Rent Deposit Provision Seen as Burden on Courts

by MATTHEW GOLDSTEIN
New York Law Journal, June 17, 1997
A LAST-MINUTE agreement to save rent regulation in New York City has placed a new minefield in the battleground occupied by tenants and landlords in Housing Court.

The compromise bill, which was set for the Legislature's vote last night, would require tenants in rent disputes to deposit monthly rent checks into an escrow account.

The provision would supplant a 1983 state law that leaves it up to the judge to decide whether to order a tenant to deposit rent with the court.

The language of the new measure was being hammered out by legislators yesterday.

Landlords claim that judges have been far too lenient in allowing tenants to remain in apartments without paying rent while a dispute is litigated. Tenant advocates denounced the measure and said it would tip the balance of power in the landlords' favor. Ninety percent of tenants appear without lawyers.

Meanwhile, court administrators who have objected to prior mandatory deposit bills, complained it would add work for an already overburdened clerical staff. Justice Fern Fisher-Brandveen, the administrative judge for the New York City Civil Courts, said the law will likely ''require more judicial and non-judicial resources.''

Scott Rosenberg, a Legal Aid Society attorney, said the measure would make it impossible for poor tenants to receive hearings for claims that their landlords have either not made necessary repairs or are overcharging. ''There is no other situation involving disputes over the payment of money in which one litigant is required to pay into court, in order to get access to court,'' Mr. Rosenberg said. ''It is a tax on the judicial system.''

Jamaal Speede, the Manhattan coordinator for the Task Force on Housing Court, which provides nonlegal advice to unrepresented litigants, called the rent deposit measure ''horrendous.''

An outline of the proposal, released yesterday morning by Governor Pataki, requires that a tenant deposit monthly rent in an escrow account after a case is adjourned for a second time. In a building with 12 or fewer apartments, tenants must pay any ''undisputed amount of rent'' to the landlord, and put the balance of what the landlord claims in an account. If a tenant refuses, the landlord presumably would be permitted to evict for nonpayment.

Robert Goldstein, a partner with Borah, Goldstein, Altschuler & Schwartz, whose firm represents mostly landlords, said housing cases have become so ''protracted'' that often by the time a landlord obtains an eviction order, the tenant has no money to pay back rent. Landlords maintain that by requiring rent payments, disputes will be resolved sooner and tenants will resume paying or move out.

Landlords have campaigned aggressively for the deposit legislation. In January 1996, the Rent Stabilization Association, a group that represents 25,000 property owners, organized to demonstrate the unwillingness of housing judges to enforce the 1983 law.

Ernesto Belzaguy, deputy chief clerk for Housing Courts, estimated that in Manhattan the new law could produce 20,000 applications a year from landlords. In an average year in Manhattan, he said, judges generally approve no more than 175 rent deposit requests.

Approximately 300,000 landlord-tenant cases are filed annually in the city. When a rent deposit application is granted, a tenant deposits a check or money order with the Housing Court clerk's office. The money is then forwarded to the Department of Finance.

To retrieve those rents from the department, a tenant or landlord must obtain a judge's signed order, a process that can take up to six months after a case's completion.

The rent deposit measure was part of agreement reached early Monday between Governor Pataki and the leaders of the Assembly and Senate, moments after the state's rent law expired. The pact would continue rent regulations in New York City and surrounding suburbs for another six years, while gradually allowing landlords to charge market rates for some rent-controlled and rent-stabilized apartments.

The plan would continue rent regulations for approximately 2.5 million New Yorkers, while ending price controls for apartment dwellers with incomes greater than $175,000. When a regulated apartment become vacant, landlords would be permitted to increase rents by as much as 20 percent. The law would also limit succession rights to a tenant's spouse, gay partner or immediate family member. Copyright 1997, The New York Law Publishing Company. All Rights Reserved.