§ 4 — General powers and duties of the commission

§ 4. General powers and duties of the commission. 1. At the time this\nact shall become effective, the commission shall establish maximum rents\nwhich shall be\n (a) for housing accommodations outside the city of New York, the\nmaximum rent which was established on March first, nineteen hundred\nfifty, pursuant to the federal act, and shall not include adjustments\ngranted by orders issued under the federal act after that date,\nregardless of whether they were made effective as of, or retroactive to,\nthat date or a date prior thereto; and\n (b) for housing accommodations within the city of New York, the\nmaximum rent which was established on March first, nineteen hundred\nfifty, pursuant to the federal act, and shall not include either, (1)\nadjustments granted by orders issued under the federal act after that\ndate, regardless of whether they were made effective as of, or\nretroactive to, that date or a date prior thereto, or (2) adjustments\ngranted by orders increasing the maximum rent, issued after March first,\nnineteen hundred forty-nine, under the federal act, regardless of\nwhether the order of increase was made effective as of, or retroactive\nto, March first, nineteen hundred forty-nine, or a date prior thereto,\nbut shall include adjustments for new or additional services or\nfacilities provided by the landlord while the housing accommodations\nwere not rented or where tenant-occupied, to which the tenant then in\npossession had agreed, either expressly or impliedly; and\n (c) for housing accommodations within the cities of New York and\nBuffalo which on March first, nineteen hundred fifty, had no maximum\nrent established pursuant to the federal act, but which were subject to\na maximum rent established pursuant to the local laws of the cities of\nNew York and Buffalo, the maximum rent which was established on March\nfirst, nineteen hundred fifty, pursuant to such local laws.\n 2. Whenever the commission determines that such action is necessary to\neffectuate the purposes of this act, it may also establish maximum rents\nfor housing accommodations, as that term is defined herein, in\nmunicipalities in which no maximum rent was in effect on March first,\nnineteen hundred fifty. Any housing accommodation for which a maximum\nrent is so established shall be deemed a housing accommodation for all\nthe purposes, and subject to all the provisions of this act.\n 2-a. For housing accommodations created by a change from a non-housing\nto a housing use or by conversion on or after February first, nineteen\nhundred forty-seven, including those decontrolled by order, and\ncertified by a municipal department having jurisdiction to be a fire\nhazard or in a continued dangerous condition or detrimental to life or\nhealth, the maximum rent shall be the rent charged on January first,\nnineteen hundred fifty-seven, or the date of first rental, whichever is\nlater. Any housing accommodations for which a maximum rent is so\nestablished shall be deemed a housing accommodation for all the\npurposes, and subject to all the provisions of this act, but only so\nlong as such illegal or hazardous condition continues and further\ncertification with respect thereto shall not be required notwithstanding\nany inconsistent provision of this act.\n 2-b. Provision shall be made pursuant to regulations prescribed by the\ncommission for the establishment, adjustment and modification of maximum\nrents in rooming houses, which shall include those housing\naccommodations subject to control pursuant to the provisions of\nparagraph (b) of subdivision two of section two of this act, having\nregard for any factors bearing on the equities involved, consistent with\nthe purposes of this act to correct speculative, abnormal and\nunwarranted increases in rent.\n 3. Whenever the foregoing standard is not susceptible of application\nto a housing accommodation to which this act applies, and for which no\nmaximum rent was established on March first, nineteen hundred fifty, or\nwhere no registration statement had been filed as had been required by\nthe federal act, the maximum rent thereof shall be fixed by the\ncommission, having regard to the maximum rents for comparable housing\naccommodations or any other factors bearing on the equities involved,\nconsistent with the purposes of this act.\n 3-a. Notwithstanding the foregoing provisions of this section, on and\nafter May first, nineteen hundred fifty-three, the maximum rent for any\nhousing accommodations shall not be less than the maximum rent in effect\non March first, nineteen hundred forty-three (or if there was no such\nmaximum rent then in effect, the maximum rent first established pursuant\nto the federal act prior to July first, nineteen hundred forty-seven)\nplus fifteen per centum thereof as such sum is adjusted to reflect:\n (1) the amount of any decreases in maximum rent required by order\nbecause of decreases in dwelling space, services, furniture, furnishings\nor equipment, or substantial deterioration or failure to properly\nmaintain such housing, and\n (2) the amount of increases in maximum rent authorized by order\nbecause of increases in dwelling space, services, furniture, furnishings\nor equipment and the amount of the temporary increase authorized by\norder because of a major capital improvement.\n Nothing contained in this subdivision, however, shall have the effect\nof increasing the maximum rent of any housing accommodation more than\nfifteen per centum above the maximum rent in effect on April thirtieth,\nnineteen hundred fifty-three.