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Justice Week planned by owners' groups.

A massive effort is underway by apartment owners' groups to focus on the lack of deposit of rents with the courts, despite current laws to the contrary.

The Rent Stabilization Association (RSA), the Community Housing Improvement Program (CHIP), the Real Estate Board of New York (REBNY) and the Associated Builders and Owners of Greater New York (ABO) are calling on members to take part in Justice Week, that will take place from January 22 to 26. The Small Property Owners of New York, the Black and Latino Property Owners Coalition and other property owners groups are also supporting the actions.

During that week, owners will ask their attorneys to request the deposit of rent with the courts and if denied, to obtain a reason on the record. The groups hope to use the information obtained to change the system and prove bias for their case for Federal takeover of the Housing Court.

The announcement of the event will be in this month's organization newsletters and more details are expected soon.

"We're putting Housing Court on trial and making them account for their actions," said R. Bonnie Haber, president of CHIP and a Queens and Washington Heights owner. "It's very exciting that the whole industry is joining together and making a major statement."

Agreed Jack Freund, executive vice president of the RSA and its 25,000 mainly small owners, "It's a major organizational effort. We are asking the court to live by its own rules."

What owners should do is direct their Housing Court attorneys to not only request the deposit of rent with the court, but also request a reason for denying such a request be put on the court record.

"It's very important that owners participate and they insist their attorneys participate," explained Haber. "The onus is on the owner to take the responsibility and to make sure it's followed through by the attorneys."

One potential problem, noted Dan Margulies, executive director of CHIP, is that judges may instead ask if they are ready for trial. "It will require a concerted effort by owners and attorneys," he warned.

Attorneys to Wait

Attorneys say that typically, when they request the reason for lack of a rent deposit be put on the record, the judge will tell them a court reporter will be available later that day. Rather than wracking up hourly legal fees for their clients by waiting around from the 9:30 a.m. calendar calls, attorneys often must back-off the request. During Justice Week, attorneys are to be instructed to wait for the records to be made.

The court is actually supposed to make a court reporter available each day at noon under a stipulation signed by the administrative law judge, at the behest of a lawsuit taken up by the RSA, although that practice is not always followed. "There is no excuse for a judge to postpone it later than noon," fumed Freund.

Stipulation Requires Reason

Not only is there a law that requires the deposit of rent with the court except for cause shown, but under the September 12, 1991 stipulation worked out in response to the RSA owner's lawsuit, Miller vs. Silbermann filed in May of 1989, the court is supposed to abide by 19 provisions, including the deposit of rent with the courts should the tenant request an adjournment and the above-mentioned availability of a court reporter. But the provisions have not been enforced.

"The only concrete thing we got out of it was the establishment of the owners' advisory tables," said Freund. "A year after the stip, we were back in court because our monitoring had shown no compliance."

Instead, said RSA chair Arnold Goldstein, managing partner of Samson Management, "We're asking the Federal government to appoint a master and take over the court system."

From court records, Freund said, the RSA has determined there are about 325,000 Housing Court actions a year and that 95 percent of those are for non-payment proceedings. Approximately 160,000 of those actions actually go through court proceedings, leading to an estimate of 3,000 housing cases that are before a judge for some action each week in the city.

"There are 3,000 cases and if there are not a substantial number of deposits, we will have for our lawsuit the fact that the Housing Court is incapable of applying impartial justice," said Freund.

Tenants Skip Out

The huge number of cases, ease of adjournment and lack of necessity to pay up is also keeping the courts clogged. "If we had the deposit of rent and people who did not have true grievances were eliminated, the courts wouldn't be so backlogged," insisted Haber.

Owners and attorneys say tenants are being trained not to pay rent and to use the court system to put off paying as long as possible. "It shouldn't be a temporary borrowing mechanism for a tenant," said REBNY's Stephen Spinola.

Typically, renters skip out rather than paying up when a judge finally caves in many months later.

"The owners are losing a lot of money on this," said Niles Welikson, a partner with the law finn of Horing, Welikson & Bienstock.

"It's blatantly unfair to allow the tenant to play the system," said Joel Mitofsky, a partner with Mitofsky & Shapiro. "The court can direct it be paid to court, or to the IOLA (special escrow) account of the owner's attorney. Requiring this deposit of rent is an effort to make certain the tenant is on the up and up and does not bolt when a judgement is entered into."

