CTRC Fact Sheet Index

TenantNet note: These Fact Sheets were published by CTRC in the mid-1990's. Some information will be out-of-date. As far as we know, there have been no updates to these fact sheets. While much of the information may still be valid, the reader should exercise caution.

CTRC Fact Sheets -- reproduced with permission.
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The Community Training Resource Center (CTRC) is a city-wide not-
for-profit organization that champions the rights of modest and
low-income tenants and promotes the preservation, improvement,
and expansion of affordable housing. CTRC provides training and
technical assistance for neighborhood housing groups, community
based organizations, legislative staffs and social service
providers.

CTRC produces fact sheets on tenants' rights, develops and
publishes research reports, and provides a written guide to New
York City government processes. CTRC advocates on budget policies
that affect housing and related services in low-income
neighborhoods. CTRC has led the campaign for the improvement and
expansion of the city's Housing Maintenance Code inspection and
enforcement services.
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CTRC Fact Sheet #105

UNLAWFUL FEES AND CHARGES UNDER RENT STABILIZATION

The New York City Rent Stabilization Law (RSL) and Code (RSC)
establish the methods and procedures for determining and
adjusting legal rents for apartments subject to their
jurisdiction.

The Rent Guidelines Board, appointed by the Mayor, is charged
with setting rent increases for stabilized apartments with either
new (vacancy) leases or renewal leases that commence in a
specific guidelines year, Oct. 1 through Sept. 30.

Rent adjustments that apply to individual buildings or apartments
are made by the New York State Division of Housing and Community
Renewal (DHCR) after application by a landlord or a tenant. These
adjustments might be increases (or decreases) in rent based upon
one or more of the following: major capital improvements, new
equipment installation, renovation, granting of a hardship
application, or a change in building services.

Only adjustments allowable under the Stabilization Law and Code
and/or granted by the DHCR or the Courts, are legal. Language or
clauses in rental leases demanding increases that do not conform
to the law are unenforceable and should be ignored.


Late Payment of Rent Fees

The legality of a landlord charging a late fee when the tenant
delays in paying the rent, unfortunately, is a grey area that has
long been a matter of contention. There is, it seems, nothing
specific in the law or code that allows or prohibits this
practice, although Section 2525.2, the "Evasion Clause" of the
code, can be and has been interpreted as forbidding late fees.

The DHCR takes the position that if there is a late fee clause in
the original lease, and the practice was established in the
building as of a "basedate" and the fee is not in excess of 5% of
the rent, then it is allowable.

As a practical matter, tenants might be advised to disregard the
billing of late fees; in most cases it would hardly pay for the
landlord to pursue a legal action for the recovery of what is
usually an insignificant sum. Chronic late payment of rent,
however, can be grounds for eviction.

Tenants who have paid late fee charges and wish to file
overcharge complaint may do so with the DHCR on their Form RA-89.


Court Costs

There is a specific fee called "court costs" set by law, that
landlords may collect when authorized by order of the court after
the entry of a judgment against a tenant. Court costs are usually
assessed when the tenant has failed to appear and a default
judgment has been recorded, or when the tenant has appeared and
failed to offer any defense, resulting in the landlord winning
unopposed. Such court costs are rarely imposed when the tenant
does appear and raises some valid defense. A landlord who adds so-
called "court costs" of any amount to a rent bill and collects
it, without authorization from the court, is overcharging the
tenant.


Legal Fees

Landlords sometimes bill tenants for "legal fees" after the
tenant has failed to pay rent on time, and the landlord has sent
the tenant some legal notice such as a "Petition for Non-
payment." Landlords can collect legal fees only when the original
lease contains a clause providing for such payment and a judge
orders the tenant to comply, after trial. A post-judgment hearing
on fees will take place, with the landlord's lawyer giving
testimony relating to time and expenses. If the landlord drops
the proceeding by "withdrawing" or "discontinuing" it, the legal
fees cannot be awarded.

In general, there are no legal fees that a rent stabilized tenant
is obligated to pay, for whatever reason or claim by the landlord
or his attorneys, unless so authorized by a court of law.


Key Money

"Key money" is the term given for an illegal fee charged a
prospective tenant for the privilege of renting a new apartment.
It is usually demanded by a person who controls showing vacant
apartments, such as the superintendent or managing agent; often
it is collected in collusion with the owner. Key money is
frequently demanded in cash to avoid any evidence that it was
collected. The prospective tenant realizes, of course, that
getting the apartment depends on paying this unlawful fee.
However, the tenant should attempt to pay by check or money
order, or pay in the presence of a friend who can be a witness
that the transaction took place. Once the tenant has the lease
and occupies the stabilized apartment, the tenancy is protected
and steps may be taken to challenge the payment of the key money
as a willful overcharge subject to triple damages.