\n 4. (a) The commission may from time to time adopt, promulgate, amend\nor rescind such rules, regulations and orders as it may deem necessary\nor proper to effectuate the purposes of this act, including practices\nrelating to recovery of possession; provided that such regulations can\nbe put into effect without general uncertainty, dislocation and hardship\ninconsistent with the purposes of this act; and provided further that\nsuch regulations shall be designed to maintain a system of rent controls\nat levels which, in the judgment of the commission, are generally fair\nand equitable and which will provide for an orderly transition from and\ntermination of emergency controls without undue dislocations,\ninflationary price rises or disruption. Provision shall be made pursuant\nto regulations prescribed by the commission, for individual adjustment\nof maximum rents where the rental income from a property yields a net\nannual return of less than seven and one-half per centum of the\nvaluation of the property. Such valuation shall be the current assessed\nvaluation established by a city, town or village, which is in effect at\nthe time of the filing of the application for an adjustment under this\nsubparagraph properly adjusted by applying thereto the ratio which such\nassessed valuation bears to the full valuation as determined by the\nstate board of equalization and assessment on the basis of assessment\nrolls of cities, towns and villages for the year nineteen hundred\nfifty-four and certified for such year by such board pursuant to section\nforty-nine-d of the tax law; provided, however, that where at the time\nof the filing of the application for an adjustment under this\nsubparagraph such board has computations for such year indicating a\ndifferent ratio for subclasses of residential property in a city, town\nor village, the commission shall give due consideration to such\ndifferent ratio except ratios in excess of one hundred percent,\nprovided, further, that where such board has not determined and\ncertified any ratio pursuant to such section of such law for a city,\ntown or village for such year, the commission shall apply the ratio\ndetermined or certified by such board pursuant to section twelve hundred\ntwelve of the real property tax law for the most recent year; except\nwhere there has been a bona fide sale of the property within the period\nbetween March fifteenth, nineteen hundred fifty-seven, and the time of\nthe filing of the application, as the result of a transaction at arms'\nlength, on normal financing terms at a readily ascertainable price and\nunaffected by special circumstances such as a forced sale, exchange of\nproperty, package deal, wash sale or sale to cooperative; provided,\nhowever, that where there has been more than one such bona fide sale\nwithin a period of two years prior to the date of the filing of such\napplication the commission shall disregard the most recent of such sales\nif a prior sale within such two-year period was adopted as the valuation\nof the property in a proceeding under this subparagraph. In determining\nwhether a sale was on normal financing terms, the commission shall give\ndue consideration to the following factors:\n (i) The ratio of the cash payment received by the seller to (a) the\nsales price of the property and (b) the annual gross income from the\nproperty;\n (ii) The total amount of the outstanding mortgages which are liens\nagainst the property (including purchase money mortgages) as compared\nwith the equalized assessed valuation of the property;\n (iii) The ratio of the sales price to the annual gross income of the\nproperty, with consideration given to the total amount of rent\nadjustments previously granted, exclusive of rent adjustments because of\nchanges in dwelling space, services, furniture, furnishings or\nequipment, major capital improvements, or substantial rehabilitation;\n (iv) The presence of deferred amortization in purchase money\nmortgages, or the assignment of such mortgages at a discount;\n (v) Any other facts and circumstances surrounding such sale which, in\nthe judgment of the commission, may have a bearing upon the question of\nfinancing.\n No application for adjustment of maximum rent based upon a sales price\nvaluation shall be filed by the landlord under this subparagraph prior\nto six months from the date of such sale of the property. In addition,\nno adjustment ordered by the commission based upon such sales price\nvaluation shall be effective prior to one year from the date of such\nsale. Where, however, the assessed valuation of the land exceeds four\ntimes the assessed valuation of the buildings thereon, the commission\nmay determine a valuation of the property equal to five times the\nequalized assessed valuation of the buildings, for the purposes of this\nsubparagraph. The commission may make a determination that the valuation\nof the property is an amount different from such equalized assessed\nvaluation where there is a request for a reduction in such assessed\nvaluation currently pending; or where there has been a reduction in the\nassessed valuation for the year next preceding the effective date of the\ncurrent assessed valuation in effect at the time of the filing of the\napplication. Net annual return shall be the amount by which the earned\nincome exceeds the operating expenses of the property, excluding\nmortgage interest and amortization, and excluding allowances for\nobsolescence and reserves, but including an allowance for depreciation\nof two per centum of the value of the