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Ryan Vienneau
  • Property Manager
  • Stillwater, NY
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Rent collection strategies under the new NY Tenant Protection Act

Ryan Vienneau
  • Property Manager
  • Stillwater, NY
Posted Sep 19 2019, 09:20

I'm an investor trying to formulate new policies around the new statewide NY Tenant Protection Act of 2019 that was passed in June.  After speaking with countless lawyers, property managers, and RE investors all over NY State in the last 3 months, almost no one seems to have come up with any good strategies, policies, or ideas for how to motivate late payers to pay remotely on-time under the laws, so I'm starting this discussion to share some ideas, best practices, policies, etc., and maybe brainstorm as a NYS community as to what's working and not working for upstate, central and western NY.  I'll exclude the city from this discussion because they have a whole slew of other issues even worse than what us upstate-ers have to deal with.  

For those not aware, here's the issue.  As of June, NYS has imposed the following new "Tenant Protection" laws into effect that make it almost impossible to encourage on-time rent payment (there are way more clauses than this in the law, but these are the ones that affect this conversation):

1.  Late fees are limited to the lesser of $50 or 5% of rent, and can't be imposed until 5 days past due.  

2.  Evictions now take 45-60 days based on new timing requirements, such as the service of 14-day notice and delivery of 5-day certified letter of late rent.

3.  If a tenant pays only base rent (NOT late fees) in full at ANY time during the eviction process prior to being removed from the unit, then the eviction is voided and thrown out.  

4.  Landlords CANNOT charge back legal fees to tenant associated with eviction.  

5.  Deposits are limited to 1 month's rent, and can't charge for last month's rent.  

So, here's the challenge.  Suppose a tenant habitually pays late, but not 45-60 days late.  And suppose It's now the 15th of the month, and they still haven't paid, so you sent your certified letter of late rent back on the 5th as required.  As a Landlord, we now have 2 options: 1) Do nothing, hoping they eventually pay, which costs us nothing immediately but is risky, or 2) Incur the cost of serving them with a 14-day notice (maybe $150 or so) that we cannot recoup from the tenant if they eventually pay base rent before being evicted.  

The issue that compounds this is that, for the renter that ALWAYS pays weeks late, option #2 can happen every month, forever, and the tenant would incur no costs, could refuse to pay late fees, but never be evicted, and the Landlord would eat the $150/mo for serving process in perpetuity.  And further, once a tenant is 5 days late and the late fee has hit, there's zero additional incentive for a tenant to pay prior to the day of eviction because nothing can be charged to the tenant beyond that initial $50.

What I'm hoping to glean from this discussion is what policies other PM's and investors are using to deal with this.  Please avoid the discussion getting political, its safe to say all of us on here think the laws are total BS and there are other discussions elsewhere on BP for that, but let's keep this discussion to how we deal with the reality of it.  This is statewide, so looking to hear from investors in Albany, Schenectady, Troy, Saratoga Springs, Rochester, Syracuse, Buffalo, Utica, Poughkeepsie, and everywhere in between.  Also would love for any NY lawyers on here to weigh in.

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