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Buying Property with Existing Tenants

On February 21, 2013, in Landlord-Tenant, by Robbie L. Vaughn, Esq.

Purchasing Occupied vs. Purchasing Vacant

Should I buy a house that already has tenants?

Maybe.

We have represented many Landlords who have purchased homes with existing tenants. In our experience, this has not always gone well for the new Landlord. Many of the new Landlords have ended up starting an eviction action against the existing tenants shortly after the closing.

However, many of our clients are real estate investors and have factored into the purchase price the cost associated with an eviction. In fact, many have weighed these factors well in advance of buying the property and actually end up getting a “better” deal because of the existing tenants. They normally won’t buy the property with existing tenants unless they are getting a very good deal.

Personally, I like to find my own tenants. However, as stated, there can be advantages to buying a property with existing tenants (e.g. instant rental income, lower purchase price, instant occupancy for security purposes).

Therefore, you need to carefully consider many different factors before you decide to purchase a home with existing tenants.

Nassau County Landlord Tenant Attorneys

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Section 8 Tenant Evictions

On July 11, 2012, in Landlord-Tenant, by John A. Weber IV, ESQ.

Section 8 Tenant Evictions

SECTION 8 TENANT EVICTIONS

In order to evict Section 8 tenants, landlords must follow special procedures that apply uniquely to Section 8 tenancies. The process is more complicated and difficult than typical evictions, but landlords with good reasons for evicting tenants should not be discouraged.
Section 8 is a government program that subsidizes a portion of certain tenants’ rent. The program is administered by NYCHA, the New York City Housing Authority. People may qualify for Section 8 vouchers for a number of reasons. People with mental illnesses or physical disabilities, for example, may be eligible for Section 8 vouchers. Some Section 8 vouchers may be transferred, by the tenant, from residence to residence, while other vouchers remain with the rental unit. In either case, a portion of the rent will be paid by the government directly to the landlord. The tenant is only responsible for the portion of the rent that is not covered by the voucher. If the landlord seeks any part of the subsidy portion in the eviction action, then NYCHA must be joined as a party to the case.

In any Section 8 eviction, NYCHA as well as the tenant must be notified of the grounds for eviction before the landlord begins the case. Once NYCHA and the tenant are notified, the process the landlord will have to follow will depend on the grounds for eviction. If the tenant is being evicted for nonpayment of rent or holdover based on termination of a Section 8 voucher, then the landlord must send a certification stating the grounds for eviction to NYCHA and the tenant. (A “holdover” is when a landlord evicts a tenant that remains in a rental unit after the lease has expired, or because the tenant remains in the unit after violating lease terms. If the lease agreement is contingent upon the Section 8 voucher, then termination of the Section 8 voucher would give the landlord grounds for eviction. This would be a holdover based on termination of a Section 8 voucher.) The landlord can then request a certificate of non-objection from NYCHA. Section 8 tenants can only be evicted for “good cause” – such as creating an ongoing nuisance or violating the law, among other things. NYCHA must be assured that the tenant is being evicted for good cause. If NYCHA issues a certificate of non-objection, then the certification of grounds may be substituted for the allegations in the landlord’s petition. If NYCHA does not respond in a timely manner, the landlord can begin the case, but should include an allegation stating that NYCHA has not responded in the petition. NYCHA may object to the grounds for eviction in the certification. In this event, the case may still proceed, but NYCHA must be joined as a party to the case. After this, the case can proceed as a typical eviction action.

Each of these procedural requirements must occur within specified timelines, and there may always be special circumstances demanding other procedural actions. Section 8 evictions can be one of the more difficult areas of housing law. But if the grounds are there, eviction is an option.

Landlord Tenant Attorneys

If you have any questions about this, or other legal issues, please call the Law Firm of Vaughn, Weber & Prakope, PLLC at 516-858-2620 to schedule a free consultation.

Does landlord have a duty to mitigate damages if tenant breaches lease?

If you are a landlord in New York, you may – or may not – be responsible for mitigating damages that result from a breach of the lease.

Generally, a non-breaching party to a contract has a duty to mitigate damages resulting from another party’s breach of contract. For example, imagine that a construction company enters into a contract to buy building materials from a manufacturer. If the manufacturer breaches the contract by failing to provide the building materials, the construction company will not be able to complete the building, and may not be paid for the project. Under traditional contract rules, the construction company has a duty to attempt to acquire the materials from another manufacturer. The construction company may not sue the manufacturer for all of the money it lost as a consequence of failing to complete the project unless it at least made an effort to replace the materials, by, for example, buying the materials from another manufacturer. Even if successful in replacing the materials, the construction company may sue the manufacturer for any additional costs it took on in search of those replacement materials.

Landlord tenant law sometimes imposes a similar duty upon a landlord in the event that a tenant breaches a lease by, for instance, moving out before the end of the lease term. Many jurisdictions would require a landlord in this position to at least attempt to rent the property to another tenant. If successful, the landlord will have avoided some of the financial losses that would have occurred had the property remained vacant until the end of the lease term. However, in other jurisdictions, no such duty is imposed upon landlords. In those cases, if a tenant breaches a lease by moving out, a landlord may wait until the end of the lease term, and then sue the tenant for the entire amount of rent still outstanding under the lease, without making any attempt to find a replacement tenant.

What kind of jurisdiction is New York? Surprisingly, it is both. Although most courts agree that commercial landlords have no duty to mitigate their damages (that is, they have no duty to find replacement tenants), there is much disagreement – and confusion – between the courts about whether residential landlords have such a duty. For the foreseeable future – that is, until a higher court takes an unambiguous position on this issue – case law in the different counties determines whether the duty applies to any given landlord.

If you are a landlord or tenant, and have any questions about how the law applies to your property or lease, please feel free to call (516) 858-2620 to speak with a Landlord Tenant Attorney.

 

*Contributions to the research and preparation for this blog were made by Jason Mays, J.D.(awaiting admission in NYS)

Landlord must return $115,944.19 plus interest to tenant

On July 3, 2011, in Landlord-Tenant, by Robbie L. Vaughn, Esq.

Landlord Owes Tenant

Here is an unusual case where the landlord owes tenant $115,944.19.

Section 7-103 of the General Obligations Law provides, in pertinent part, that:

1. Whenever money shall be deposited or advanced on a contract or license agreement for the use or rental of real property as security for performance of the contract or agreement or to be applied to payments upon such contract or agreement when due, such money, with interest accruing thereon, if any, until repaid or so applied, shall continue to be the money of the person making such deposit or advance and shall be held in trust by the person with whom such deposit or advance shall be made and shall not be mingled with the personal moneys or become an asset of the person receiving the same.

In the recent case of 23 E. 39th ST. MGT. v. 23 E. 39th ST. DEVS., 2011 NY Slip Op 31684 – NY: Supreme Court 2011, the  landlord failed to place a $400k security deposit in a segregated interest bearing account. The court found this to be conversion and ordered that the landlord return to the tenant, $115,944.19, the amount sought in the complaint, with interest at the statutory rate from October 9, 2007.

We proudly assist Landlords and Tenants in Nassau county, Suffolk county, Queens, Brooklyn, Bronx, Staten Island, and Manhattan with their landlord tenant matters. Call (516) 858-2620 to arrange a FREE consultation with a Landlord Tenant attorney!

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