Brokers' Fees

Real Estate Brokers' fees for finding an apartment may be legal,
but often they are not and constitute a disguised form of key
money. Telling the difference takes a little effort. A bona fide
Real Estate Broker is a person licensed by the New York
Department of State to act as an intermediary or salesperson in
the purchase, sale, and rental of real property for a commission
or fee. Landlords may list their available units with one or more
brokers. The fee charged by a broker (an amount equal to one or
two months rent is not unusual or illegal) may be paid by the
tenant when the lease is executed, although some brokers also
charge application fees prior to actual rental. The broker must
be part of an independent business, unrelated to the landlord or
his employees, in order to lawfully collect a broker's fee.

If there is no such "arms-length" relationship to the landlord
then any broker's fee collected may be construed as having been
paid to the landlord and thus constitutes an overcharge subject
to triple damages. Tenants may file an overcharge complaint with
the DHCR if they suspect an unlawful fee of this kind has been
paid.

It is also unlawful for a licensed broker to collect a fee if a
tenant has found an apartment independently, and then is sent to
a broker by the landlord or superintendent. Complaints about
improper brokerage fees may also be made to the New York
Department of State.


Superintendent Shake-downs

Superintendents or other landlord employees sometimes demand
money for performing normal repairs or services in a building.
This is an illegal practice; most regular services and repairs
are required by law and must be provided in return for rent.
Supers who demand payment ("fees" or "tips", etc.) for these
services are shaking down the tenant. All such payments to a
landlord's employee or agent are to be construed as overcharges,
and considered to have been collected by the landlord. However,
since proving that these unlawful, mostly cash, payments have
been made, is extremely difficult, tenants are advised not to
comply with such demands in the first place. Rather, they should
enforce their right to services and repairs by filing a complaint
with the DHCR (Forms RA-81 or RA-84) for failure to provide
services and demand a rent reduction. (See our fact sheet, Rent
Reductions for Lack of Services.)


New Equipment

During an apartment vacancy, extensive renovations and the
installation of new equipment and appliances can result in
substantial rent increases. Landlords are allowed to legally
increase rents by one fortieth of their actual costs, but many
abuse this policy by exaggerating their expenses and charging
exorbitant and illegal rents. Tenants who are aware or who
suspect that their rent includes an increase for such
improvements should routinely file an overcharge complaint with
the DHCR. The landlord will have to document the changes he has
made and the costs he has claimed (invoices and proof of payment,
etc.) in order to establish that the rent collected is not
excessive. Please refer, also, to our fact sheet, How Tenants Can
Avoid a New Equipment Rent Increase.


How to Deal with Landlord Threats

Tenants often pay unlawful fees because they think the landlord
is entitled to them and failure to do so will result in court
action and eviction. Landlords play on tenant fears by sending
letters threatening such eviction actions and making written or
oral demands that the tenant pay up or move out. Unscrupulous
landlords will enlist the aid of their employees, agents, or
attorneys to further intimidate the tenant into paying
unauthorized fees and charges. These tactics can be considered a
form of harassment and tenants are advised that the DHCR has an
Enforcement Bureau, staffed by attorneys, to handle such
situations. Complaints may be filed with this bureau by obtaining
DHCR Form RA-60H, Tenant Statement of Complaint(s) Harassment.

As indicated above, the collection of unlawful fees constitute an
overcharge and is punishable by damages awarded to the tenant. A
successful rent overcharge complaint may deter the landlord from
making further attempts at extracting such payments from tenants.

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These article are Copyright 1995 and 1996 by Community Training Resource
Center (CTRC) and reproduced by TenantNet. They may be freely
redistributed in their entirety provided they are reproduced exactly
as in the originals, including this copyright notice, the opening and
closing informational banners and any references to either CTRC
or TenantNet must be included.

These article are provided as is without any express or implied
warranty. While any information in these article is believed to be
correct at the time of writing, these articles are for educational
purposes only and do not purport to provide legal advice. If
you require legal advice, you should consult with a legal
practitioner licensed to practice in your jurisdiction.

Community Training Resource Center                (212)964-7200
47 Ann Street
New York, NY 10038

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