The Housing Stability and Protection Act of 2019 changed the real estate industry significantly, and building owners are still trying to wrap their heads around all the changes. One significant change, which is often overlooked, are the changes to the “rent deposit law” or RPAPL Section 745(2).
Adjournments in litigation are fairly common, including in housing court, despite eviction proceedings being described as summary proceedings. Often, this leaves building owners frustrated, as they might not be able to collect the rent until an outcome is reached. Before June 2019, building owners were able to apply for a rent deposit order to compel a tenant to pay the rent pending an outcome of the litigation. That application would have been made on the second adjournment request by a tenant or after the 30th day after the case first appeared in court. In some instances, if the tenant did not pay the ordered amount, the building owner might be able to acquire a judgment without having to proceed to trial. However, effective as of June 14, 2019, even though the rent deposit law still exists on paper, it has been rendered useless by amended changes.
First, the order, which used to be mandatory for the court, became discretionary. The statute amended the word “shall” in RPAPL 745 (2)(A) to, “may upon consideration of the equities.” Second, an order requires a motion now, instead of being able to be made on an application without a motion. That may not mean anything to non-litigators, but given that the adjournment application isn’t usually known until the scheduled hearing date, it makes moving for that relief on the day of the adjournment application impossible, effectively delaying the proceeding and undercutting the purpose of the Rent Deposit Order, which is intended to prevent delays.
The defenses to a rent deposit law were also expanded from four limited defenses to seven more common defenses. Tenants can now claim a rent overcharge or the existence of a hazardous or immediately hazardous Housing Maintenance Code Violation to prevent a Rent Deposit Order.
Most importantly, the landlord lost the ability to acquire a judgment at all in the event of default by the tenant. Now, the law only permits the request for an immediate hearing.
Even though the Rent Deposit Law has lost all its teeth, stipulations requiring ongoing rent and/or use and occupancy to be paid pending an outcome are still fairly common and effective in preserving the status quo of a case.
Jordi Fernandez Law, P.C.
420 Lexington Avenue, Suite 2920
New York, NY 10170