USA - NEW YORK Law and Practice Contributed by: Adam S. Walters, Erin C. Borek, Timothy P. Moriarty and Kelly E. Marks, Phillips Lytle LLP
reduction of greenhouse gas emissions in most buildings over 25,000 square feet by 40% in 2030 and 80% by 2050. With its first compliance period in 2024, the law’s carbon emission limits become increasingly stringent over a series of compliance periods, with owners facing poten - tial penalties for exceeding limits. While compli - ance rests with the buildings’ owners, emissions from tenants’ energy consumption play a part in compliance. At the onset of negotiating a letter of intent, landlords and tenants should discuss the extent to which the tenant has to contribute to the cost of improving the building to meet the new law. During the lease negotiation, landlords and tenants should clearly discuss and under - stand any building performance standards that the landlord has set or other building rules and requirements applicable to energy efficiency and the reduction of greenhouse gas emissions. Residential Leases The regulations and laws that apply to residential leases were overhauled by the Statewide Hous - ing Stability and Tenant Protection Act of 2019 (HSTPA). In addition, some residential tenancies are protected by older rent control laws. The key provisions of the HSTPA include the following: Rent Regulation Some residential buildings are subject to rent stabilisation regulations that establish caps on the amount of rent landlords can charge and the amount of increases they can impose. In addi - tion, some residential tenancies are protected by older rent control laws. The HSTPA has made it more difficult for landlords to “deregulate” units subject to such regulations, as follows. Luxury deregulation and vacancy allowances Prior to the HSTPA, apartments with rents above a certain threshold could be deregulated upon vacancy or when the tenant’s income rose to a
certain amount. Also, landlords could increase rent by up to 20% each time a unit became vacant, and earn longevity bonuses, which allowed them to increase rent by 0.6% multiplied by the number of years since the last vacancy. The HSTPA repealed these allowances. Sunset provision The HSTPA repealed the sunset provision, which was the date by which the legislature had to renew rent regulation laws to prevent their expi - ration. Rent control Under the HSTPA, rent for rent-controlled units can only be increased by the lesser of 7.5% or the average of the previous five increases approved by the Rent Guidelines Board. Co-op and condo conversions Landlords could previously deregulate stabi - lised apartments as part of the condo or co- op conversion process. The HSTPA imposed significant limitations on this by eliminating the eviction-plan option, and increasing the required purchase percentage for non-eviction plans from a minimum of 15% sales to third parties to a minimum of 51% sales to current occupants. Capital improvements Before the HSTPA, landlords could recoup costs of Major Capital Improvements (MCIs) to build - ings and Individual Apartment Improvements (IAIs) to apartments through rent increases. These increases have been significantly cur - tailed. MCI increases are based on the cost of the improvements and apportioned on a per-unit basis. Before the HSTPA, owners of buildings with 35 or fewer units could recoup their costs over an eight-year amortisation period, while
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