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Rent regulated renewal lease with a guarantor

NYC Rent Regulation: Rent Control/Rent Stabilized, DHCR Practice/Procedures

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Rent regulated renewal lease with a guarantor

Postby NoMoreAds » Fri Oct 16, 2020 6:13 pm

Hello!
I have a question about how a renewal lease works when your original lease involves a guarantor company.

I imagine the landlord of a non-regulated apartment can do whatever they wish.

What about a rent stabilized unit? If I sign a new lease only my name would be on the lease, correct? Would there be an official rider attached that names the guarantor company? Or would it be a piece of paper between me and the landlord that was not officially recognized?

And one year later when it’s time to renew, could I simply renew or would I still be financially obligated to pay the guarantor company for every subsequent lease renewal?

Thank you for any advice/answers to this concern.
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Re: Rent regulated renewal lease with a guarantor

Postby TenantNet » Fri Oct 16, 2020 7:01 pm

Quick answer from our files - not sure if these answer the question however:

https://www.brickunderground.com/rent/c ... -apartment

https://www.brickunderground.com/rent/i ... ndemic-nyc

https://www.brickunderground.com/blog/2 ... _guarantor

viewtopic.php?f=15&t=10643

We might have some additional material, but that would involve some digging and I don't know if it would apply to your question. So take a look at the above links and see it any of that works.
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Re: Rent regulated renewal lease with a guarantor

Postby NoMoreAds » Fri Oct 16, 2020 7:26 pm

Thanks for the quick reply!

I came across those links in my research but found them inconclusive. They mention initial lease and even give an example of a retroactive instance, but say nothing about a lease renewal.

Thinking about the phase that a renewal lease must be the same terms as the original lease – how does using a guarantor define an original rent stabilized lease? Are they named on the lease?

I have no problem paying a company once – I just don’t want to me married to them forever.
Concurrently, if I used an elderly relative as a guarantor, how would that relate to a renewal lease? What if for example, they died before the renewal lease date? What would happen then?

Any more info would be greatly appreciated!

(and I failed to mention I am talking about a NYC rent stabilized apartment)
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Re: Rent regulated renewal lease with a guarantor

Postby TenantNet » Fri Oct 16, 2020 8:28 pm

"Same terms and conditions..." usually applies to services and rents, the latter of course can be increased by the RGB or an order of DHCR. It generally also means the LL cannot add new conditions, like a guarantor that wasn't there on the initial lease, or prohibit you from smoking within your apartment if the initial lease didn't address that.

Some landlords will add illegal riders on renewals. For the most part you do not have to agree to it. Some exceptions might be if the government has created new requirements. Also generally exempt are house rules that are reasonable.

A requirement to maintain a guarantor might depend on the text of the original lease and the text of the guarantee.

Things might be different right now due to the impact of COVID-19. Individual circumstances might differ from one situation to another.

Here's one case (I haven't read it though)
Sambr, LLC v Brown (2 Misc 3d 62 [App Term, 1st Dept 2004]) held that "execution of a guaranty was material to the grant of the original lease" and that requiring a guarantor on a renewal lease was permitted. (A guarantor of a RS lease does however have the right to decline to renew the guaranty.)

Also see this case, and also this case.

And another case with the Donald.

Now, normally the grounds for non-renewal of a RS lease do not include the failure to provide a guarantor. RSC 2524.4 & 2524.5 sets forth ALL the grounds for non-renewal: owner use, non-primary residence, recovery by not-for-profit institution, withdrawal from rental market, demolition.

So in our opinion, the lack of a guarantor is not a reason for non-renewal.

But if the lease requires an active guaranty to be in effect, the failure to provide one could be deemed a breach of the lease, and the LL could then bring a holdover.

So it can get complicated. I only scanned these, so I can't say for certain there is a rule that holds in all cases. You may wish to consult with a tenant attorney who has experience in this issue. (many lawyers don't know this stuff - tenant attorneys will).
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Re: Rent regulated renewal lease with a guarantor

Postby NoMoreAds » Fri Oct 16, 2020 8:56 pm

Wow! Thanks for that detailed reply.

More details of my situation - In normal times, I would easily qualify for an apartment on my own. Unfortunately, due to COVID, my 2020 salary won’t be enough so I would need a guarantor for the present moment. By the time a lease renewal comes around, I would be fine on my own. But if the guarantor is attached to the original lease, we may be attached at the hip for all subsequent renewals.

I really don’t like this COVID virus!!!
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Re: Rent regulated renewal lease with a guarantor

Postby TenantNet » Fri Oct 16, 2020 10:09 pm

Here's another thought. You say your regular salary has been reduced due to COVID. You and several million just in NYC. Even though the courts are opening, it's very slow and there is a HUGE backlog, on the scale of 200,000 or more. So chances are any case your LL might bring will take a while. And of course, none of this comes into play until the renewal is supposed to take place. So you might have time.

Consider negotiating with the LL. If you can swing your rent, then let the LL know you have been a reliable tenant and will continue to be one. The LL might be willing to give on this point rather than end up with an empty apartment. LLs want cash flow. They have to pay their taxes and mortgage.