buildings exclusive of the land,\nor the amount shown for depreciation of the buildings in the latest\nrequired federal income tax return, whichever is lower; provided,\nhowever, that (1) no allowance for depreciation of the buildings shall\nbe included where the buildings have been fully depreciated for federal\nincome tax purposes or on the books of the owner; or (2) the landlord\nwho owns no more than four rental units within the state has not been\nfully compensated by increases in rental income sufficient to offset\nunavoidable increases in property taxes, fuel, utilities, insurance and\nrepairs and maintenance, excluding mortgage interest and amortization,\nand excluding allowances for depreciation, obsolescence and reserves,\nwhich have occurred since the federal date determining the maximum rent\nor the date the property was acquired by the present owner, whichever is\nlater; or (3) the landlord operates a hotel or rooming house or owns a\ncooperative apartment and has not been fully compensated by increases in\nrental income from the controlled housing accommodations sufficient to\noffset unavoidable increases in property taxes and other costs as are\nallocable to such controlled housing accommodations, including costs of\noperation of such hotel or rooming house, but excluding mortgage\ninterest and amortization, and excluding allowances for depreciation,\nobsolescence and reserves, which have occurred since the federal date\ndetermining the maximum rent or the date the landlord commenced the\noperation of the property, whichever is later; or (4) the landlord and\ntenant voluntarily enter into a valid written lease in good faith with\nrespect to any housing accommodation, which lease provides for an\nincrease in the maximum rent not in excess of fifteen per centum and for\na term of not less than two years, except that where such lease provides\nfor an increase in excess of fifteen per centum, the increase shall be\nautomatically reduced to fifteen per centum; or (5) the landlord and\ntenant by mutual voluntary written informed agreement agree to a\nsubstantial increase or decrease in dwelling space, furniture,\nfurnishings or equipment provided in the housing accommodations;\nprovided that an owner shall be entitled to a rent increase where there\nhas been a substantial modification or increase of dwelling space, or\ninstallation of new equipment or improvements or new furniture or\nfurnishings provided in or to a tenant's housing accommodation. The\nincrease in the maximum rent for the affected housing accommodation\nshall be one-one hundred sixty-eighth, in the case of a building with\nthirty-five or fewer housing accommodations, or one-one hundred\neightieth, in the case of a building with more than thirty-five housing\naccommodations where such increase takes effect on or after the\neffective date of the chapter of the laws of two thousand nineteen that\namended this subparagraph, of the total actual cost incurred by the\nlandlord up to thirty thousand dollars in providing such reasonable and\nverifiable modification or increase in dwelling space, furniture,\nfurnishings, or equipment, including the cost of installation but\nexcluding finance charges and any costs that exceed reasonable costs\nestablished by rules and regulations promulgated by the division of\nhousing and community renewal. Such rules and regulations shall include:\n(i) requirements for work to be done by licensed contractors and a\nprohibition on common ownership between the landlord and the contractor\nor vendor; and (ii) a requirement that the owner resolve within the\ndwelling space all outstanding hazardous or immediately hazardous\nviolations of the uniform fire prevention and building code (Uniform\nCode), New York city fire code, or New York city building and housing\nmaintenance codes, if applicable. Provided further that an owner who is\nentitled to a rent increase pursuant to this clause shall not be\nentitled to a further rent increase based upon the installation of\nsimilar equipment, or new furniture or furnishings within the useful\nlife of such new equipment, or new furniture or furnishings. Provided\nfurther that the recoverable costs incurred by the landlord, pursuant to\nthis subparagraph, shall be limited to an aggregate cost of thirty\nthousand dollars in a fifteen year period beginning with the first\nindividual apartment improvement on or after June fourteenth, two\nthousand nineteen. The owner shall give written notice to the commission\nof any such adjustment pursuant to this clause; or (6) there has been,\nsince March first, nineteen hundred fifty, an increase in the rental\nvalue of the housing accommodations as a result of a substantial\nrehabilitation of the building or housing accommodation therein which\nmaterially adds to the value of the property or appreciably prolongs its\nlife, excluding ordinary repairs, maintenance and replacements; or (7)\nthere has been since March first, nineteen hundred fifty, a major\ncapital improvement essential for the preservation, energy efficiency,\nfunctionality, or infrastructure of the entire building, improvement of\nthe structure including heating, windows, plumbing and roofing, but\nshall not be for operational costs or unnecessary cosmetic improvements;\nwhich for any order of the commissioner issued after the effective date\nof the chapter of the laws of two thousand nineteen that amended this\nparagraph the cost of such improvement shall be amortized over a\ntwelve-year period for buildings with thirty-five or fewer units or a\ntwelve and one-half year