help with NYC rent control scam, please - Posted by Chyna

Posted by KJ on April 07, 2007 at 11:36:56:

Frank,

Thanks for the detailed explanation. Always enjoy your take on things. I have learned a lot from your posts. Have a great day.

KJ

help with NYC rent control scam, please - Posted by Chyna

Posted by Chyna on April 03, 2007 at 14:25:39:

I have a rent controlled tenant in her mid sixties paying $136.92 for a two bedroom apartment worth $1,800 a month. I believe she is planning on organizing for her grown daughter to “move in” so that when she leaves her daughter can continue to live there rent controlled. I know that as of a year ago her daughter lived several miles away and may in fact still live there in reality.

How can I prevent this from happening? If I need a private investigator, how do I find one? Is there a better way to handle it?

Thanks,
Chyna

To buy her out?? - Posted by Chyna

Posted by Chyna on April 06, 2007 at 10:28:09:

A few people have suggested that I might offer to buy her out. She’s in her mid-sixties and is paying $137 for a two bedroom apartment worth $1800/month.

Does anyone have a ballpark figure to suggest? I can tell her I need the apartment for my son who is, in fact, moving back to the area but I have no idea of an appropriate amount.

Thanks to all for your advice,
Chyna

Re: help with NYC rent control scam, please - Posted by DJ-nyc

Posted by DJ-nyc on April 05, 2007 at 21:40:35:

Chyna,

I just “bought out” two Rent ‘stabilized’ tenants on a 6 family I bought in November.

It was a very risky purchase, but before I closed I personally spoke to the 2 tenants and promised them cash to leave and I even tried to find one of them an apartment.

Move gently, humbly and find some money to offer them. Otherwise and unfortunately the law is on their side with the rent control issue. By the way, I converted the 6 family to a 4 family so now it will be out of “rent stabilization law”.

Cash is King.

Good luck,
DJ-nyc

Further thoughts … - Posted by Frank Chin

Posted by Frank Chin on April 05, 2007 at 11:27:34:

Chyna:

This is to answer your offline question.

  • Get an attorney knowlegeable in this as the stakes are high.

  • Yes there are PI firms specializing in this, I read of one wihtin the past few months in the NY Times, but I wasn’t able to come up with it searching the archives. Proving where they live is not too hard with utility, and phone records, but you’ll need folks in the know to dig it out, else you get entangled in privacy issues.

  • Believe you have control over occupancy, and you can prevent additional tenants (daughter) moving in. This is the point you whould pin down with an attorney. Spend a few bucks here, else you’ll be $1,700 short in rent every month for the next twenty years.

  • A surveillance monitor of who’s coming and going would be a worthwhile investment here. My dad had a illegal occupant, but each time when they were observed coming and going, tenant claims they were visitors who just happened by for coffee.

Frank Chin

Re: help with NYC rent control scam, please - Posted by Frank Chin

Posted by Frank Chin on April 04, 2007 at 08:06:17:

Chyna:

See this:

http://query.nytimes.com/gst/fullpage.html?res=9A00E0DA1438F932A1575BC0A965948260

Hope it helps.

Frank Chin

Re: help with NYC rent control scam, please - Posted by John

Posted by John on April 03, 2007 at 17:42:44:

Your best option is probably to just buy her out. She’s got a great deal and legally she could pass it on to her daughter given the right set of circumstances. With two bedrooms she may very well just move in for real and your investigation will come to nothing except wasted money. On top of that you could even be accused of harassing the tenants. Were you in the same situation you would probably try to do the same thing so do what any businessman does; use money to solve the situation.

Re: help with NYC rent control scam, please - Posted by Chris

Posted by Chris on April 03, 2007 at 14:53:12:

I am in NY, not NYC, you need Frank Chin, he’s the only one I know of that investsin NYC, funny, only an hour or 2 away and a different world from where i invest. I wish you luck!

Re: To buy her out?? - Posted by Frank Chin

Posted by Frank Chin on April 07, 2007 at 05:27:45:

Chyna:

You can try.

But put yourself in her, or her daughers shoes. You well know $136/month is not even going to cover utilities, insurance, maintenance on the unit. Anyone buying a place to live in the 5 boroughs, or rent in a nice neighborhood will shell out near $2,000.

So someone paying $136.00 is living legally for FREE. Anyone that can hold on to such a place owns a goldmine!!

I know of some who negotiated payments to “rent stabliized” folks. But I looked at a property where the tenant was a 92 year old lady paying a little over $100.00, and the seller claims she’ll either be dead, or going to a home shortly. Stablized rents are another story as they’re much higher.

But I was thinking, nursing home go for $300/day, so why not get a visiting nurse a few times a month, instead of giving up a $100/month apartment.

Chyna, everyone’s situation is different, and of course, you won’t know till you ask. BUT, the questions is “how much money up front is EQUAL to having a place to live in NYC FOR FREE”??

You say this women is in her 60’s, and she’s in good health?? If I was retiring in my 60’s, a 2BR apartment almost for free is a NECESSITY. You give me 100K, it’ll be gone in 10 years, and I’ll be going to live in a shelter??

