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Rent deposit case law scant, but developing.

There are approximately 300,000 landlord-tenant cases initiated in the city each year, mostly concerned with the payment of rent. The new Rein Deposit Law, which was designed to forestall dilatory tactics, is constitutional, says Supreme Court Judge Lehner in his recent decision in the class action Lang v. Pataki (See April 8 issue of Real Estate Weekly, page 1.) But how does it really work in practice'?

The rent deposit law seems simple. If a tenant applies for a second adjournment or 30 days have elapsed since the first court appearance, the tenant must deposit all rein going forward into court (if there are more than 12 apartment units) or directly to the landlord (in smaller buildings), except if the landlord is not a proper party; the tenant has been evicted (by force or intolerable conditions); there are hazardous conditions and the rent is subsidized by welfare agencies; or lack of jurisdiction.

If the tenant makes the first rent deposit, but falls to come up with ongoing payments, the landlord can request an immediate trial of the validity of the tenant's defenses.

A particularly powerful part of the new law is that tenants who have defaulted must pay rent due as a condition of vacating a default and staying an eviction. There are about 148,000 such requests to stay judgments of possession each year.

The reported cases to date are few.

On the strict construction side, Judge James directed that a commercial tenant pay use and occupancy directly to the landlord. Since the payment was a couple of weeks late. she awarded possession to the landlord.

On the exceptions side, Justice Lehner stated that the law might be unconstitutional "as applied," meaning specific instances might run afoul of the Constitution. So, for example, courts have now held that tenants who seek adjournments because they need an interpreter or because they are disabled are not, at least in the initial stages, subject to the mandatory provisions of the new law.

Judge Straniere in Staten Island was concerned in one case because he could not even explain the import of the new law to a tenant who spoke only Spanish. The courts will be checking the history of adjournments very carefully in the "record of court action" sheet (this is a new addition to the court file which allows a Judge to make notes of what took place in the courtroom on each court appearance).

In a case before Judge Jacobson, even though the landlord's attorney said that his "on call" client could be at the courthouse in less than one hour, the court found that the landlord was not ready for trial. (Scott Somers, chair of the Metropolitan Council on Housing, was in court and received permission to argue as amicus curiae). Judge Jacobson said that the landlord has to be in court (not on "call") and ready to go with all of the witnesses and documents at the landlord's finger tips; otherwise, the landlord is not ready to proceed, and the adjournment cannot be charged against the tenant.

Judge Friedman has stated that consent adjournments cannot be charged against the tenant, even if the case is on the calendar for more than 30 days and even if motions have delayed the case for a period of months.

The actual application of the new law is being worked out in the lower courts. The appeals courts have not yet spoken in this area. Even though the mound has been lowered for the landlord, the message for parties hasn't changed: the landlord must be ready to move the case; the tenant must avoid being charged with delays.
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Title Annotation:Focus On: Property Management; Rent Deposit Law
Author:Weinberger, Jonathan
Publication:Real Estate Weekly
Date:Apr 29, 1998
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