Allowing Electronic Signatures on Rent-Stabilized Leases
Q It seems as though younger tenants want to do everything online and enjoy the convenience of electronically signing documents. Can I offer rent-stabilized renewal leases by electronic means?
A Unfortunately, whether an owner can offer a rent-stabilized renewal lease by electronic means isn’t clearly answered by looking at the Rent Stabilization Law (RSL) or the Rent Stabilization Code (RSC). RSC §2523.5(a) states that an owner must send a rent-stabilized tenant a renewal lease (DHCR Form RTP-8) “by mail or personal delivery” between 150 and 90 days before the expiration date of the tenant’s current vacancy or renewal lease term. DHCR Fact Sheet #4: Lease Renewal in Rent Stabilized Apartments also states that, “In New York City, the owner must give written notice of renewal by mail or personal delivery not more than 150 days and not less than 90 days before the existing lease expires on a DHCR Renewal Lease Form (RTP-8).”
And neither the RSL, RSC, nor the DHCR Fact Sheet mention electronic signatures. Otherwise, the New York State Electronic Signatures and Records Act §304 provides that: “[U]nless specifically provided otherwise by law, an electronic signature may be used by a person in lieu of a signature affixed by hand. The use of an electronic signature shall have the same validity and effect as the use of a signature affixed by hand.”
The RSL, including any amendments to the law added by the Rent Act in June 2019, is silent on the use of electronic signatures, and on signatures generally, in connection with rent-stabilized leases, says New York attorney Eileen O’Toole. And RSC §2523.5(a) could be construed to limit renewal lease delivery only to delivery by mail or personal delivery.
However, the DHCR issued an Opinion Letter dated Jan. 4, 2008, stating that “entering into either a vacancy or renewal lease by electronic means may be offered as an accommodation to the tenant for the tenant’s convenience. Entering into a lease electronically is acceptable if the tenant consents and all requirements of the Rent Stabilization Law and Code are met.”
Assuming, based on the DHCR Opinion Letter, that electronic signatures are acceptable if done for the tenant’s convenience, O’Toole recommends that owners still take precautions. Owners wishing to accommodate tenants through electronic signatures should send the lease renewal offer to tenants electronically early in the 150 and 90 day window period. Owners also should maintain proof of electronic delivery, including an email receipt or acknowledgement from the tenant of receipt of the emailed offer, and maintain any lease signed and delivered by a tenant to their office electronically.
If the owner doesn’t receive a signed lease back from the tenant by the 110-day point, the owner should mail a copy of the renewal lease with all applicable riders to the tenant before the 150 and 90 day window period ends, and retain proof of mailing, says O’Toole. This way, owners will have complied with the RSC provision requiring timely delivery by mail or personal delivery.
The 2008 Opinion Letter says, “The owner would be well advised to insure that the tenant actually receives the e-mail that included the lease. Without proof, such as an e-mail acknowledgement, to show that the tenant actually received the lease electronically, such electronic service would not be acceptable.”
It’s important to note that at the time a vacancy or renewal lease is offered, either electronically or by mail or personal delivery, all required riders should be attached. The RSL specifically requires that the DHCR Rider be annexed to both vacancy and renewal lease offers, says O’Toole.
Finally, after a tenant signs and returns a lease, the owner must sign and furnish to the tenant a copy of the fully executed vacancy or renewal lease bearing the signatures of the owner and the tenant and the beginning and ending dates of the lease term. Owners should keep copies of the fully executed leases, as well as proof of electronic delivery date or proof of mailing.
Notwithstanding the above, there may remain some concern about proving in court (if needed) the timely execution of a lease (or of a tenant’s nonrenewal) where execution of documents is done electronically, rather than the traditional mailing, cautions O’Toole.