Helping Tenants Navigate New York’s Loft Law
At the New York City law firm of Ween & Kozek, LLC, we have the resource of more than 30 years of real estate law experience to draw on in representing our clients. One area in which we have expertise is the Loft Law, as our attorneys have represented many clients in asserting their rights to safe, legal, rent stabilized residential tenancies. Our attorneys work closely with tenants to invoke and protect their rights under the Loft Law, and to ensure that they are not taken advantage of by their landlords.
The Loft Law
Article 7-C of the Multiple Dwelling Law, otherwise known as the Loft Law, was enacted on June 21, 1982. The law was enacted to serve as a comprehensive and specific means of addressing widespread residential occupancy of former manufacturing and commercial “loft” buildings throughout New York City. As the demand for manufacturing space declined in New York City after World War II, owners of loft buildings needed to find a way to generate rental income through alternative means. During the same period, there was an influx of artists into New York City who were in need of space to create their artwork. They desired to create live/work spaces for themselves. Thus, circumstances were ripe for development of residential loft tenants—there was a supply of loft spaces and a corresponding demand. The problem, however, was that these loft spaces were not technically “legal” for residential use. They were located in zoning districts, such as TriBeCa and SoHo, which were restricted to only manufacturing use. Thus, even if the owner and tenants wanted to “legalize” these residential uses, the applicable zoning stood as a legal impediment.
Notwithstanding these issues, loft owners and tenants formed their partnership. So as to avoid potential liability for renting manufacturing spaces for residential use, owners entered into so-called “loft” or “commercial” leases with the artists, and gave the tenants tacit permission to develop these loft spaces and buildings for residential use. The tenants were rented large, open, undeveloped loft spaces, in most cases lacking legal light and air, plumbing, electricity, heating, hot water, fire egress, and other fundamental requirements of the New York City Building Code and Multiple Dwelling Law. The tenants therefore invested their money and sweat equity to do the conversions. They added these systems, bringing hot and cold water, heat, gas, and electricity to their spaces. They built the spaces out for their use, constructing walls for bedrooms, kitchens, bathrooms, studios, and living spaces. They paid for an installed fixtures and appliances.
As a result of the influx of these live/work artists into formerly dormant neighborhoods, those neighborhoods became vibrant socio-cultural communities. Naturally, demand for these spaces increased, as they were viewed as structurally unique and attractive. Non-artists became interested in living in loft spaces. Owners of loft buildings saw the opportunity to raise rents due to the increased demand, and thus attempted to evict the loft pioneers and exact higher rents from the rentals. The loft tenants fought back; they organized and lobbied for governmental protection.
In June, 1982, the Loft Law was enacted. In the Loft Law itself, the New York State Legislature expressly recognized the investment that loft tenant made in their spaces and to their communities, and the need to resolve the hazards created by illegal living in former manufacturing and commercial spaces. The Loft Law therefore provided rent regulation to spaces and people who are eligible for protection, and a structure for “legalization” of eligible loft buildings and spaces.
Upon completion of legalization of such Loft Law covered buildings and units, they are integrated into the rent stabilization system. Those buildings and units are required to be registered with the New York State Division of Housing and Community Renewal (“DHCR”). Owners are required to issue Loft Law tenants new leases that comport with the requirements set forth in the Loft Law, the Rent Stabilization Law, and the Emergency Tenant Protection Act of 1974.
Under the originally enacted Loft Law, buildings are eligible for “Interim Multiple Dwelling” (“IMD”) status if: they lacked a certificate of occupancy as a multiple dwelling as of June 21, 1982, were formerly used for manufacturing or commercial purposes, in whole or in part; and contained at least three units that were occupied for residential purposes from April 1, 1980 until December 31, 1981.
The Loft Law vested authority to administer the Loft Law in a New York City administrative agency, the New York City Loft Board. The Board’s function is, amongst other matters, to determine eligibility for coverage under the Loft Law, ensure registration of Loft Law covered buildings and units with the Loft Board, to determine the legal regulated rents for such Loft Law covered units, and to implement and administer the Loft Law’s legalization system.
The Loft Law has been subsequently amended to expand its basis for coverage. On June 21, 2010, the Loft Law was amended and a new “window period” was created. Pursuant to the 2010 amendment to the Loft Law, buildings are eligible for IMD status if: they lacked a certificate of occupancy as a multiple dwelling as of June 21, 2010, were formerly used for manufacturing or commercial purposes, in whole or in part, and contained at least three units that were occupied for residential purposes for at least twelve (12) consecutive months during 2008 – 2009. Under the 2010 Loft Law, each residential unit must have a window that opens onto a street, lawful yard or court, must have an entrance from a common area, must be at least 400 square feet in floor area, and cannot be located in a basement or cellar. The 2010 Loft Law additionally carves out exceptions for coverage for the following buildings: (1) buildings that are located in an Industrial Business Zone (except for the Williamsburg, North Brooklyn, and a part of the Long Island City Industrial Business Zones, which buildings may be covered if they otherwise are eligible) and (2) buildings that contained, on June 21, 2010 and actively and continually through the date of an application for coverage, a use contained in Zoning Use Groups 15 – 18 that the New York City Loft Board has determined is “inherently incompatible” with residential use in the same building.
