Dear Friends,
New York’s second-highest court (the Appellate Division, 1st Department) recently issued a potentially troublesome decision concerning the question of how courts should figure out where a rent-regulated tenant’s “primary residence” is. I’d like to share a bit of information about the case because it might affect some of your clients who live in rent controlled or rent stabilized apartments.
The basics: A rent stabilized or rent controlled apartment must be the tenant’s “primary residence.”
The law says that someone who rents a rent-regulated apartment must use that apartment as his or her “primary residence.” Judges have written probably thousands of pages on the subject of what “primary residence” means, but the basic concept is that the tenant needs to actually live in the apartment, for more than half the year. There are many exceptions – such as when someone spends time away from the apartment caring for an ill relative – but I won’t go into those here.
Landlords of rent stabilized and rent controlled apartments are often very diligent about identifying tenants who are not primarily residing in their units, sometimes hiring private detectives to conduct investigations into tenants’ lives and comings and goings.
The reason underlying this rule, by the way, is that because there’s a huge housing shortage in New York, a renter who don’t actually live in his or her low-rent apartment should give it up so that someone else who needs it can move in.
What constitutes someone’s primary residence?
Courts determine whether an apartment is someone’s primary residence by looking at a variety of factors. And it’s long been accepted that no single factor may entirely determine whether someone’s apartment is considered their primary residence. Courts consider where the tenant is registered to vote, what address his or her driver’s license gives, where he or she banks, and – as in the recent Appellate Division case – what their tax returns say.
What’s new about the recent court decision?
In the recent case, the tenant had filed tax returns in which she deducted her apartment rent as a corporate business expense. In doing so, the court ruled, she was swearing to the government that she did not reside in the apartment. And therefore, the court decided, the landlord wins, end of story; that single fact decided the entire case. (If you’d like to read the short decision in the case, Ansonia v. Unwin, click here and scroll to p. 37.)
What should you tell your clients? — Tax returns, homestead exemptions, and beyond . . .
Tenants of rent-regulated apartments have long been cautioned to be careful about what address they use in various documents and contexts. But now, perhaps, this is more important than ever. Tenants need to be especially careful about documents, like tax returns, in which they are effectively making a statement to the government about where they primarily live. One such document is an application for a “homestead exemption.”
If you own a house in, say, Florida, and you live in it as your home, you can apply for a Florida homestead exemption, which reduces your property taxes. But some homeowners who apply for these exemptions are rent-regulated tenants in NYC. If these tenants’ landlords sue them in housing court on a claim of “non-primary residence,” landlords’ lawyers will use the recent court case to say that those people’s apartments are not, by definition, their primary residences. Because that’s what they swore to the Florida government.
Bottom line: If clients of yours are tenants of rent-stabilized or rent controlled apartments who also spend time elsewhere, tell them to think carefully about what addresses they use. You can refer them to various sources of information on the subject, such as the Rent Guidelines Board website, available here — and, of course, do please refer them to one of our legal advice clinics, where they can discuss the issue in detail with a lawyer for free.
All the best,
Alex