Summer Rental Exception to the Housing Stability and Tenant Protection Act
On June 14, 2019 the Housing Stability and Tenant Protection Act (HSTPA) was enacted into law, making historically sweeping reforms to New York’s rent laws. Amongst these changes were the amendments to §7-108 of the General Obligations Law (“GOL”) contained in Part M of the HSTPA which took effect July 30, 2019. The new law limits the amount of a security deposit any person could charge a prospective tenant to one month’s rent and applies to both rent stabilized and unregulated tenancies regardless of the length of the tenancy. Additionally, the practice of charging advance rent for any portion of the lease term is prohibited. The law also imposes punitive damages for willful violations “of up to twice the amount of the deposit or advance.” GOL §7-108(g).
The only exceptions to the new security deposit and advance rental payment provision were contained in Subsection 1-a and included: dwelling units subject to the city rent and rehabilitation law or the emergency housing rent control law, continuing care retirement communities, assisted living providers, adult care facilities, senior residential communities, and not-for-profit independent retirement communities that offer personal emergency response, housekeeping, transportation and meals to their residents.
On September 20, 2021, Governor Hochul signed into law an important amendment to the aforesaid exceptions (Chapter 428 of the Laws of 2021), promoted by Assemblyman Fred Thiele. Recognizing that it is routine practice in popular summer rental destinations such as the Hamptons to charge an upfront single payment for the entirety of the seasonal term, the amendment excludes “seasonal use dwelling units” from the otherwise applicable one month restriction on security deposits and advance rent payments. GOL §7-108(1-a)(a). Subdivision 4 defines a “seasonal use dwelling unit” as one in which: “(a) the lease expressly provides that: (i) the dwelling unit is registered as a seasonal use dwelling unit, indicating the local or county government agency with which it is registered; (ii) the occupancy of the tenant is only for seasonal use not to exceed one hundred twenty days or a shorter period provided for in the lease; and (iii) such tenant has a primary residence to return to, the address of which is expressly provided in the lease.” GOL §7-108(4).
Seasonal use dwelling owners who wish to charge an upfront single payment for the entirety of the seasonal rental need to ensure that the rental term does not exceed 120 days and that they register their properties with their local county or government by filing a copy of the lease agreement with the appropriate seasonal use dwelling unit registry. GOL §7-108(5). While these new requirements may seem onerous, they preserve the established business practice of the short-term seasonal rental market which could have otherwise been negatively affected through its encompassment under the HSTPA’s blanket provision applicable to “all dwelling units in residential premises.”