Q&A on Rent-Regulated Garage Spaces
If you own or manage a rent-regulated building with garage spaces that are also covered under rent control or rent stabilization, you must be careful when you rent those garage spaces to tenants. You can’t increase the rents of those garage spaces by more than the allowable rent control increases or the applicable Rent Guidelines Board Order (RGBO) increases. And once you start providing a garage space, it becomes a required service that you can’t stop providing.
If you make a mistake in how you handle the garage spaces, you could end up facing a Division of Housing and Community Renewal (DHCR) order directing you to refund a rent overcharge to a tenant or cutting the rent based on a finding of reduced services. To help you figure out what you can and can’t do, we’ve come up with seven common questions owners have about renting garage spaces and the answers to those questions.
When Separate Lease for Garage Space Is Required Service
Q: If I own and run a garage in my building and rent spaces in that garage under separate leases to rent-regulated tenants in that building, do those spaces become a required service that I must continue to provide?
A: Yes. If you own a building and rent garage space under separate leases to rent-regulated tenants in that building or did so on the building’s base date or any time after that, the garage space becomes a required service that you must continue to provide to those tenants.
In addition, you can’t unilaterally terminate a tenant’s access to an assigned garage parking space. In one case, a tenant had occupied the parking space for 25 years. The district rent administrator ruled for the tenant and reduced his rent. The owner appealed and lost. There was no proof that the owner had filed an application to reduce or modify required services. Therefore, the owner failed to maintain required services by removing the tenant’s parking space [Creekhill Realty, LLC, April 2013]. However, the garage space isn’t a required service if an independent contractor has owned and run it since the building’s base date.
For rent-stabilized spaces in a garage that you own and run, you must offer tenants the choice of one- or two-year renewal leases on a separate lease form, according to a DHCR opinion letter dated June 9, 1997, by Charles Goldstein.
When Providing Garage Space Is Required Service Without Separate Lease
Q: If I give a rent-regulated tenant a garage space at no additional charge, without a separate lease for the garage space, must I continue to include this garage space as a service that I must provide to the tenant?
A: Yes. The garage space becomes a required service that you must continue providing to the tenant at no additional charge.
Applying Correct Rent Increases
Q: How do I calculate the correct rent increase for a garage space?
A: A garage space is considered rent controlled if it was first rented before Jan. 1, 1971, to the tenant of an apartment in a building covered under rent control (that is, one built or converted to residential use on or before Feb. 1, 1947). If the garage space was first rented to a rent-controlled or rent-stabilized tenant on or after Jan. 1, 1971, it’s rent stabilized.
If the garage space is rent stabilized, it’s subject to the renewal rent increases permitted by the applicable Rent Guidelines Board Order (RGBO) and the vacancy rent increases permitted by the Rent Regulation Reform Act of 1997 (RRRA).
If the garage space is rent controlled, the answer isn’t clear. A DHCR opinion letter dated Oct. 22, 2001, by Charles Goldstein says that you can increase the parking charge for a rent-controlled tenant’s garage space only “upon order of DHCR after application by the owner who, generally, would have to demonstrate hardship.” It goes on to state that parking charges aren’t included in the maximum base rent (MBR) system. But the letter doesn’t say exactly how you would apply to the DHCR for those rent increases. Speak to your attorney if you’re in this situation.
In one owner’s case, a rent-controlled tenant complained of rent overcharge after he increased the rent on his ancillary garage space from $64.75 per month to $135 per month. The owner claimed that the apartment’s 1962 lease didn’t mention a parking spot and that this service wasn’t provided by the owner. The owner tried to argue that “ancillary” services also didn’t apply under rent control. The tenant admitted that he started renting the garage space during the 1970s. The DRA ruled against the tenant, finding that the garage rent was separate from the tenant’s maximum collectible rent (MCR), that the garage space was offered as an optional service to the apartment, and that the garage space was subject to rent control.
The tenant appealed and won. The DHCR found that the tenant’s garage space was subject to rent control and that the rent increase collected was void and unenforceable. The owner appealed, claiming that the DHCR’s decision was arbitrary and unreasonable. The DHCR took the case back for reconsideration and ruled again for the tenant. The garage space was provided as part of the rent-controlled tenancy. Similar garage spaces were provided to other rent-controlled tenants in the building [Cooper, September 2013]
Subletting Garage Space
Q: Is the tenant entitled to sublet the garage space to someone else?
