DHCR Issues New Guidance on Electronic Leases, Lease Offers
The DHCR has finally issued rules to permit rent-stabilized leases and lease renewals to be offered and accepted through electronic means. On March 25, the DHCR issued Operational Bulletin 2022-1, entitled “Electronic Lease Offering and Tenant’s Voluntary Consent.” The bulletin was issued as a result of the passage of Chapter 74 of the Laws of 2022, which allows tenants to voluntarily consent to accept electronic lease offerings and allows the DHCR to create rules and procedures for these offerings.
Until this bulletin, whether an owner could offer a rent-stabilized renewal lease by electronic means wasn’t clearly answered by the Rent Stabilization Law (RSL) or the Rent Stabilization Code (RSC). Owners were required to send a rent-stabilized tenant a renewal lease “by mail or personal delivery.” And neither the RSL nor the RSC mentioned electronic signatures.
The bulletin also recognizes the requirements of NYS Technology Law. The New York State Electronic Signatures and Records Act Section 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.” And Section 309 states that the use of electronic records and signatures are to be voluntary.
With the latest guidance, if they choose to, owners and tenants now have the ability to receive and enter into rent-stabilized lease agreements by email. These new rules don’t require an owner to offer electronic leases, nor do they allow an owner to require tenants to sign electronic leases. We’ll go over what you must do to begin offering electronic leases.
Tenant’s Voluntary Consent
The DHCR also issued form EL-TVC entitled, “Electronic Lease Offer: Tenant’s Voluntary Consent Form,” which is the standard form to obtain consent. You can find the form here: www.hcr.ny.gov/system/files/documents/2022/03/el-tvc-electronic-lease-tenants-voluntary-consent-fillable-form.pdf.
The consent form must be signed by both parties and a copy must be provided to the tenant. You should also keep a copy of all documents for your records because the consent form isn’t required to be sent to the DHCR’s Office of Rent Administration.
While it may be clear to you that sending renewal lease offers electronically is more convenient, the operational bulletin warns against owners ignoring the voluntary nature of consent. The bulletin says that tenants who believe that they’re being forced into signing the voluntary consent form, cite a retaliatory threat by an owner for refusing to sign it, or assert that their signature was fraudulently made to the form, can file a complaint to charge the owner with harassment.
Serving form to tenant. The consent form must be completed by the owner and served on or delivered to the tenant by email, placement in an electronic portal, or by personal service or mail, if necessary. The operational bulletin allows for service of the consent form either prior to or at the same time as the lease or renewal lease offer. However, the instructions included with the consent form say that consent must be obtained “prior to the use of electronic records to execute a lease or renewal form.” As a result, to be on the safe side, you should obtain consent “prior to” sending the lease or renewal lease offer.
Returning form to owner. Tenants can voluntarily consent to electronic lease offers by signing the consent form, manually or electronically, and then returning it to the owner by regular mail or by hand. Without a signed consent form from the tenant, an owner can’t offer leases electronically, nor can an owner require electronic signatures.
Tenant signatures, time frames. Other than spouses or domestic partners, all tenants must sign the consent form in order for the consent to be effective. Once signed, the consent is applicable for the entirety of the tenancy, to all subsequent lease renewal offers during the tenant’s time in the rent-stabilized apartment.
Lease Forms and Riders
According to the DHCR, owners can use whichever software product or electronic portal to facilitate lease offerings that they so choose. However, owners must use the DHCR-promulgated lease renewal form (RTP-8). For the renewal form, to account for the placement of electronic signatures and related software limitations, the DHCR is allowing the formatting to be adapted but the content may not be changed.
With regard to the other forms, the DHCR says the use of electronic signatures may apply to the voluntary consent form, the actual lease offer (including all required DHCR lease riders, including those relating to J-51 and 421-a), and all other riders required by law. The DHCR advises owners to use vacancy lease forms that are currently in use and any vacancy lease forms in the future that meet industry standards. And owners can amend these forms as needed to account for electronic signatures. However, remember that owners must use the RTP-8 form for rent-stabilized lease renewals.
Maintaining Proof of Service
Owners and tenants must maintain proof of service of the consent form, the lease renewal offer, and the acceptance or refusal. According to the DHCR, regardless of whether the transmission was done by personal email, electronic portal, or some other alternative, proof of service should include, but not be limited to, as many of the following elements as possible:
- Identity of the sender and recipient;
- Date of transmission;
- Subject matter;
- Attachments; and/or
- Electronic links to documents.
Regardless of the method of service used, owners must be able to print copies of electronic communications and all documents for submission to the DHCR and/or the courts upon request in a case proceeding.
It’s important to note that all of the regular window periods for lease renewal offers and tenant responses still apply. In New York City, an 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 form RTP-8. After the renewal offer is made, the tenant has 60 days to choose a lease term, sign the lease, and return it to the owner.