period for buildings with more than thirty-five\nunits, and shall be removed from the legal regulated rent thirty years\nfrom the date the increase became effective inclusive of any increases\ngranted by the applicable rent guidelines board. Temporary major capital\nimprovement increases shall be collectible prospectively on the first\nday of the first month beginning sixty days from the date of mailing\nnotice of approval to the tenant. Such notice shall disclose the total\nmonthly increase in rent and the first month in which the tenant would\nbe required to pay the temporary increase. An approval for a temporary\nmajor capital improvement increase shall not include retroactive\npayments. The collection of any increase shall not exceed two percent in\nany year from the effective date of the order granting the increase over\nthe rent set forth in the schedule of gross rents, with collectability\nof any dollar excess above said sum to be spread forward in similar\nincrements and added to the rent as established or set in future years.\nUpon vacancy, the landlord may add any remaining balance of the\ntemporary major capital improvement increase to the legal regulated\nrent. Notwithstanding any other provision of the law, for any renewal\nlease commencing on or after June 14, 2019, the collection of any rent\nincreases due to any major capital improvements approved on or after\nJune 16, 2012 and before June 16, 2019 shall not exceed two percent in\nany year for any tenant in occupancy on the date the major capital\nimprovement was approved; provided, however, where an application for a\ntemporary major capital improvement increase has been filed, a tenant\nshall have sixty days from the date of mailing of a notice of a\nproceeding in which to answer or reply. The state division of housing\nand community renewal shall provide any responding tenant with the\nreasons for the division's approval or denial of such application; or\n(8) there has been since March first, nineteen hundred fifty, in\nstructures containing more than four housing accommodations, other\nimprovements made with the express informed consent of the tenants in\noccupancy of at least seventy-five per centum of the housing\naccommodations, provided, however, that no adjustment granted hereunder\nshall exceed two per centum unless the tenants have agreed to a higher\npercentage of increase, as herein provided; (9) there has been, since\nMarch first, nineteen hundred fifty, a subletting without written\nconsent from the landlord or an increase in the number of adult\noccupants who are not members of the immediate family of the tenant, and\nthe landlord has not been compensated therefor by adjustment of the\nmaximum rent by lease or order of the commission or pursuant to the\nfederal act; or (10) the presence of unique or peculiar circumstances\nmaterially affecting the maximum rent has resulted in a maximum rent\nwhich is substantially lower than the rents generally prevailing in the\nsame area for substantially similar housing accommodations.\n In addition to the filing of written statements setting forth the\nfinal rate of equalization concerning assessment rolls of cities, towns\nand villages, after determination thereof by the state board of\nequalization and assessment, with the appropriate officials as now\nrequired by law, such board shall also file a copy of each such\nstatement, duly certified, in so far as they relate to cities, towns and\nvillages subject to rent control pursuant to this act, with the state\nrent administrator and the chairman of the temporary state commission to\nstudy rents and rental conditions. Where such board has made\ncomputations indicating a different ratio for subclasses of residential\nproperty, such information shall also be filed with such rent\nadministrator and the chairman of such temporary state commission.\n (b) The total of all adjustments ordered by the commission pursuant to\n(1) and (3) of paragraph (a) of subdivision four hereof for any\nindividual housing accommodations shall not exceed fifteen per centum\nfor any twelve month period; provided, however, that in ordering an\nadjustment pursuant to (1), the commission may waive this limitation\nwhere a greater increase is necessary to make the earned income of the\nproperty equal to its operating expense; provided further, however, that\nthe maximum rents subject to the allocation requirement of paragraph (c)\nhereof shall be increased by such further additional amount during each\nsucceeding twelve-month period, not exceeding fifteen per centum of the\nmaximum rent in effect on the effective date of the original order of\nadjustment, until the maximum rents for the property shall reflect the\nnet annual return provided for pursuant to (1) hereof, but in no event,\nhowever, shall the total increase ordered for a succeeding twelve-month\nperiod be more than an additional three per centum of the maximum rent\nin effect on the effective date of the original order of adjustment\nunless a new application be filed by the landlord.\n The commission shall compile and make available for public inspection\nat reasonable hours at its principal office and at each appropriate\nlocal office, and shall file with the chairman of the temporary state\ncommission to study rents and rental conditions the manual of accounting\nprocedures and advisory bulletins applicable to applications under (1),\n(2) and (3) hereof, and all amendments thereto.