USA - NEW YORK Law and Practice Contributed by: Adam S. Walters, Erin C. Borek, Timothy P. Moriarty and Kelly E. Marks, Phillips Lytle LLP
owners of buildings with 36 or more units had nine years. Annual rent increases were capped at 6% in New York City and 15% in the rest of New York State. The HSTPA imposed a 2% Statewide cap, lengthened the amortisation period to 12 years, and made the rent increases temporary, requiring them to be removed after 30 years. The HSTPA limited the number and cost of IAIs to no more than three within a 15-year period, at a maximum aggregate cost of USD15,000. As with MCIs, the rent increases are now temporary and must be removed after 30 years. Duty to mitigate If a residential tenant vacates before the lease expires, the landlord has a legal duty to find a new tenant before they can seek to collect rent from the vacating tenant. There is no such duty for commercial landlords. Landlords must now take reasonable and customary actions to re- rent vacant units, whether regulated or unregu - lated, at the lower of fair market value or the rate agreed to in the lease. In addition, residential tenants are now statuto - rily entitled by law to a sanitary and safe apart - ment pursuant to the warranty of habitability. On 22 December 2021, the HSTPA was modi - fied as to the application of the following to co- operatives: • the provisions limiting security deposits and advances; • the requirement for the landlord to give notice if a lease renewal is not offered or if a renewal is offered at an increase to rent equal to or greater than 5%; • the limitations/prohibitions on fees charged at the beginning of a tenancy;
• the limitations on the payments, fees or charges for the late payment of rent; • restrictions on what may be sought in a sum - mary proceeding; • the requirement for an additional five-day notice by certified mail if maintenance is not timely received; and • the provision prohibiting the collection of attorneys’ fees in a summary proceeding. Tax incentives for residential development Section 421-a of the Real Property Tax Law has over the years provided certain tax incentives for developers to build “affordable” residential units, in the form of real property tax abatements for a certain number of years following comple - tion of construction. This law is controversial, has been modified several times, and currently is only available to projects that commenced con - struction between 1 January 2016 and 15 June 2022 that are to be completed on or before 15 June 2026. This law is under continuing discus - sion and debate. It is unclear if the tax incentives will be renewed, and the form and terms of any such renewal are uncertain. 6.15 Effect of the Tenant’s Insolvency The effect of a tenant’s insolvency on its lease obligations is governed by the applicable bank - ruptcy, insolvency, and creditors’ rights statutes. When the tenant files for bankruptcy, an “auto - matic stay” is imposed that initially restricts the enforcement of remedies or the termination of the lease by the landlord. Thereafter, there are specific requirements under bankruptcy law with respect to whether a lease is to be assumed or rejected.
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