What to Do if Tenant’s Adult Child Has Taken Over Rent-Regulated Apartment
Seven plaintiffs have joined the Rent Stabilization Association (RSA) and Community Home Improvement Program (CHIP) to sue over new rent regulations they claim are ‟unconstitutional.” The plaintiffs are management companies run by three different landlords and an individual landlord. The lawsuit was filed in the U.S. District Court, Eastern District of New York, and names the city, the Rent Guidelines Board along with each of its members, and the state Homes and Community Renewal Commissioner RuthAnne Visnauskas as defendants.
The lawsuit discusses the numerous ways the new rent law has harmed the three landlords. For Cindy Realty, one of the plaintiffs, the complaint states that it has been forced to rent units to strangers who claim they have succession rights. A husband and wife who had lived in a unit since 1994 moved to Florida and now claim the person living in the apartment is their son, according to the lawsuit. “It is too difficult and costly for Cindy Realty to prove the residence of the couple, and the son is likely to claim succession rights,” the suit says. “Cindy Realty is thus saddled with a tenant it never approved.”
As legislation becomes more tenant friendly and tenants seek to pass on their below market-rate apartments to their friends or families, owners of rent-stabilized and rent-controlled apartments will increasingly face “family members” of tenants claiming to have the right to a rent-stabilized renewal lease or protection from eviction in an apartment under rent control when the tenant dies or permanently leaves the apartment. Or maybe you’ll discover that an adult child of a rent-stabilized or rent-controlled tenant has taken over the tenant’s apartment.
Handling this particular situation can be tricky. First, you’ll have to answer some difficult questions, including:
- Does the child have pass-on rights to the apartment, and if so, what must you do?
- If the child doesn’t have pass-on rights, but would like to stay in the apartment, should you offer him a vacancy lease?
- If the child doesn’t have pass-on rights, should you sue to evict him, and if so, what kind of case should you start?
We’ll tell you what information you must get to handle the situation properly, and let you know what your options are, depending on what you find out.
To get pass-on rights, the person claiming pass-on rights must show that he lived in the apartment with the tenant for a minimum amount of time and either qualifies as a member of the tenant’s family or has a family-type relationship with the tenant.
Minimum time in apartment. The Rent Stabilization Code, which applies to rent-stabilized apartments, and the New York City Rent and Eviction Regulations, which apply to rent-controlled apartments, say that to meet this residency requirement, the person must show that:
1. Before the tenant moved out or died, the person lived with the tenant in the apartment:
- For at least two years; or
- From the beginning of the family relationship, or the family-type relationship (if the person claiming pass-on rights isn’t a family member of the tenant); or
- From the beginning of the tenancy; and
2. During this time, the apartment was the person’s primary residence.
Exception: The two-year requirement is shortened to one year if the person claiming pass-on rights is a senior citizen or disabled. The code defines “senior citizen” as a person 62 years of age or older. It defines “disabled person” as someone who has an “impairment which results from anatomical, physiological, or psychological conditions other than addiction to alcohol, gambling, or any controlled substance, which are demonstrable by medically acceptable clinical laboratory diagnostic techniques and which are expected to be permanent and which substantially limit one or more of such person’s major life activities.”
In addition, the minimum periods of required residency won’t be considered interrupted by any period during which the “family member” temporarily relocates because he or she:
- Is engaged in active military duty;
- Is enrolled as a full-time student;
- Is not residing in the apartment in accordance with a court order not involving any term or provision of the lease and not involving any grounds specified in the Real Property Actions and Proceedings Law;
- Is engaged in employment requiring temporary relocation from the apartment;
- Is hospitalized for medical treatment; or
- Has such other reasonable grounds that shall be determined by the DHCR upon application by such person.
Family or family-type relationship. The person claiming pass-on rights must be a family member as defined in the code and regulations. “Family member” is defined as either a spouse, son, daughter, stepson, stepdaughter, father, mother, stepfather, stepmother, brother, sister, grandfather, grandmother, grandson, granddaughter, father-in-law, mother-in-law, son-in-law, or daughter-in-law of the tenant or permanent tenant.
If the person isn’t one of those family members, he must prove that he had a “family-type” relationship with the tenant. Courts decide whether the person has a family-type relationship by looking for certain criteria set out in the code and the regulations. The more criteria a person can prove that he meets, the more likely a court (or the DHCR) is to consider him to have had a family-type relationship with the tenant. The criteria include the following:
- The person had a long relationship with the tenant.