\n (c) Any increase in maximum rent shall be apportioned equitably among\nall the controlled housing accommodations in the property. In making\nsuch apportionment and in fixing the increases in maximum rents the\ncommission shall give due consideration (1) to all previous adjustments\nor increases in maximum rents by lease or otherwise; and (2) to all\nother income derived from the property, including income from space and\naccommodations not controlled, or the rental value thereof if vacant or\noccupied rent-free, so that there is allocated to the controlled housing\naccommodations therein only that portion of the amount of increase\nnecessary pursuant to (1), (2) or (3) of paragraph (a) of subdivision\nfour hereof, as is properly attributable to such controlled\naccommodations.\n (d) No landlord shall be entitled to any increase in the maximum rent\nunless he certifies that he is maintaining all essential services\nfurnished or required to be furnished as of the date of the issuance of\nthe order adjusting the maximum rent and that he will continue to\nmaintain such services so long as the increase in such maximum rent\ncontinues in effect; nor shall any landlord be entitled to any increase\nin the maximum rent in any case where a municipal department having\njurisdiction certifies that the housing accommodation is a fire hazard\nor is in a continued dangerous condition or detrimental to life or\nhealth, or is occupied in violation of law.\n (e) Before ordering any adjustment in maximum rents, a reasonable\nopportunity to be heard thereon shall be accorded the tenant and the\nlandlord.\n (f) An owner, lessor or agent thereof shall be prohibited from\nassessing a lessee any fee, surcharge or other charges for legal\nservices in connection with the operation or rental of a residential\nunit unless the owner, lessor or agent has the legal authority to do so\npursuant to a court order. Legal services include, but are not limited\nto, court fees, legal representation, attorney fees, notary public\ncharges, and administrative fees incurred by the owner, lessor or agent\nin connection with management of the building, including actions and\nproceedings in a court of law. Any agreement or assessment to the\ncontrary shall be void as contrary to public policy.\n (g) No owner of a housing accommodation subject to the provisions of\nthis law shall impose any surcharge for the installation and use of a\ntenant-installed air conditioner unit where the tenant pays for electric\nutility service.\n 5. (a) Whenever in the judgment of the commission such action is\nnecessary or proper in order to effectuate the purposes of this act, the\ncommission may, by regulation or order, regulate or prohibit speculative\nor manipulative practices or renting or leasing practices, including\npractices relating to recovery of possession, which in the judgment of\nthe commission are equivalent to or are likely to result in rent\nincreases inconsistent with the purposes of this act.\n (b) Whenever in the judgment of the commission such action is\nnecessary or proper in order to effectuate the purposes of this act, the\ncommission may provide regulations to assure the maintenance of the same\nliving space, essential services, furniture, furnishings and equipment\nas were provided on the date determining the maximum rent, and the\ncommission shall have power by regulation or order to decrease the\nmaximum rent for any housing accommodation with respect to which a\nmaximum rent is in effect, pursuant to this act if it shall find that\nthe living space, essential services, furniture, furnishings or\nequipment to which the tenant was entitled on such date has been\ndecreased. The amount of the decrease in maximum rent ordered by the\ncommission under this paragraph shall be reduced by any credit,\nabatement or offset in rent which the tenant has received pursuant to\nsection two hundred thirty-five-b of the real property law, that relates\nto one or more conditions covered by such order.\n (c) Whenever any municipal department having jurisdiction certifies\nthat any housing accommodation is a fire hazard or is in a continued\ndangerous condition or detrimental to life or health, or is occupied in\nviolation of law, the commission may issue an order decreasing the\nmaximum rent of such housing accommodation in such amount as it deems\nnecessary or proper, until the said municipal department has certified\nthat the illegal or hazardous condition has been removed.\n 6. Any regulation or order issued pursuant to this section may be\nestablished in such form and manner, may contain such classifications\nand differentiations, and may provide for such adjustments and\nreasonable exceptions as in the judgment of the commission are necessary\nor proper in order to effectuate the purposes of this act. No increase\nor decrease in maximum rent shall be effective prior to the date on\nwhich the order therefor is issued.\n 7. Regulations, orders, and requirements under this act may contain\nsuch provisions as the commission deems necessary to prevent the\ncircumvention or evasion thereof.\n 8. The powers granted in this section shall not be used or made to\noperate to compel changes in established rental practices, except where\nsuch action is affirmatively found by the commission to be necessary to\nprevent circumvention or evasion of any regulation, order, or\nrequirements under this act.\n 9. No annual rent increase authorized pursuant to this act shall\nexceed the average of the previous five annual rental adjustments\nauthorized by a rent guidelines board for a rent stabilized unit\npursuant to section 4 of the emergency tenant protection act of nineteen\nseventy-four.\n