If your LL is not insane, which is fewer and fewer these days, he/she might be willing to negotiate and perhaps give in on this issue.

Also understand that if the LL refuses to renew your lease, make sure he knows (in writing) that it is your intent to do so. Judges want to make sure of tenants' intent. You can go for years without having a lease (and become a month-to-month tenant if the LL accepts your rent at the same rent that you have been paying). You would still maintain your RS status. I've been in that situation. I would stay away from DHCR.

As I said above, I don't think the LL can take you to court on the grounds of not having a guarantor. (read the cases as how to notify the LL of the guarantor not agreeing to further liability). He can take you in a Holdover for breach of lease depending on the text of the original lease. But ... the courts are very backed-up. It could be a few years until the system is back and operating properly.

I can't tell you each detail of how this will play out, and do your own research on this. But I tend to think real world circumstances are such that you can work this all out.

BTW, keep a diary of everything that happens, and I would not speak with the LL on the phone. Sometimes the less you say, the better.
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Re: Rent regulated renewal lease with a guarantor

Postby NoMoreAds » Fri Oct 16, 2020 11:12 pm

Wow! As always you continue to impress with how helpful you are to everyone on this board!

In my case, however, I have to leave my current apartment and get a new one. A new lease in which I would need the guarantor for 1 year only. As I mentioned, I don't mind paying a company once. I just don't want a yearly finance review with a landlord for the next 10 years.

It's funny, the old concept of paying a landlord 6 months security was something I never liked but i sure wish is was legal now!!
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Re: Rent regulated renewal lease with a guarantor

Postby TenantNet » Sat Oct 17, 2020 2:00 am

Unless there's other stuff going on, why do you have to leave your current apartment? You are RS, so you would have a right to a renewal lease, and as I stated it's my opinion that even without a lease, you are still vested with RS rights. I don't think I've had a lease in over five years and I'm RS. Of course my story is different, but the point is the same.

And if you dig deeper on this, it might be that a continuing guarantor is not necessarily required. I haven't seen your lease or other details, so I can't say for certain. And as I said above, I haven't read all the case law on this. And you might find the LL willing to accommodate (negotiate) if it helps him keep a reliable tenant.

So when you say you "have to," well my answer is "no, not really."
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Re: Rent regulated renewal lease with a guarantor

Postby NoMoreAds » Sat Oct 17, 2020 9:47 am

Hi
Sorry for any confusion - nothing I've written and asked is about my current living situation. I'm moving - all my questions are about securing a new lease without long term complications.

Thanks
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Re: Rent regulated renewal lease with a guarantor

Postby Landlords Boy » Wed Oct 21, 2020 3:09 pm

Hi! GIven the 2019 revision to the rent laws, I do rely on guarantors more often than I did before. The guarantor is named in the lease itself.

"And one year later when it’s time to renew, could I simply renew or would I still be financially obligated to pay the guarantor company for every subsequent lease renewal?"

Under my leases, the obligation of the guarantor continues with every renewal or extension. The purpose of the guarantor is to guarantee payment of rent to the landlord if the tenant does not pay the landlord. If a tenant pays anything to a guarantor, that's not part of an arrangement between landlord and tenant, so it's not part of the lease.
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Re: Rent regulated renewal lease with a guarantor

Postby TenantNet » Wed Oct 21, 2020 4:55 pm

Of course we can't presume what you're doing is necessary legal. After all, you're a NYC landlord.
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Re: Rent regulated renewal lease with a guarantor

Postby NoMoreAds » Wed Oct 28, 2020 11:08 am

Hi
Thanks for those replies. My research and talking to some brokers is telling me that once I use a guarantor I will be married to them for as long as the lease lasts.
It brings up a question for you, Landlords Boy, if you could offer your thoughts -
Generally, a landlord likes to see a tenant with income 40x the rent. During these crazy times, would you except funds from unemployment this year as part of that equation?
Thanks!
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Re: Rent regulated renewal lease with a guarantor

Postby TenantNet » Wed Oct 28, 2020 1:06 pm

Brokers and landlords are probably the last people from whom to get accurate advice. If it's that important, I would have a consultation with a tenant attorney who actually litigates this stuff in housing court (at least, when it's open). A number of tenant attorneys advertise here ... and can offer free or low-cost initial consultations. You can also contact the NYC Bar Association. They have a program for consultations. Last time I used it (albeit many years ago), it was $25 for the one-time consultation.
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Re: Rent regulated renewal lease with a guarantor

Postby NoMoreAds » Thu Oct 29, 2020 8:41 am

I'm aware different people have different agendas. I'm gathering information from all sides. And all sides seem to be in agreement that any and all elements on an original lease WILL be attached to any future renewal lease. Thanks as always.
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Re: Rent regulated renewal lease with a guarantor

Postby TenantNet » Sat Oct 31, 2020 1:28 pm

Just to add to the mix, this is a recent decision from NYS Supreme Court, NY County.
http://www.nycourts.gov/reporter/pdfs/2 ... _33385.pdf
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