1. The lease expressly provides that:
• the dwelling unit is registered as a seasonal use dwelling unit, indicating the local or county government agency with which it is registered;
• the occupancy is only for seasonal use and does not exceed 120 days or a shorter period provided by the lease; and
• the tenant has a primary residence to return to and such address must be expressly stated on the lease.
2. The dwelling unit is registered with the appropriate local government, county, or state registry as a seasonal use dwelling; and
3. The dwelling unit is not rented as a seasonal use dwelling unit for more than 120 days during each calendar year.

On June 10, 2021, the New York State Legislature passed Assembly Bill A350 / Senate Bill S5105C (“Bill”) which set forth exemptions for cooperative housing corporations (co-ops) in relation to their tenants who are unit owners, purchasers, or shareholders. Once signed by the Governor, the Bill takes effect immediately.

While unit owners, purchasers, or shareholders of co-op units are generally considered “tenants” under their respective proprietary leases or occupancy agreements, if the bill becomes law, co-ops will be exempted from the usual landlord-tenant requirements and prohibitions set forth below:

• Security Deposit or Advance (GOL §7-108): A co-op will be allowed to collect more than one month’s rent for a deposit or advance from tenants who are unit owners, purchasers, or shareholders of owner-occupied units;
• Notice of Non-Renewal or Notice of Rent Increase (RPL §226-c): A co-op is no longer required to provide the RPL §226-c Notice of Non-Renewal or Notice of Rent Increase to tenants who are unit owners or shareholders of the co-op;
• Application Fees (RPL §238-a): A co-op may demand any payment, fee, or charge necessary to compensate a managing agent and/or transfer agent for processing, reviewing, or accepting a tenant’s application where such tenant would become prospective unit owner or shareholder;
• Credit and Background Check Fees (RPL §238-a): A co-op may charge more than $20, but such fees should not exceed the actual cost;
• Monthly Maintenance Fees for Late Payments (RPL §238-a): A co-op may charge up to 8% of the monthly maintenance fee for the late payment of such fee if provided for in the proprietary lease or occupancy agreement;
• “Rent” in a Summary Proceeding (RPL §702): A co-op may demand more than the rent in a summary proceeding against a unit owner or shareholder provided that the proprietary lease or occupancy agreement allows for the recovery of other fees, charges, penalties or assessments in a summary proceeding;
•  5-Day Notice of Non-Payment (RPL §235-e(d)): A co-op may provide another method of sending notice by mail other than certified mail as long as it is set forth in the proprietary lease or occupancy agreement; and
• Attorneys’ Fees upon a Default Judgment (RPL §234(2)): A co-op may be awarded attorney’s fees in the event of default judgment against a unit owner or shareholder if the recovery of such fees are set forth in the proprietary lease or occupancy agreement.

Essentially, the Bill aims to correct the unintended effects of the Housing Stability and Tenant Protection Act of 2019 towards unit owners or shareholders of co-ops who are “tenants” only because of their proprietary leases or occupancy agreements.

Do you agree with the Legislature’s corrections? Is it too little, too late?

For pending litigation, it sure seems that this new law affirms that co-ops that previously breached the Housing Stability & Tenant Protection Act as applicable to tenants, are liable, no?

Can a landlord's agent charge a tenant its commission?

That issue is going to be decided by the New York County Supreme Court in the case of McLendon v. Kelley after the court refused to dismiss the case, but the case should already be dismissed under the Court's own reasoning.

The law that the tenant is relying on in this case to block the fee charge is called The Housing Stability and Tenant Protection Act (HSTPA) and specifically, Real Property Law 238-a(1)(a), which states as follows:

Except in instances where statutes or regulations provide for a payment, fee or charge, no landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks as provided by paragraph (b) of this subdivision, provided that this subdivision shall not apply to entrance fees charged by continuing care retirement communities licensed pursuant to article forty-six or forty-six-A of the public health law, assisted living providers licensed pursuant to article forty-six-B of the public health law, adult care facilities licensed pursuant to article seven of the social services law, senior residential communities that have submitted an offering plan to the attorney general, or not-for-profit independent retirement communities that offer personal emergency response, housekeeping, transportation and meals to their residents.

In refusing to dismiss the case on this law, the Court focused on the Department of State's Guidance on the topic wherein the Department had opined "that a broker for the landlord could not collect a broker fee from a perspective tenant pursuant to the above provision." However, the Court's reasoning is in error and the broker should bring a motion to reargue / renew this application for dismissal.

Operatively, the Department of State's Guidance was withdrawn on February 10, 2020 and therefore it holds no weight in this case. To substantiate this withdrawal of Guidance, see the notation at question 5. on page 4 of this hyperlink.

More importantly, in Real Estate Bd. of New York v. New York State Department of State, the Judge issued a full injunction preventing the statute from being utilized against brokers until the Court issues a decision on REBNY's Order to Show Cause, which has not yet occurred. 

This case should therefore be dismissed.

5. CAN A LANDLORD’S AGENT COLLECT A “BROKER FEE” FROM THE PROSPECTIVE TENANT? No, a landlord’s agent cannot be compensated by the prospective tenant for bringing about the meeting of the minds. NY RPL § 238-a(1)(a) provides, in part, “no landlord, lessor, sub-lessor or grantor may demand any payment, fee, or charge for the processing, review or acceptance of an application, or demand any other payment, fee or charge before or at the beginning of the tenancy, except background checks and credit checks….” The fee to bring about the meeting of the minds would be a “payment, fee or charge before or at the beginning of the tenancy” other than a background or credit check as provided in this section. Accordingly, a landlord’s agent that collects a fee for bringing about the meeting of the minds between the landlord and tenant (i.e., the broker fee) from the tenant can be subject to discipline. 

It is well settled that “[a]n agency's interpretation of its own regulation ‘is entitled to deference if that interpretation is not irrational or unreasonable’” &

“the question is one of pure statutory reading and analysis, dependent only on accurate apprehension of legislative intent, there is little basis to rely on any special competence or expertise of the  administrative agency and its interpretive regulations... And, of course, if the regulation runs counter to the clear wording of a statutory provision, it should not be accorded any weight.”