You have a rent stabilized apartment in a coveted neighborhood in New York City. You can’t believe your luck. A two bedroom/one and a half bathroom in a great building for a third of what your friends and colleagues pay. One day, there’s a knock on your door. It’s a representative from the new management company for the building to tell you that it has been sold and the new owner, to put it gently, wants you out. The representative offers to pay for your moving expenses and, because they are feeling generous, will let you stay in the building rent-free for the next couple of months while you secure a new home. You consider your options: You can hire a lawyer to fight the looming eviction (because that’s the implicit threat) or you can take the “generous offer” and find your next apartment. After all, living in New York City is the life of a nomad, right?
This is an all too common story for rent stabilized tenants in New York City. And the outcome, that their ouster by the new owner is a fait accompli, for moving expenses and pocket change, is equally common. But it shouldn’t be. The rent stabilization law makes it very difficult for a landlord to evict tenants in rent stabilized or rent regulated units. There are exceptions to the rule, but if your new owner is seeking to make a profit off his or her new purchase, and that’s the likelihood, then it is equally likely that no exception applies. And it is moreover likely that the new owner will pay more than moving expenses and pocket change to gain possession of your unit.
If no exception applies, and you are safeguarded by the robust protections of New York City’s Rent Stabilization Law, you have a very valuable commodity. For that reason, you should recognize that you don’t have to leave. Many rent stabilized tenants have been in their apartment for years, if not decades. It is their home and they have no intention of going anywhere. And if that is your stance, you certainly don’t have to. But, if you recognize that knock on the door as an opportunity, as an invitation to negotiate, you should also recognize that you have a lot of, if not all of, the leverage in the negotiation to come. The new owner wants you out, but typically cannot get you out without your consent. A lot of leverage means that you should not take the first offer conveyed upon that knock on your door. Instead, you should endeavor to determine what the unit is worth both on the open market and to your new landlord.
When a client comes to our firm seeking guidance in the face of that door knock, we undertake extensive due diligence. We seek to learn as much as possible about the new landlord: is it a big developer, is it a mom and pop shop making their first purchase, is it a fund, is it an individual? What kind of buildings has this landlord purchased in the past? What has the landlord done with those buildings after their purchase? Have they converted the building to a condominium structure? Have they rented out individual units? Doing this kind of exhaustive homework on the new owner can provide important clues into how they intend to turn a profit off of your building. Once we have those clues, we can begin to paint the picture of how the new owner values your particular unit.
From there, we analyze the market value of your unit, both on the rental and sales fronts. We hire a local broker to provide a market analysis of your unit. Using that information in conjunction with what we have learned about the new owner and their past practices, we develop a counter-offer which accurately reflects the value of surrendering your lease. Information is power and we have found that coming to the negotiating table with a counter-offer fully supported by market data makes for successful results.
It is equally important to understand that the regulatory space that these negotiations operate within. Many new owners are seeking to convert their purchase to a condominium or cooperative structure. Condominium and cooperative conversion is regulated by the New York State Office of the Attorney General, and owners seeking to convert their purchase may have additional obligations which could impact the fabric of surrender negotiations.
In short: a knock on the door by the friendly new owner of your building should result in a dialogue more complex than a conversation about moving fees. Whether you want to stay or are seeking the most compensation possible for surrendering your unit, you should contact an adviser with experience in this space to navigate the complex economic and regulatory framework. As a New York City tenant this is likely a once in a lifetime opportunity: Do your homework and seek sound professional advice to arrive at the best possible outcome for you and your family.