  either  the  tenant  or  owner
prevails  and therefore are ultimately dispossessed, as a consequence of
not putting the rent money aside as it became due.
Tenants who could  not  afford  to  pay  the  rent  would  benefit  from
mandatory  pre-trial rent deposits since the nature of the problem would
be evident sooner and emergency intervention could be  provided  earlier
at a lesser cost to the City.
Placing  rent  money  in  escrow is not an additional burden on a tenant
because paying rent is a monthly obligation.  If the tenant is  claiming
that  the  apartment  is not habitable, they are not being asked to give
the money to the owner.  There is no abrogation  of  tenants  rights  in
enacting this bill.
This legislation also contains a provision that, in the event the tenant
asserts  rent  was paid and provides proof to the court thereof, or that
non-payment is  as  a  result  of  the  Department  of  Social  Services
discontinuation  of  rental  subsidies,  the  Court  would ask that only
prospective rent be placed in escrow.  This provision  protects  certain
tenants from a ultimately unfair mandatory requirement.
Finally,  mandatory  rent  deposits  would  prevent  some  housing court
actions thereby permitting housing courts  to  focus  on  other  housing
issues  such as the enforcement of housing code violations and breach of
warranty of habitability.
This bill would help many small homeowners of two and three family homes
who need the rent to keep their homes.  The State of New York will  also
benefit from enacting this legislation.
FISCAL IMPLICATIONS: None to State.
EFFECTIVE DATE:  This act shall take effect on the one hundred eightieth
day after it shall have become law.