Ask Sam: Why aren't more empty storefronts in NYC being converted to residential apartments?

The short answer is that they can be converted, but it is an onerous process which many landlords do not follow correctly, says Sam Himmelstein, an attorney at Himmelstein, McConnell, Gribben & Joseph who represents residential and commercial tenants and tenant associations.

“We’ve seen a lot of cases lately of commercial spaces being occupied residentially, without the landlord changing the building’s certificate of occupancy,” Himmelstein says.

The certificate of occupancy (CO) identifies how a building can be used and must be updated if a commercial space is converted for residential use.

“Apartments have certain requirements that commercial spaces don’t, especially with regard to light, air, windows, and the minimum size of rooms,” Himmelstein says. “When you convert from commercial to residential, you have to comply with these and change the CO. If you don’t, the apartment is not legal.”

This typically involves quite a bit of renovation work, along with getting the proper documentation from the Department of Buildings, a process that some landlords neglect to follow.

One common scenario occurs in buildings with residential units and a ground floor commercial space. If that ground floor space is rented out as a residential apartment, not only do landlords have to change the CO, but they also have to meet additional requirements under the Multiple Dwelling Law, which applies to buildings with three or more apartments.

“If you make the commercial space a third residential apartment, you’ve changed it to a de facto multiple dwelling and have to register it as such,” Himmelstein says. “We’ve seen a lot of situations in which a landlord claimed a building was two-family, but there were tenants living in a third space that was purported to be commercial.”

Landlords who do this cannot legally collect rent from those tenants or maintain a court case against them for non-payment of rent. However, if the tenants do pay, they cannot recover those payments.

Another issue arises when a building has five residential and one commercial unit. If the commercial unit is converted to residential use, the building has six residential apartments and then becomes subject to rent stabilization. Landlords who do this without updating the CO are violating the law, and legally cannot collect rent.

“We have this very issue in a case now. A landlord converted a ground-floor store to an apartment, put in bedrooms and bathrooms, and rented it to a residential tenant,” Himmelstein says. “We caught him, and the tenants are now asserting claims in court that they are rent stabilized.”

These tenants could recover rent overcharges, get their rent lowered, and have be protected from eviction as rent-stabilized tenants if they prevail in court.

Landlords renting commercial space for residential use is nothing new—in fact, this was such a common practice that it spurred the creation of the Loft Law, which passed in 1982, to allow residentially occupied commercial spaces to become legal, rent-stabilized apartments.

If you suspect a commercial space is being used residentially, or that your building’s CO is not accurate, you can look up the property in the Buildings Information System. Until the CO is accurate and your landlord is complying with the requirements for residential apartments, they cannot collect rent.

Related: 

Ask Sam: How do I find out if my apartment should be rent-stabilized--and the landlord owes me money? (sponsored)

Ask Sam: How do I find out if my apartment is covered by NYC's Loft Law? (sponsored) 

Ask Sam: Is a landlord allowed to 'warehouse' vacant apartments? (sponsored)

Read all our Ask a Renters Rights Lawyer columns here.

Sam Himmelstein, Esq. represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben & Joseph in Manhattan. To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.