Tuesday June 25, 2024
The Good Cause Eviction Law was passed as a part of New York State’s 2024 annual budget. The contentious legislation aims to bolster tenant protections by restricting rent increases, limiting evictions, and mandating certain lease renewals within New York City. The law has also raised concerns due to its significant constraints on landlords and its potential to increase costs for tenants.*We recommend all landlords and building owners consult with their general counsel on compliance with new legislation.
What is the Good Cause Eviction Law?
The Good Cause Eviction Law is designed to increase tenant protections as costs skyrocket.As of April 20, 2024, annual rent increases of more than 10% – or 5% plus annual inflation, whichever is less – are automatically considered “unreasonable” by New York State. In 2024, the maximum allowable increase is estimated to be around 8.82%. If a landlord raises the rent above this limit, they won’t be able to evict tenants for nonpayment unless they can justify the increase through costly a court process.
"The statute doesn't say that owners cannot try to get more than 8.82%. It just puts the burden on owners to prove that it's reasonable, as opposed to the tenant proving it's unreasonable."
— Todd Rose, Founding Partner | Rose & Rose Law
Housing costs were a major motivation behind passage of the Good Cause Eviction law. According to StreetEasy, New York City’s average rent costs grew more than seven times faster than average wage increases in 2023, which represents the largest gap in the country. Research from the Community Service Society of New York found that 34% of New Yorkers are “severely rent-burdened,” meaning they spend at least half of their income on housing.
What counts as a “good cause” for eviction?
The law establishes a strict set of criteria for courts to qualify an eviction as “good cause”:
- Failing to pay “reasonable” rent
- Illegal activity within the apartment
- Causing or permitting a nuisance
- Violating a “substantial obligation” of tenancy
This obligation must have been accepted by the tenant in writing (i.e. in a lease) and requires the landlord to have provided the tenant with a “notice to cure,” informing them of their violation, then allowing them 10 days to resolve the issue.
- Failing to provide reasonable access to the apartment for repairs or showings
- Failing to sign a lease renewal with “reasonable” changes
- Illegal occupancy, assuming the owner bears no responsibility for creating these conditions and can secure a vacate order
- If the unit is taken off the market or demolished
- If the owner is recovering the unit for personal use. Seniors and disabled tenants are exempt from eviction under this provision
Which buildings are exempt from the Good Cause Eviction Law? Are condos and co-ops exempt?
Yes, condos and co-ops are exempt from the Good Cause Eviction Law, as well as rental units within these properties."The language in the statute appears to be pretty clear that an apartment located within a condominium is exempt from Good Cause Eviction. We are somewhat skeptical that’s what the legislature intended, but as of now, the language says what it says, and there’s good grounds for treating those apartments as not subject to the statute."
— Paul Coppe, Partner | Rose & Rose Law
Additional exemptions include:
- Units with leases fully signed prior to April 20, 2024, even if the lease didn’t begin until after that date
- Units rented for more than 245% of the Fair Market Rate (FMR)
New York State has released a county-by-county FMR guide which will be updated annually
- Multifamily rental buildings completed in 2009 or later are exempt for 30 years after their completion date
- Units in multifamily rental buildings owned by a “small landlord,” meaning one who owns 10 or fewer units in New York State
- Units in multifamily rental buildings owned by a corporation, so long as each owner of the corporation has 10 or fewer units in their New York State portfolio
- Owner-occupied buildings with 10 units or less
- Units marked as affordable housing
- Rent-stabilized and rent-controlled units
- Sublets, dormitories, hotel rooms, hospital units, and rooms within religious institutions
Landlords need to provide tenants a Good Cause Eviction notice.
Starting on August 18, 2024, landlords will be required to include a Good Cause Eviction Law Notice in all leases, lease renewals, and predicate notices. This notice must:- Inform tenants that their unit is covered by Good Cause, or explain why it is exempt
- Provide justification for rent increases if the unit is covered by Good Cause
- Provide justification for non-renewal if the unit is covered by Good Cause
How does the Good Cause Eviction Law impact “net-effective” rent?
Some landlords and owners provide a free month of rent as a promotion to prospective tenants to lower the advertised cost of a 12-month lease. The lower “net-effective” rent figure is calculated by dividing the gross rent cost by the number of months the tenant will occupy the unit. This may be used against the landlord or owner in the case of a dispute with a tenant who measures their rent increase starting from the “net-effective” cost rather than the gross cost."It’s already come up and been regulated in the rent stabilization context. Unfortunately, the case law is all over the place and has gone both ways in different cases."
How might Good Cause impact landlords and multifamily rental building owners?
Raising operating costsAnnual rent increases of more than 10% – or 5% plus annual inflation, whichever is less – are automatically considered “unreasonable” by New York State. However, this limit might be less restrictive for the average landlord than it sounds. From 2007 to 2022, NYC’s average annual increase in median rent cost was only 3.87%.
Placing a cap on increases may incentivize owners to raise rent up to that limit each year in case of additional restrictions in the future.
Slowing eviction proceedings
In 2023, about 133,000 eviction suits were filed in NYC, mostly due to unpaid rent. Eviction suits take an average of 133 days to settle when the tenant has legal representation. These courts are now tasked with resolving a much broader range of landlord-tenant disputes, which means further strain on an already overburdened system.
Intensifying tenant screening
Restricting a landlord’s ability to enforce evictions for nonpayment may cause intensified screening of prospective tenants, and fewer opportunities for lower-income applicants.
Complicating renovation and improvement projects
Landlords often decline to renew a tenant’s lease when they hope to complete a renovation project within that unit. Now, landlords must first obtain a court order showing good cause.
"Evictions and housing instability cause enormous harm to renter households. Proposals that require landlords to prove good cause for evicting a tenant or refusing to renew a lease are well-intentioned efforts to limit those harms. But they also simultaneously pose risks by discouraging investment in housing, raising costs for all tenants, and making it even harder for tenants to find a suitable home." [Originally published in The City]
— Vicki Been, Faculty Director | NYU Furman Center