Why You Should Obtain A C of O for Your Building

On Thursday June 6, 2012, the Court of Appeals of the State of New York (the State’s highest Court) decided that an IMD tenant who has not paid her rent since 2003 could not be compelled to pay and could not be evicted for nonpayment.  Chazon, LLC v. Margaret Maugenest.  The reason: the landlord was not in compliance with the code compliance timetable set forth in Multiple Dwelling Law Section 284 and the landlord’s application to the Loft Board for an extension of time had been denied.  As a result, Maugenest gets to keep $60,000 in unpaid rent and her landlord has lost its ability to collect it.

Are you in compliance with the code compliance timetable?  The current law provides that owners of buildings, covered by the 1982 Loft Law, are required to obtain a residential Certificate of Occupancy (“C of O”) on or before July 2, 2012.  If your tenants are currently paying their rent, without regard to the legalization status of the building, they may not continue to do so after hearing about the Maugenest decision, which received wide publicity. 

If you do not think you will meet the July 2, 2012 deadline, you should file an application with the Loft Board for an extension of time prior to the deadline.  If the Loft Board grants the application, your deadline will be extended until a date certain, and then your IMD tenants will be required to pay rent up to and including the extension date.

In the past, the Loft Law was set to expire on a date certain, and each time the law was extended, the legislature also moved back the code compliance deadlines.  However, all of that changed with the 2010 statute, which does not ever expire.  There is little reason to expect that the legislature will ever re-visit the Loft Law in order to give owners a break and extend the code compliance deadlines for buildings covered under the 1982 law.  Furthermore, owners who do not obtain a C of O may be hit with a Loft Board enforcement proceeding for penalties of $1,000.00 per day for failure to take all necessary and reasonable steps to obtain a C of O.