- The person and tenant shared or relied on each other for paying household or family expenses.
- They intermingled finances; for instance, they shared joint bank accounts, credit cards, and loans, and owned personal and real property together.
- They engaged in family-type activities, such as social and recreational activities, family events, and holiday celebrations.
- They formalized their legal obligations and intentions toward each other. For example, they named each other as their executor and/or beneficiary, granted each other a power of attorney, and/or gave each other authority to make health care decisions.
- They held themselves out as family members to others through their words or actions.
- They regularly performed family tasks, such as looking after each other and each other’s extended family members.
- The determination isn’t limited to any one factor, and in no event would evidence of a sexual relationship between such persons be required or considered.
Get More Information
Determining whether a child meets the pass-on requirements isn’t always easy to do. You’ll need to get more information about how long the child actually lived with the tenant in the apartment and whether the child lived there as his primary residence. Here are some ideas about how you can get this information.
Ask child. You may be able to go directly to the source. But try to be discreet. Don’t be so blunt as to say, “I’m planning to evict you and need more information to support my case.” Instead, you may want to tell the child that you’re updating your records on the apartment and need to know if the tenant is still living there, and if not, who is. You can then try to find out exactly when the child moved in.
The child may be up-front and readily admit that he just moved into the apartment a few weeks ago. But don’t count on it. More likely, the child will be savvy enough to know what to say to get pass-on rights, even if it’s not true. So if the child tells you he has been living with the tenant for the past 10 years, do some double-checking.
Ask building employees. Your building employees, especially doormen, should be a good source of information. For example, a doorman can tell you if he has seen the tenant’s child coming into and out of the building on a daily basis, and for how long. Information from building employees has helped owners win pass-on cases.
Ask other tenants. If you have a good relationship with other tenants in the building, ask them if they’ve seen the child at the apartment, and if so, how often.
Hire private investigator. To get a clear picture of where the tenant’s child has been living, you may need to hire a private investigator. The private investigator may uncover information that could help you decide whether you have a good case for seeking the child’s eviction. For example, you may discover that the child actually owns a house in another state and has a driver’s license from that state. Or he may have registered to vote and has paid real estate taxes for a different apartment or house on the other side of the city.
Once you get the information, you’ll need to sit down with your attorney to evaluate whether the child has a strong case for claiming pass-on rights. This won’t always be clear-cut. For example, your doorman and other tenants may tell you that they’ve rarely seen the child at the building. But your private investigator may find that the child has used the building address on various documents. You’ll have to figure out how strong a case you have and whether it pays to fight a child’s pass-on claim.
If you decide to fight the claim in court, your attorney may be able to ask the child for other documents—for example, tax returns—through certain pretrial procedures. In one case of a daughter claiming pass-on rights, the owner sought document production as part of pre-trial questioning, including proof of the daughter’s claimed relationship to the tenant, federal and state income tax returns, insurance information, bank statements, phone bills, and her contract for casting in a reality TV show. The owner also sought the daughter’s social media posts in connection with third-party entities. The court ruled for the owner but limited production of social media posts to the two-year period before the tenant’s death and narrowed those demands to redact all content except for location stated on the post and where the post used words such as “home,” “residence,” or words meaning residence [Renaissance Equity Holdings LLC v. Webber, July 2018].
If Child Has Pass-on Rights
If you think the child has a strong case for claiming pass-on rights that isn’t worth challenging, you’ll need to give the tenant’s child a renewal lease in his or her own name because the child is stepping into the shoes of the tenant.
If Child Doesn’t Have Pass-On Rights
If you think the tenant’s child doesn’t qualify for pass-on rights, you have three options:
Option #1: Offer child a vacancy lease. You can offer to give the tenant’s child a vacancy lease in his name. The Housing Stability and Tenant Protection Act (HSTPA) of 2019, which went into effect on June 14, 2019, made changes to how rents can be raised and changed formulas for vacancy leases. Under the old rules, a vacancy bonus could be as much as 20 percent for a new two-year lease. Now, there is no vacancy bonus. When a tenant signs a vacancy lease, he can choose between a one- or two-year option and the allowable increase is set by the local rent guidelines board. However, no more than one guideline board increase may be added per guideline year. In addition, lawful Major Capital Improvements and Individual Apartment Improvements (IAI) may be added to the rent. If the previous tenant was paying a preferential rent before the vacancy, the owner is now entitled to charge the new tenant the full legal rent.
