Three-Day Rent Demand Signed by Owner's Attorney
Violates Federal Fair Debt Collection Practices Act
REAL ESTATE UPDATE
Realty Law Digest
By Scott E. Mollen
The New York Law Journal, February 25, 1998
A United States District Court has held that the federal Fair Debt Collection Practices Act is applicable to a three-day demand for rent.
An owner's attorney had signed a demand that advised the tenant that absent payment of four months' back rent within three days, she would be evicted. The tenant sued the owner's law firm, contending that the demand violated the act. The tenant argued that the law firm did not clearly state that it was attempting to collect a debt, that the law firm had made threats that it did not intend to carry out and that it had omitted the required 30-day validation period.
The law firm countered that the rent arrears did not constitute a "debt" within the meaning of the act since it did not involve a credit transaction and that, since the three-day period is mandated by Real Property Actions and Proceedings Law §711, the notice did not constitute a "communication" under the act.
The act mandates that collectors advise debtors in writing, that they have 30 days to contest the validity of alleged obligations.
The court held that rent constituted a "debt" within the purview of the act and that the demand constituted a "communication" covered by the act.
The court explained that the act " 'clearly embraces consumer obligations to pay money' arising out of 'personal, family or household purposes' without regard to whether the underlying transactions involve the extension of credit or the deferral of payment." The court also observed that Congress had eliminated proposed language that would have " 'limited the statute to debts arising from extensions of credit ....' " Moreover, the act defined "communication" as the " 'conveying of information regarding a debt directly or indirectly to any person through any medium.' "
Since the demand had "demanded payment on pain of eviction proceedings," the court concluded that there is "no colorable argument" that the demand does not meet the act's definition of "communication."
Comment: The court acknowledged its "discomfort" since the "broad language of the [act's] definition of 'communication' will have a significant effect on New York's statutory scheme for the fair and efficient resolution of landlord-tenant disputes." The court noted that there is nothing to indicate that "such was the intent of Congress [in enacting the act], a statute designed to protect debtors from fraudulent and abusive debt collection practices."
Colleen F. McGuire and Robert E. Sokolsky, attorneys for the plaintiff, expressed their view that "the application of the FDCPA to landlord-tenant law is a creative means to level the unequal bargaining power between landlords and tenants. Tenants must be treated with all of the rights provided to consumers of other commodities. We are confident Romea will be upheld by the Second Circuit."
Janice J. DiGennaro, of Rivkin, Radler & Kremer, attorneys for the defendant said that "this is a troubling decision which is at odds with both legislative intent and the expressed statutory purpose as Judge Kaplan himself recognized. It has already generated a great deal of concern, confusion and uncertainty in the landlord-tenant community. It is our belief that the Second Circuit will follow the direction of the recent Supreme Court decision in Heintz v. Jenkins, 514 U.S. 291 (1995) and decline to read the statute in a way which impairs a landlord's legitimate state court remedies."
Romea v. Helberger & Associates, SDNY, 97 Civ. 4681, Dec. 22, 1997, Lewis A. Kaplan, J.