Rent

Thanks to the Loft Law, renters can sometimes get out of paying rent—for years

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The idea of having a Chelsea loft and not paying rent for six years may seem like the stuff of New York City real estate dreams, but for one couple, it's reality—and it's likely perfectly legal.

The New York Post reports on a husband and wife who haven't paid their $4,754.02 rent since 2010. The reason, they say, is because the landlord of the nine-story building, which is mostly commercial, does not have a residential certificate of occupancy for their apartment. And if that's true, say our experts, they're perfectly right and unlikely to have to pay any back rent, either.

Chalk it up to the "loft law," which is part of the Multiple Dwelling Law, and was passed in 1982, when lots of formerly commercial lofts in places like SoHo were being turned over to residential units. It was signed to protect tenants by bringing everything up to safety and fire codes, as well as to give rights and rent protection to tenants of these formerly commercial lofts. According to the law, says attorney Steve Wagner of Wagner Berkow (a Brick Underground sponsor), if the Certicate of Occupancy, a legal document that outlines a strucure's permitted use, is not in place, the landlord cannot collect rent. And that is exactly what the couple from the Post story are claiming is true.

While the landlord claims they owe $410,000 in rent and electrical charges, they may not have to pay a thing. Wagner says cases like this aren't uncommon, and he expects the tenants will come out victorious.

After all, "the loft law was created as a disincentive for commercial landlords to put residential tenants into buildings," says Jeff Reich, an attorney with Schwartz Sladkus Reich Greenberg Atlas LLP.

Now, even if the landlords were to go through the process of getting a residential C of O and can charge rent going forward, they can't charge any back rent. And the apartment would also become rent stabilized, too, says Wagner.

Wagner is currently working with a loft renter whose landlord is trying to buy them out. "Originally the landlord was trying to sweeten the buyout deal by saying he'd forgive the renter the over-$100,000 rent that was owed, plus $350,000. I fought it, and told them that our tenant didn't owe him anything. Plus, he ended up getting a lot more than $350,000," he says.

 

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