Goldstein said the judges feel they are performing a social service, but instead are creating a situation that forces a tenant to move.

If a tenant is successful in avoiding the payment of an average rent of $600 for an average nine months, he explained, and even if there is a rent abatement of $1,500 or so for repairs, the renter is suddenly faced with coming up with a check for $3,500 and typically, the money is long gone.

"Everyone loses," said Goldstein. "The tenant is forced to move because they have spent the money. They are working people and they just pay someone else's bill. The owner is out nine months rent and doesn't have the money to take care of his building. And the tenants who pay the rent suffer front a lack of services because the owner can't pay the fuel oil bill."

There are situations where the courts will require deposits, but in general they don't do so, said Welikson. "In most instances, you can jump up and down and give all the great reasons and the court does not grant the request."

Agreed REBNY's Spinola, "Technically it's in the state law and judges ignore it."

Law Requires Deposit

The law, Section 745 of the Real Property Actions and Proceedings Law, states in part 2a: "In a summary proceeding upon the second request by the tenant for an adjournment, the court shall direct that the tenant post all sums as they come due for future rent and use and occupancy ... unless waived by the court for good cause shown."

It goes on to state in 2b: "In any adjournment of a summary proceeding, other than on consent or at the request of the petitioner, the court shall at the petitioner's request state on the record why for good cause shown it is not directing the tenant to pay or post all sums demanded pursuant to a lease or rental agreement in the proceeding as rent and use and occupancy."

So while rent deposit is only mandatory on the second adjournment on the request of the tenants, explained Margulies of CHIP, "it's permissible for any adjournment and reason can be demanded for failure to require it."

As part of the Miller lawsuit stipulation, the court is providing a form for the judges to fill out stating their reasons why deposit of rent was not required.

"We have a form that we provide and if the person doesn't like the decision they can appeal," said Deputy Clerk of the Civil Court Ernesto Belzaguy, adding that so far as they know, no appeals have been filed. "The law is on the books, and if the judge doesn't follow the rules, your remedy is to appeal the decision. A lot of people complain, but they are not willing to take the steps to see it happens. The responsibility is on the parties that appear in court."

The groups hope that Justice Week will prove the judges are not following the law despite requests by attorneys to do so, form or no form.

"We want the court to put on the record why they are not following the law," said CHIP's Haber.

Politicians Favor Deposit

Both Mayor Rudolph Giuliani and Governor George Pataki have publicly supported the fairness of making deposits of rent with the courts.

In May, to an RSA breakfast, Pataki stated: "It is absolutely wrong that when there is a legitimate dispute over whether or not the tenant should make a rent payment, that the tenant decides not to pay it - it should be paid to court."

During the last state legislative session, the Senate passed a measure strengthening the requirements for the deposit of rent with the court, but the Assembly has not acted on it. A similar measure in the Council has also been in limbo. Albany sources told REW they wanted to see the Council act first, but a stalemate is not what the owners groups ordered.

"It's not an owners' bill, but a bill that will bring some sanity back to the court system," said Goldstein.

REBNY also raised the issue with New York State Senate Majority Leader Joseph Bruno at the organization's recent Board of Governors meeting.

"How is it unfair for a tenant's rent to be put into an escrow account?," asked Spinola. "We want it clear the judges can't ignore it and this will be a combined industry priority for 1996. This is something that is fair and reasonable."

At the annual Bronx Board of Realtors dinner in September, Bronx Borough President Fernando Ferrer also came out in support. "Rent needs to be deposited in court," he said. "If someone is trying to skip out, rent should be deposited so no one loses."

The idea for Justice Week originated from the CHIP board meetings.

"I have to hand it to CHIP for coming up with the concept and we have picked up the ball and are running with it," said Freund.

The ABO, in support of these efforts, is also asking its members for $250 donations made out to its "Hell No" campaign to help defer certain expenses. Property owner Jerome Belson, the group's president, said these could include obtaining transcripts of the proceedings.

Haber feels Housing Court has been a huge disappointment. "We have all been brought up to believe the courts are fair," she said, "but owners haven't been treated that way. We just want honesty and fairness."
COPYRIGHT 1995 Hagedorn Publication
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1995, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:New York City apartment-owners groups
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Dec 6, 1995
Words:1837
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