Evict Tenant Who Doesn't Get Renewal Lease Signed by Guarantor
Suppose you sign an initial lease with a rent-stabilized tenant and require the tenant to get a guarantor to guarantee payment of the rent. At renewal time, the tenant returns the renewal lease without the guarantor’s signature. According to the DHCR and a housing court case, you are not required to sign the renewal lease and risk having to deal with a tenant who can’t afford to pay the rent.
Below, we give you two options you can consider if the tenant returns the renewal lease without a guarantor’s signature. And we’ll give you a Model Letter: Demand Guarantor for Renewal Lease, which you can use to demand that the tenant provide a guarantor for the renewal lease.
If a rent-stabilized tenant has a guarantor on his initial lease and returns the renewal lease without the guarantor’s signature, you have the right to:
Demand tenant get original guarantor or ‘suitable alternate guarantor.’ A DHCR opinion letter dated May 21, 2002, and signed by Charles Goldstein, says you’re entitled to demand that the tenant get either the original guarantor or a “suitable alternate guarantor” for the renewal lease.
The owner rented an apartment to a rent-stabilized tenant, and the tenant’s initial lease was cosigned by a guarantor for tenant’s rent. At some point, the guarantor said she could no longer perform this obligation. When the lease was up for renewal, the owner wanted the tenant to provide another guarantor. The owner asked the DHCR if this was proper. In an opinion letter, the DHCR said yes.
According to Rent Stabilization Code Section 2523.5(a), an owner is required to offer a renewal lease for a rent-stabilized apartment on the same terms and conditions as the expiring lease. If an expiring original lease is specifically guaranteed, that guaranty is a material term of the expiring lease, and the owner is entitled to condition renewal on the provision of a guarantor. In other words, a rent-stabilized lease must be renewed on the same terms and conditions as the initial lease. So the owner was entitled to require a guarantor on the tenant’s renewal lease.
Evict tenant. If the tenant doesn’t get a suitable guarantor to sign the renewal lease, you can seek the tenant’s eviction for not renewing the lease on the same terms and conditions as the initial lease.
In one case, an owner sued to evict a rent-stabilized tenant for not renewing her lease on the same terms and conditions as her initial lease. The tenant’s brother signed her initial lease as a guarantor. The guarantor revoked his guaranty when the tenant renewed her lease. And the owner rejected the tenant’s offer of an alternate guarantor based on review of the alternate’s financial condition. The court ruled for the owner. The court ruled that the Rent Stabilization Code requires renewal of leases on the same terms and conditions as the original lease and the guaranty was a key provision of the original lease [Sambr, LLC v. Brown, March 2004].
Potential Issue with Broad Guaranty on Renewal Leases
You may be wondering if the problem of a signed renewal lease without a guarantor’s signature might be avoided if your guaranty on the initial lease says that it would remain in effect even if the lease was renewed, changed, or extended in any way. So, in theory, it wouldn’t matter if the tenant returned the renewal lease without the guarantor’s signature.
If this is the case, it’s still possible that a court won’t apply the guaranty to the renewal lease, despite what the guaranty says. For example, in one appeals court case, a mother claimed she wasn’t responsible for the tenant’s rent. The mother had signed the tenant’s initial lease as guarantor for rent. The lease stated that the guaranty would remain in effect even if the lease was renewed, changed, or extended in any way. After one lease renewal, the mother advised the owner in writing that she would no longer guarantee tenant’s rent payments upon further lease renewals. The tenant signed a second renewal lease but then stopped paying the rent. The owner sued the mother for the amount the tenant owed during the second renewal lease period.
The court ruled for the owner, and the mother appealed. The appeals court reversed and ruled for the mother. The court noted that under rent stabilization, there could be an indefinite number of renewals of the original lease. Under this circumstance, the guarantor had the right to end her future liability by giving the owner reasonable notice. But the court went on to say that the owner wasn’t without recourse if the guarantor did revoke the guaranty. That’s because the owner didn’t have to renew the tenant’s lease once advised by mother that she’d revoked the guaranty [Levine v. Segal, October 1997].
Consider Two Options
Based on your rights, there are two options you can consider when a rent-stabilized tenant who had a guarantor on his initial lease returns the renewal lease without the guarantor’s signature.
Option 1: Send demand letter to tenant before seeking tenant’s eviction. You can send a letter to the tenant, demanding that the tenant get the guarantor’s signature or find a suitable alternate guarantor for the renewal lease. This is a good option if you’re otherwise happy with the tenant but want to make sure there’s a guarantor for the renewal lease. If the tenant doesn’t get a guarantor, you can then seek the tenant’s eviction. In the eviction case, you can use the letter to show the court that you tried in good faith to resolve this issue with the tenant before seeking his eviction.
If you decide to try this option, the letter you send should advise the tenant that he must find a suitable guarantor for the renewal lease (that is, one with enough income to cover the tenant’s rent). Your letter, like our Sample Letter, should:
- Advise the tenant that he hasn’t renewed the lease on the same terms and conditions as the initial lease;
- State that the renewal lease doesn’t contain the signature of the guarantor who signed the initial lease;
- Refer to the DHCR opinion letter giving you the right to demand that the tenant get the guarantor’s or an alternate guarantor’s signature on the renewal lease;
- Tell the tenant that you’re returning the lease so he can get the guarantor’s signature or propose a suitable alternate; and
- State that if the tenant doesn’t return the renewal lease with the guarantor’s signature or that of a suitable alternate who has your approval by the date the signed renewal lease was originally due, you’ll seek his eviction.
Option 2: Seek tenant’s eviction without first sending letter. Instead of sending a letter to demand that the tenant get a guarantor’s signature, you can simply seek the tenant’s eviction for not renewing the lease on the same terms and conditions as the initial lease. If your initial lease with the tenant has a guarantor, remind the tenant up front that he must include the guarantor’s signature on the renewal lease.
You can do this in the cover letter you send to the tenant with the renewal lease. Say in the cover letter that both the tenant and guarantor must sign the renewal lease. This “puts the ball in the tenant’s court” to return the renewal lease with the guarantor’s signature.
See The Model Tools For This Article
|Demand Guarantor for Renewal Lease