Sunday, June 12, 2016

Recent NYC Landlords' Seminar Promotes "Demolition Evictions" Approach As Legitimate Way To Boot Nearly-Impossible To Evict, Rent Regulated Tenants In Gentrifying Neighborhoods

In New York City, The Real Deal (NYC) reports:
  • [At a recent presentation to a local landlords' group, well-known New York City landlord attorney Michelle Maratto Itkowitz] quickly got down to the business of eviction, telling landlords the best way to get tenants out of their buildings is to show the state they plan to knock ’em down in the first place.

    “Things have changed in three years,” Itkowitz said. “Tenants understand implicitly, even if they live under a rock, that there is value for owners, developers and managers in recovering rent-stabilized apartments. It’s not a secret anymore.”

    Shooing out existing tenants from stabilized and market-rate properties alike has become more difficult with a more organized tenant movement, increased media attention — think the Stuyvesant Town debacle — and stricter regulation on both the city and state levels. Tenants are now too savvy to succumb to the old tricks of the trade and housing codes have been revised, Itkowitz said. As such, she had three main points for landlords who have still not figured out how to go about “de-tenanting” in the “next generation.”

    “No harassment. No frivolous litigation. No supers,” she said, giving examples of how not to operate in a market with heightened tenant protections.
    “Now let’s talk about about something that actually moves tenants out of the way if you have to get to that point,” said Itkowitz, transitioning from don’ts to dos. “Demolition eviction, page 23,” she prompted, referencing a pamphlet that accompanied her speech.(1)

    A line in the rent-stabilization law allows landlords to deny tenants’ renewals on leases at stabilized apartments if the landlord can show the state they have approved new building plans, the money to complete them, and agree to pay tenants relocation expenses and a stipend.

    Currently, many landlords try to evict tenants and clear a building before really getting the ball rolling with demolition and development plans, she said. But if landlords would just bite the bullet and get all of that filed up-front, they’d have an easier time getting tenants out.

    That got the audience talking.

    So can you do demolition eviction and then evict the tenants and then not demolish the building?” asked one man in attendance.

    There’s nothing in there I can see that penalizes you for not demolishing the building,” Itkowitz replied. This bait-and-switch technique is probably fair game, excepting that a “nasty person with a grudge” tried to take you to court over it after the fact, she said.

    More questions followed: Does the phantom demolition technique work for gut renovation? (No.) Does it work for rent-controlled buildings? (Sometimes, but it’s hard to do.) Does the unit count have to be the same in the new project after demolition? (Only if rent control is involved.) Does it work with SROs? (You bet.) Can you start the demolition eviction while you’re not legally allowed to be contacting tenants about buyouts? (Yeah, I don’t see why not.) Does starting this process preclude you from also suing your tenants or buying them out? (No, that’s fine.)

    I like demolition eviction and I’d just like to see people do more of it” instead of frivolous and sneaky tactics that lead nowhere, Itkowitz concluded.

    “I don’t understand why more landlords aren’t doing it,” she said.

    Other bits of advice for owners looking to part with tenants included coming up with a de-tenanting strategy before closing on a building, and making sure new buyers have all the outstanding lease contracts in hand ahead of time. “Someone needs to be looking at them and methodically planning,” she said.

    Itkowitz also noted that many landlords get themselves into trouble by trying to be sneaky. “Own your agenda, people,” she told the audience — “none of this hidden stuff.” Owners should also try in advance to identify the likely holdovers looking to lawyer-up and deal with them directly and honestly.

    “I can’t help you with lies,” she said, “but there’s enough tools in the truth.
For the story, see An insider’s guide to evicting rent-stabilized tenants ("Demolition eviction, page 23," RE attorney Michelle Maratto Itkowitz advises landlords).

See also, Gothamist: Real Estate Vampires Plot How To "De-Tenant" Rent-Stabilized Brooklyn.
(1) For a handbook describing this process, see Demolition Evictions: A Real Possibility. See also, Tenant Buyouts for the Next Generation and Demolition Eviction.

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