OK, so far I’ve written about what the law actually says and how annoyed I am with the hyperbolic reactions to it, but today I want to dig into the things I think they did WRONG in this bill. Because while I am staunchly pro-tenant when it comes to slumlords who take advantage, there are elements of this law that will unfairly burden responsible landlords.
And I’m going to quickly say that this is what happens when people try to legislate things they are not experts in, but the real estate industry bears responsibility, too. If they and their lobbyists would be honest and reasonable, ACTUALLY trying to work towards something fair, then their guidance could have shaped this reform. Instead they pushed for basically no reform at all, and this is what they got: an extremely pro-tenant bill that doesn’t expire and was written by people who do not understand how real estate works.
Let’s start with the application process. There used to be something called a “tenant blacklist,” which was a list of potentially problematic tenants (like yours truly). These lists were made by 3rd party agencies and purchased by major landlords as a way to quickly screen potential tenants. Anyone who had been in housing court or a general pain in the ass could be placed on this list and find it impossible to be approved for another apartment. I agree with them getting rid of these lists, because the criteria is arbitrary and showing up in housing court isn’t always due to a tenant being a bad tenant; it is often because the landlord is a bad landlord (ugh, I’m going to need to do a video to dig into this because there’s so much behind that statement). But the new law seems to extend past this. The way it’s written, you can no longer run background checks on potential tenants. Or, more specifically, you CAN but the results cannot affect your decision to rent the apartment to someone. This is good in the sense it can keep one landlord taking you to court (again, potentially not because you were a bad tenant) from ruining your ability to ever rent again, but it’s bad because you can’t check for patterns of behavior that are and should remain red flags. If someone has a long history of potentially fraudulent lawsuits, or assault, a landlord should be able to use that information. I will also say, however, that landlords can and will continue to do this, I’m sure. I’ve seen landlords reject someone because of race and find a an excuse to cover it.
Along with this limitation on what info you can use to make tenant application decisions, there is a $20 cap on application fees/credit check fees, and the landlord needs to show that this money was used for a credit check. Although brokerages and condo/co-ops seem to be exempt from this cap (lots to figure out, still). Again, I see where this need for a cap originated. Plenty of landlords would require $150-$200 “application fees” just to run a quick credit check. There was no transparency and they could do whatever they wanted. When my roommate and I applied for our place many moons ago, we had to pay $800 just for “credit checks,” since there were two of us and two guarantors. I know that money did not go towards A For most landlords my team uses On-Site, which runs both credit and background and costs $80. So it’s only when you combine the “maximum of $20” with “you can’t run background checks” that this is even feasible or makes any sense, but I’m still not sure I’m for it, and again, it only seems to apply in certain cases. It benefits me directly, but I still don’t love the idea that you can’t check for active litigation against someone when deciding whether to rent them an apartment.
Now let’s look at the lease signing and actually getting/living in the apartment. There is a lot of talk about the new security deposit limits. Previously, a landlord could ask for extra months of security up front if the tenants had a shakier credit history or if they were international or a student. But now there is a hard limit of one month’s rent. I can kind of get behind this, because it’s pretty ridiculous how many landlords just across the board ask for two months’ security and tack on other random fees and also want first and last…but I’ve also BEEN someone who asked for two months security because a prospective tenant only had one year of US credit history and multiple non-US passports. It’s also totally unclear how this will affect things like pet deposits, which, for now, are still being accepted within reason (i.e. in a furnished rental). In non-regulated or “free market” apartments, landlords are potentially able to just take extra rent up front—but NOT first and last, as that’s essentially an additional month security—and this has a limited impact. In rent stabilized units it means they can’t take more than one month of security and one month of rent. If the amount of up-front rent is only limited in regulated apartments I’m not particularly angry about this part of the bill. Landlords can simply be extra particular about who they put in a rent stabilized apartment. They SHOULD be doing that anyway, because someone in a rent stabilized apartment is guaranteed an annual lease renewal, so you don’t want to risk it for someone with bad credit or other red flags. It will probably just make it harder for agents, but I love a challenge.
Speaking of stabilization, I also don’t know if I agree that regulated apartments should never, ever be able to be deregulated. But I don’t know exactly how I would want the process to look, because the old way incentivized landlords to do predatory things. I’ll circle back once I’ve SOLVED THE HOUSING CRISIS SINGLE-HANDEDLY!
There’s another part of the security deposit that’s making waves: a landlord now has only 14 days after a lease ends/tenant moves out to return the security deposit. If they are deducting any portion of it for repairs and/or cleaning, they need to provide the tenant with an itemized list of what is being charged and why. Again, I understand where this is coming from and agree with it overall. Landlords now have no time limit to return a security deposit and no oversight when they keep portions of it. They have never had to justify just refusing to return someone’s deposit, and the onus was on the tenant to figure out how to get it back. There are landlords who gleefully admit they never, ever return security deposits, regardless of the condition of the apartment. That is thousands and thousands of dollars that people never get back, kept without justification. However, 14 days is not long enough. I think it should be a month. It’s going to be very difficult for landlords to get this done within two weeks, and it unfairly hurts smaller landlords who don’t have large staffs of people to handle these things.
There’s one last thing in the bill that I don’t have a firm grasp on yet, but it could potentially be another point I can’t get behind. It has to do with apartments that have been purchased as sponsor units within co-ops reverting back to their rent stabilized . Did that sentence confuse you? It should, and that’s why I’m not digging into it here. But just know there MAY be something else I don’t like that would have far-reaching consequences. I’ll let you know once I figure it out because I’m sure you are DYING to get all the details!