This women’s daughter is in her 40’s. If I was the daughter, I’ll live somewhere (your place) for free for 20 years, save up, and go cruising every year at retirement.

Thinking about it, if it was me, and if I love to live in NYC, there’s not much that you can give me that’s equal to living for free. Putting it another way, if you were to ask me “would you take 100K from me, or would you like me to give you a place to live for free for the rest of your life”?, I’ll probably pick “give me a 2BR to live for free, I’ll throw in $136 for the heat, hot water, insurance, maintenance”.

Why did you think owners of apartment buildings just walked away??

Frank Chin

Re: To buy her out?? - Posted by Drew

Posted by Drew on April 06, 2007 at 17:29:03:

How long do you think she would stay if not bought out? As I understand rent stabilization, you have to renew her lease, right?

Re: To buy her out?? - Posted by Killer Joe

Posted by Killer Joe on April 06, 2007 at 15:00:27:

Chyna,

I am guessing you are not the first person to come into this situation. It is very likely that NYC has given some thought to this and has laid out some guidelines, as well.

Let me give you an example of what I am referring to, albiet in LA Co, Ca. In that jurisdiction, a rent controlled unit can be taken back by the LL for the purpose of inhabiting the unit personally, or having an immediate family member reside in the unit. They can’t kick people out due to undermarket rents, but they can for the purpose of providing housing for themselves or family members.

The way the law is laid out there, the LL is required to pay $2K to a displaced renter under 62 years old, and $5K if that person is 62 years or older, or handicapped and under the age of 62 as a fair exchange for the renter leaving against their desire. Again, the property must be subsequently occupied by the LL, or an immediate family memeber.

As an example, my wife had an employee who had been living in an ‘ocean view’ apt for 14 years, paying $530 a month rent when the building was sold to the new owner. The unit had a current market value of $1800 a month. It was a small 6 unit building, and the new owner wanted that large ocean view apt as her personal residence. Hence, our employee got the notice to vacate, and asked me if there was anything she could do to prevent the eviction. That is how I got involved in knowing about this issue. I sent her a copy of the laws highlighting the verbage stating the County’s position.

She then approached the new LL , who was hoping she would just pack up and leave, with the facts of the matter, and demanded the $5K entitlement be paid. The new LL went to her atty and was told that the money was not an option and would need to be paid. It was, and our employee moved.

You are not the first person to encounter your situation. Find out from the rent control folks what is required. They can give you a definitive answer, and if it all comes down to monies paid to the outgoing tenent, so be it. Just do things legally, HTH.

KJ

Re: Further thoughts … - Posted by Chyna

Posted by Chyna on April 06, 2007 at 10:22:33:

Frank;

I think your suggestions are valid…to find an attorney who has worked in this area (if anyone has recommendations, I’d be very appreciative) and to install a surveillance monitor to see whether someone has in fact moved in with her. I’ll see what else the attorney recommends.

Thanks, once again, for your helpful advice.
Chyna

Re: To buy her out?? - Posted by Frank Chin

Posted by Frank Chin on April 07, 2007 at 05:53:24:

Joe:

There’s two laws in NYC, “rent stabliziation” for tenants moving in after 1971 (could be off a year of two here), and “rent control”, for tenants that moved in prior, or decendants of those who moved in prior to 1971.

The law started in WWII, and those paying $136/month would have lived there continuously since the WWII, or at least the 1950’s, and with small one to two percent increase allowed, resulting in these paltry amounts. In speaking to owners, I was also told the paperwork required to get the 2%, so some of them didn’t think getting a 2% increase for $136/month is worth the bother.

For “stabilized tenants”, one loophole is the LL lgeally can take over the apartment for himself, or his children, plus a list of others (mom dad etc.) For “controlled” tenants, there is none, and the landlord can live in a “shelter” for all they care. There are no provisions in the law for buying out tenants.

For stabilized tenants, not only is the LL required to extend the lease, but he has to extend it to a list of qualified decendants. That has not been a huge problem in recent years as “stablized” rents are much higher, and the tenants more mobile. But for buidings that are stabilized that I’ve seen through the years, the rents range from 50% of market, to around 70% of market. This is much higher than close to nothing for the “controlled” tenants.

Politicians are afraid to touch the issue. They were hoping the “controlled” tenants would die off, and their children would have long ago moved away. Action they took in recent years include decontrolling units renting over $2,000 hoping that someday when all rents reach that level (maybe by 2050), everything would come off control. They only did this after news stories came out about millionaires living in $200/month apartments, while the owners scrimped on maintenance. The other is to limit the list of decendants qualifying to move in, and limiting it to only 2 generations, omitting the third, but allowing the forth. So if grandma had the apartment, daugher can move in, graddaughter does not qualify, but great granddaughter does.

By then, with “global warming”, NYC would be under several feet of water anyway by 2050, and everyone would have moved, except maybe for the “controlled” tenants hanging on to their $136/month apartment, getting around their apartments in a canoe.

Frank Chin