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New Year, new issues that managers and tenants.

In light of current economic conditions, it is especially important for landlords and property managers to analyze and determine how to deal with problems that are going to be most germane in 2009.

Among the issues that managers will have to deal with is to decide when to commence a non-payment and/or holdover proceeding against delinquent tenants or tenants whose leases have expired by their own their agent terms.

For example, is it wise to wait to start a non-payment against a defaulting tenant to give them a chance to catch-up or should a landlord immediately serve demands for rent when one month is owed?

The advantage of commencing a non-payment when the tenant skips one month is that it could take three- to four weeks until the proceeding appears in court; thus, the service of the initial rent demands usually results in getting immediate attention from the tenant who is being served. It creates a situation in which a plan can be worked out, one that is enforceable by the court, and will enable the tenant to pay and keep the unit occupied. On the other hand, if the tenant is not going to be able to pay, losses may be cut and the re-renting process started quickly.

These same rules apply to a holdover tenant whose lease has terminated. If you promptly get the tenant into court you can have serious negotiations about renewal and again hopefully keep your tenant.

2008: The Return of the Bed Bug

Another issue that managers and landlords are facing today is an unexpected resurgence in vermin!

Bedbugs are the comeback kids of the 21st century. As a result of the use of milder pesticides and the search for green solutions, the ancient scrooge "bed bugs" are back in town. Despite what many people think, they are not caused by poor hygiene and bad habits, but rather by a global economy by which the little critters have been brought back to America via planes, ships and trains, in valises, boxes, clothing and shipping containers.

The fact is, they attack every level of society, from the poor to the affluent, and invade private homes, multi-family properties and luxury hotels.

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Their bites are not fatal and usually cause a red itchy blotch like a mosquito bite. However, psychologically the thought of bed bugs crawling around one's bed, clothing, furniture and assorted personal items can be devastating. Moreover, they are extremely difficult to eradicate.

There are some new revolutionary treatments which are popular in Europe and Austria and only recently introduced in the USA. One of said treatments is called Cryenite which is actually pressurized frozen Carbon Dioxide. It gets into cracks and bed bug hiding places, freezing the bugs. An alternative is "Encasements" which are made out of material that is resistant to bed bugs bites. The Encasements stay on the mattress and keep the bugs away.

From the landlords' and managers' point of view, the price is not so much psychological as it is costly and there could be major legal consequences when the parties have to cope with bed bug.

New York City courts have dealt with the bed bug problem for over 100 years. Most of the original cases held that it was the tenant who had to abate the problem. But with the current onset of this problem, the courts have held the landlord responsible, most recently in a decision called Grand Review LLC v. Moore in Queens Civil Court dated October 21, 2008 Index Number 33667/08.

In the "Moore" non-payment proceeding against the rent stabilized tenant, the Respondent-tenant interposed a Warranty of Habitability defense in which the major issue was bed bugs. Moore testified that as soon as she moved in on May 15, 2008, she noticed the presence of bed bugs and notified management. Management responded quickly and exterminated within days. But the problem persisted, so they exterminated again, but not until August. Moore then claimed she had to move her clothes and furniture to her mother and boyfriend's house. It was addressed at trial that the landlord did respond to her complaints, but nevertheless the situation persisted. On rebuttal, the agent testified, but the landlord did not call his maintenance people, management or experts to the stand. The court held that Moore was entitled to a 40% abatement of rent.

This case is a warning signal to landlords and their agents that they must employ extreme and immediate measures to identify and eradicate this problem. Further, the litigation of such cases must be handled in an extremely professional and thorough manner lest landlords potentially be found liable for constructive eviction and resulting egregious financial penalties.

So as we prepare for next year's trials--and tribulations, new lessons are being learned each day from age-old issues as diverse as unpaid rents and nasty bugs.

During an economic downturn, landlords and agents need to weigh the advantages and disadvantages of a reasonable workout with a delinquent tenant versus an empty apartment. And bed bugs need no workout, they just have to be "terminated," swiftly, effectively and completely.

BY HARRIET M. POLINSKY, SNR. PARTNER BORAH, GOLDSTEIN, ALTSCHULER, NAHINS & GOIDEL, P.C.
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Comment:New Year, new issues that managers and tenants.
Author:Polinsky, Harriet M.
Publication:Real Estate Weekly
Geographic Code:1USA
Date:Dec 10, 2008
Words:863
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