A: Yes, but only with your written consent. According to a DHCR opinion letter dated June 4, 1993, by Nathaniel Geller, the subletting of a rent-stabilized garage space is subject to the state’s sublet law (Real Property Law, Section 226-b). This means that the tenant must ask for and get your written consent to the sublet in accordance with the sublet law. The law also says that you must have a reasonable reason for refusing your consent. If the tenant goes ahead and sublets the space without your consent, you can sue to evict the tenant for violating the sublet law.
In one instance, a tenant had two garage spaces and sublet one of them to another tenant. The owner asked the DHCR if the tenant was permitted to do so. In an opinion letter, dated April 8, 2003, written by Charles Goldstein, the DHCR said that garage spaces provided as ancillary services in a rent-stabilized building become part of the “housing accommodation.” So the tenant was entitled, under the Rent Stabilization Code, to sublet the garage space in the same manner as the tenant could sublet a rent-stabilized apartment. The tenant must submit a written sublet request to the landlord, and the landlord can’t unreasonably withhold consent. And the tenant is permitted to sublet for only two years out of a four-year period.
The sublet law doesn’t apply to rent-controlled apartments. But if a rent-controlled tenant wants to sublet garage space, a DHCR opinion letter dated Oct. 22, 2001, by Charles Goldstein says that the tenant must first get your written consent. If a rent-controlled tenant sublets the space without your consent, the opinion letter says you have two options:
Option #1: Get rent increase. Section 2202.6 of the city’s Rent and Eviction Regulations (RER) permits you to apply for an adjustment to the maximum rent. The opinion letter doesn’t state how much that rent increase would be.
Option #2: Evict tenant and subtenants from garage space. Section 2204.6 of the RER allows you to evict the tenant and subtenants from the garage space.
Right to Garage Space if Tenant Doesn’t Have Car
Q: If a tenant doesn’t have a car or even a valid driver’s license, is he required to give up his garage space?
A: No, according to an opinion letter dated Oct. 22, 2001, by Charles Goldstein. The tenant isn’t required to have a car or a driver’s license to keep his space, as long as he pays the rent for it.
Obligation to Pay for Unused Garage Space
Q: A tenant signed a one-year lease to rent a garage space. After six months, the tenant told me that he would no longer be using the space. Must the tenant pay the rent for the garage space until the end of the lease?
A: Yes, according to a DHCR ruling. In the case that led to the ruling, a tenant complained of a rent overcharge, claiming that the owner was charging him for a garage space that he no longer used. The owner claimed that the garage space rental was part of the tenant’s lease and that the tenant was responsible for paying a separate additional charge for the space until that lease expired. The DHCR ruled that the Rent Stabilization Law didn’t require the owner to release the tenant from paying the garage rent six months before the lease term ended [Glenbriar Co., February 1997].
Changing Location of Garage Parking Space
Q: Can I change the location of a tenant’s garage parking space?
A: Not unless your lease specifically permits you to do so. For example, in a DHCR opinion letter dated Nov. 21, 1995, by Nathaniel Geller, the tenant of a rent-stabilized apartment asked whether the owner was permitted to change the location of his garage space. The opinion letter said the owner wouldn’t be permitted to do so because the lease assigned the tenant a specific space and had no rider allowing the owner to switch that space.
In one case, a tenant complained of a reduction in services because the owner changed the parking spot she rented to one not near the front of the building. The tenant claimed that this created a hardship for her. The tenant pointed out that her lease specifically stated that she rented parking spot C10. However, the DHCR ruled against the tenant. Her original lease contained a clause stating that the owner could change her parking space after giving her three days’ written notice [Maxwell, June 1997].
Deregulating Garage Space
Q: If I legally deregulate a rent-regulated apartment, will the related parking space also be deregulated?
A: Yes, according to an opinion letter dated Sept. 27, 2001, by Charles Goldstein. But the opinion letter goes on to state that if the deregulated tenant chooses to give up the parking space and you rent it to a rent-stabilized tenant, the parking space will again be subject to rent stabilization. You may then charge that tenant a first rent for the parking space, subject to renewal increases permitted by the allowable RGBO or vacancy increases permitted by the RRRA.
The ability of an owner to charge a first rent for the parking space was again confirmed in an opinion letter, dated June 9, 2004, by Gregory C. Fewer. In the letter, an owner had rented a garage space to a rent-stabilized tenant for $55 per month. The tenant later gave up his garage space. The owner agreed to release him and proposed to rent the garage space to another rent-stabilized tenant. The owner claimed that it could charge a first, market rent. The tenant claimed that the owner could charge only a statutory vacancy increase over the last tenant’s $55 rent. The owner asked the DHCR who was correct. The letter stated that the owner could charge a first, market rent. The tenant’s garage rent after that would be subject to rent-stabilized renewal guidelines increases.