New York residential landlords, beware. As of November 29, 2017, the Real Property Law section 235-bb came into effect. The statute requires that a valid certificate of occupancy be in place before entering into a residential lease agreement with a tenant for real property of three or fewer units. More specifically, the law provides:

  • Prior to executing a residential lease or rental agreement with a tenant, the owner of real property consisting of three or fewer rental units shall provide conspicuous notice in bold face type as to whether a certificate of occupancy, if such certificate is required by law, is currently valid for the dwelling unit subject to the lease or rental agreement. Owners who provide the tenant with an actual copy of the valid certificate of occupancy shall be deemed to have complied with the requirements of this subdivision.

If the residential unit being rented does not have a valid and current certificate of occupancy, the landlord will be unable to recover any unpaid rent in court or evict a tenant based upon the tenant’s failure to pay rent. Additionally, any lease that, by its terms, waives the tenant’s rights under Section 235-bb is void as contrary to public policy.

As noted in Senate Bill No. 6636, which introduced the proposed law, the purpose of the statute is to address illegally converted apartments that are unsafe and not up to building code standards. Lawmakers reasoned that some tenants might wrongly assume that housing accommodations were safe to live in by virtue of the fact that they were being offered for rent.  Lawmakers concluded that the illegal conversions presented not only the obvious safety concerns, but also caused neighborhoods and schools to become overcrowded. Municipal planners assumed that a single-family house had just one family in residence, not two or more. Single family dwellings with converted basement apartments and detached cottages/garages being rented by landlords for additional profit could be a burden on public schools, roads, and other amenities in the community.

Two of the East End towns on Long Island have already addressed the problem of illegal apartments by enacting rental permit and rental registry laws.  In 2008 Southampton Town passed Section 270-3 which provided that there could be no rental of real property without a rental permit. Part of the permit application to Southampton Town requires having a valid certificate of occupancy in place. In 2015, the Town of East Hampton enacted Section 199-1-2 in their Town Code, which is a rental registry law. That law also requires a valid certificate of occupancy for rental properties.

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