The Loft Board Legalization Process
Narrative Statement/Occupant Review/Alternate Plan Disputes
Many Loft Law protected tenants do not have a basic understanding of the legalization/narrative statement process under the Loft Law or of their rights in that process. We advise and represent Loft Law protected tenants as they go through this complex, but extremely important, process, as it involves how Loft Law protected buildings and units get legalized, permits tenants to have a say in how legalization occurs, and requires careful management of deadlines, notices and meetings in order to ensure that Loft Law protected tenants’ rights are not undermined. Below is an outline of the legalization/narrative statement/occupant review/alternate plan dispute process under the Loft Law and the Loft Board.
- Owner Files Alteration Type-1 Application to Change Use (Legalize the Building/IMD units.)
- Within 15 days of filing the Alt-1, the Owner must serve all building occupants with a Narrative Statement describing the legalization work in the Alt-1 (units/common areas) and file the Narrative Statement with the Loft Board.
- Within 5 days of filing the Narrative Statement with the Loft Board, Owner must file a certification with the DoB that it has (i) served and filed its Narrative Statement; (ii) will comply with the other requirements of the narrative statement process; (iii) will file a Tenant Protection Plan; and (iv), important, prior to obtaining a work permit on the Alt-1, will file a letter with the DoB issued by the Loft Board certifying that the Owner has complied with the Narrative statement process.
- Within 30 days of filing of the Narrative Statement, the Loft Board will give notice that a Narrative Statement conference has been scheduled at the Loft Board, with owner and tenants having a right to attend. Owner will be prepared to describe its plan and tenants will have an opportunity to raise questions, comments or objections.
- After the completion of Narrative Statement conferencing (which the staff typically determines in its discretion), the Loft Board staff may give the parties an additional 21 days to resolve any disputes.
- If the conferencing does not result in an agreement, the Board Staff will “start the clock.” The clock is a 45 day period (after the giving of a notice by the Board staff) for the tenants/occupants to file comments (i.e., objections) or an alternate plan to the Owner’s legalization plan, based on a claim that the Owner’s plan will either unreasonably interfere with their use of their unit or will diminish requires services.
- The failure to file comments or an alternate plan within the 45 day period waives any right the tenant/occupant may have to comment or file an alternate plan (the period can be extended if “good cause” is shown.) This means that the Loft Board will approve (certify) the owner’s plan.
If an Alternate Plan is Filed
- If any tenants/occupants file an alternate legalization plan with the DoB and it requires DoB review in order to determine whether it can be approved, it must be filed with the DoB by a registered architect or professional engineer.
- Within 5 days of the filing of the alternate plan, the tenant(s)/occupant(s) who filed it shall serve a narrative statement describing the contents of the alternate plan and the objections to the owner’s plan, as well as any increases in legalization costs caused by the alternate plan.
- The tenants/occupants’ representative (architect or engineer) then has to clear any objections at the DoB through plan examination. The architect/engineer must take “all reasonable and necessary” actions to cure the objections within 45 days of receiving any notice of objections from the DoB on the alternate plan.
- The owner is required to clear any open objections that have been issued at the DoB on its plan as well. The Owner’s architect must take “all reasonable and necessary” actions to cure the objections within 60 days of receiving any notice of objections from the DoB on its legalization plan.
- If the tenant/occupant has cleared the objections (after taking reasonable and necessary action to do so), then within 30 days thereof, the tenant/occupant must give notice to the Loft Board so that the alternate plan shall be referred to the Loft Board for resolution.
- Upon referral of the alternate plan to the Loft Board staff, the staff will review it and may commence a “proceeding” to determine whether the Owner’s plan will unreasonably interfere with the tenants/occupants’ use or diminish required services.
- Both owner and the tenants/occupants who filed the alternate plan will be given an opportunity to make written submissions on this issue.
- The Board staff can then either refer the matter to OATH (if a fact-finding hearing is required (i.e., if the parties disagree on the material facts regarding unreasonable interference or diminishment of required services), or can resolve it themselves if no fact-finding hearing is necessary.
- If the Loft Board staff keeps it, and finds that there will be an unreasonable interference or diminishment of required services, then it will direct the Owner to incorporate the tenants/occupants plan into its legalization plan within 60 days. If the Owner fails to do so, the Loft Board may “certify” the tenants/occupants’ plan.
- If the Loft Board staff keeps it, and finds that there will not be an unreasonable interference or diminishment of required services, then the staff will certify the Owner’s plan, which means that, provided the Owner has cleared all other DoB plan examination objections, the Owner can get approval and a work permit from the DoB.
If no Alternate Plan is Filed
- If no alternate plan is filed, and when the DoB has no further objections to the Owner’s plan, the Loft Board staff will issue a certification that the Owner has complied with the Loft Board’s Narrative Statement process. This is a written certification that gets filed with the DoB, thus clearing the Owner for approval and issuance of a work permit by the DoB.
Amendments to the Owner’s Legalization
- When an Owner amends its legalization plan prior to Loft Board certification of it, the Owner must serve and file an amended Narrative Statement describing the changes to the plan.
- The Loft Board will then issue a notice to the tenants/occupants of the amended Narrative Statement.
- Within 40 days of the notice, any tenants/occupants affected by the amended Narrative Statement may file comments or an alternate plan on the amended Narrative Statement to the extent that it changes the original legalization plan. The alternate plan procedure for a pre-certification amendment follows the procedure described above.