Good Cause Eviction Bill That Would Impact Hotels Being Pushed Through New York Legislature

The New York Senate on Jan. 4, 2023, introduced the Good Cause Eviction Bill, S-305 (Bill), which effectively is written as a statewide rent control measure that impacts all housing not already subject to state rent control or rent stabilization laws. The Bill largely resembles legislation put forth more than two years ago that sought to limit the rights of building owners with regard to eviction of occupants. (See Holland & Knight's previous alert, "New York Legislation Would Prohibit Eviction Without Good Cause," March 3, 2021.) Certain members of the New York Senate and Assembly sponsored the Bill following a recent court decision upstate that determined that a local Good Cause Eviction Bill was improperly enacted because it requires a vote of the State Legislature.

The Bill would preclude the owners of unregulated apartments and hotel rooms that are used for more than 30 days from being able to evict a tenant, subtenant or someone without a lease or other occupancy agreement (broadly defined as a "Tenant") unless the Tenant's landlord can demonstrate good cause for the eviction. The Bill is still in review by the Senate Judiciary Committee.

No "Good Cause," No Eviction

The Bill provides that no landlord of a housing accommodation can evict a Tenant, subtenant or occupant of a housing accommodation, including a hotel room, without showing good cause – even if the occupant does not have a valid lease. The occupant cannot be evicted except with a court order and a showing of "good cause for removal." The Bill indicates that "good cause" includes failure to pay rent unless the tenant received a rent increase that was "unreasonable," which is presumed to be an annual increase of more than 3 percent or 1.5 times the increase in the Consumer Price Index, which for housing in New York City was 2.5 percent in 2019 and 1.2 percent in 2020. It should be noted that every Tenant must be offered a renewal rent at a "not unreasonable" rate (i.e., not more than a 3 percent increase). The landlord's failure to do so would allow an occupant to remain in the space without paying for it, and the fact that the lease expired or the occupant never had a lease is irrelevant.

"Good cause" also includes the occupant's refusal to allow the owner access to the space for the purpose of making "necessary" repairs or improvements. However, it would be up to a court to determine what would be considered a "necessary repair or improvement." As a result, a court would be asked to determine if a repair or improvement was necessary and, if the court did not think so, the occupant would not have to allow the owner into the apartment to make repairs or improvements. Moreover, the occupant could obtain an injunction stopping a nonpayment, objectionable tenancy or holdover proceeding for years while a judge determines if there was good cause for the eviction.

Rent Increases Capped

The Bill essentially caps rent increases in New York state at 3 percent per year regardless of the percentage increase in real estate taxes or other operating expenses and gives judges the power to decide if repairs and improvements are necessary in privately owned real estate. It also mandates renewal leases and limits landlords from being able to regain apartments they own. As a result, the Bill mandates that landlords cannot increase rents by more than 3 percent regardless of their increased operating costs. This legislation is premised on the belief that landlords can subsidize their neighbors indefinitely while slowly working through the courts to be able to operate their properties.

Building owners cannot evict a squatter without demonstrating to the satisfaction of a judge, then most likely an appellate court, that they have good cause in trying to reclaim the apartment in order to demolish it even after the lease requires that the Tenant vacate. In addition, an employee who is provided housing (e.g., a superintendent) cannot be evicted after being terminated until the owner proves that the employment was lawfully terminated. Moreover, the Housing Security and Tenant Protection Act of 2019 permits judges to allow tenants to remain in occupancy for a year after a default in the event of a hardship, while the owner has to continue making payments for real estate taxes, heat, insurance, repairs, etc.

Property owners who have questions about the Bill, including how they can be expected to continue paying expenses under the terms of the legislation, should contact their state senator or assembly member. For additional information and questions, contact the author.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.