You could also try to get the child’s consent to make improvements to the apartment, for which you could collect an IAI rent hike. However, with the HSTPA, no more than three IAI increases can be collected in a 15-year period and the total cost of the improvements eligible for a rent increase calculation can’t exceed $15,000. Also, the rent change ratio has been reduced from 1/40th to 1/168th of the cost of improvements in a buildings with 35 units or fewer. In buildings with more than 35 units, the amount the rent can be increased for an IAI is limited to 1/180th of the cost of the improvement.
If the child agrees to your offer, you’ll save the time and money of trying to evict him in court.
Option #2: Offer buyout. You may want to offer the child an amount of money to move out of the apartment. Depending on many factors, such as what you intend to do with the apartment and the amount you offer, you could come out ahead by saving the legal fees of a prolonged eviction case.
In considering this option, you should be aware of the legislation passed by the City Council on May 8, 2019, to curb tenant harassment. The legislative package passed either refines rules from a similar anti-harassment package or introduces new programs with the same intent. Prohibited activities include:
- Reaching out to the tenant to make a buyout offer within six months after the tenant has informed the landlord in writing not to, unless revoked in writing or a court orders otherwise [NYC Admin. Code §27-2004(a)(48)(f-1)];
- Reaching out to the tenant to make a buyout offer without informing the tenant (at least every six months): (a) the reason for reaching out; (b) that the tenant can turn the landlord down harmlessly; (c) that the tenant can seek legal counsel and should go to a city-maintained website; (d) that it is the landlord reaching out; and (e) that the tenant has the rights outlined in (1) above [NYC Admin. Code §27-2004(a)(48)(f-2)];
- Making the buyout offer while: (a) threatening, intimidating, or using obscene language; (b) initiating communication at odd hours or in an (undefined) abusive or harassing manner; (c) initiating communication at the tenant’s job without prior written consent; or (d) lying [NYC Admin. Code §27-2004(a)(48)(f-3)]; and
- Repeatedly contacting the tenant on weekends, holidays, outside normal banking hours unless the tenant previously approved outside-work-hour contact in writing, or in an (undefined) abusive or harassing manner [NYC Admin. Code §27-2004(a)(48)(f-4)].
In addition, there are new rules regarding buyout offer disclosures to tenants. This law goes into effect on Oct. 15, 2019, except for the requirement for furnishing median asking rent data, which went into effect immediately. When communicating a buyout offer to a tenant, you’ll now have to disclose multiple additional items, including:
- The median asking rent for a dwelling unit in the same community district (to be furnished and published online by HPD by Sept. 1 of each year);
- That there’s no guarantee the tenant will be able to rent a dwelling unit in the same community district with the same number of bedrooms that the person is “currently lawfully entitled to occupancy of” for the same rent as the current lease; and
- That additional factors may impact the ability of the tenant to rent a dwelling unit including, but not limited to, his current employment and credit history.
There’s another recently passed law regarding notifying HPD of a buyout agreement. When someone enters into a buyout agreement, the owners must submit information about the agreement to HPD electronically within 90 days of execution. This includes the amount of money or consideration in the agreement, along with other details. Failure to submit this will result in a violation. With this information, HPD will create a report of buyouts for the mayor and council each year. This requirement goes into effect July 1, 2020.
Lastly, the City Council enacted a law that requires the owner to obtain for each dwelling unit, where available, the previous four years of rent amounts from the DHCR, and provide that information to the current tenant whom the owner is offering to buy out. This law goes into effect on Oct. 6, 2019.
Option #3: Seek child’s eviction in housing court. This may be your only choice if the child rejects options #1 and #2. What kind of case you would bring depends on whether the tenant has moved out or died.
If tenant has moved out. If you think the tenant has moved out of the apartment and is living somewhere else, your best bet is to start a nonprimary residence case against the tenant. In the court papers, you name the child as an occupant so you can also evict him if you win the case. But remember, before you can start this type of case, you must send the tenant a nonrenewal notice between 90 and 150 days before the end of the lease.
If tenant has died. If the tenant has died, the tenant’s estate has a right to possession of the apartment until the end of the lease. But once the lease ends, you can sue to evict a child with no pass-on rights, in what’s known as a “licensee” case.