Do Ask, Do Tell ... For Now: Co-ops, Condos and Bedbug Disclosure
October 22, 2010 — As Habitat exclusively reported online in June, even a legislative source involved with New York State's bedbug disclosure law, which took effect August 31, didn't know whether the use of the word "lease" meant that it only applied to rental tenants or also to co-ops, which operate under a building-wide proprietary lease. Asked to provide an answer directly from the horse's mouth, the aide investigated and then called back to say he was "getting conflicting info on the co-op answer."
Now, however, the Department of Housing and Community Renewal (DHCR), the state housing authority that handles rent-regulated and rent-stabilized apartments, has reached an internal consensus that it has communicated informally to members of the real-estate community, while promising a written policy in the near future. And one real-estate attorney says the industry itself had adopted a "provisional" consensus — one which, like the on-again / off-again "don't ask, don't tell" rulings being lobbed among federal judges like a hacky sack, will likely change as courts, agencies and perhaps even the legislature again weigh in on exactly to whom the law applies. For now, as best the real-estate industry can figure, it applies across the board — as in the co-op board.
"I'm not aware of any written clarifications or regulations that have been issued" in the confusing wake of the law, says Eva C. Talel, a partner at Stroock & Stroock & Lavan and co-head of that law firm's co-op and condominium practice. "But our understanding, from our conversations and meetings with various groups of real estate professionals, including REBNY [the Real Estate Board of New York] and attorneys who have been trying to get clarification of what this statute covers, is that the law does apply to co-ops." She called this a "provisional position — the position for right now." As for the DHCR's promised written policy, she says that as of today, "I can tell you we haven't received anything."
The new law, an amendment to the New York City Housing Maintenance Code, requires owners / managing agents of residential rental property to give each tenant signing a vacancy lease with history of the property’s bedbug (also spelled "bed bug") infestation during the past 12 months. Initiated by Assemblywoman Linda Rosenthal (D/WF – 67th District), who represents Manhattan's Upper West Side and part of Hell's Kitchen, and sponsored by her in the Assembly and Jose Peralta (D/WF, Queens) in the Senate, it addresses the bedbug invasions New Yorkers know all too well. Nearly 11,000 calls about bedbugs were made to the 311 helpline in 2009, compared with 537 in 2004, according to the City. Confirmed infestations have also increased in New York City from just 82 in 2004 to 4,084 last year.
D'oh HCR!
The DHCR's informal statement, obtained by Habitat, said that cooperative corporations must comply with the bedbug law "upon vacancy (sale or sublet) ... since there will be a new proprietary lease or sublease involved." Individual condominium unit-owners must comply with the law when leasing their apartment, but not when selling it."
Ironically, sponsor Rosenthal herself "says she did not intend for this to apply to co-ops and condos," says Talel. "That was not clear to DHCR," which historically has had no jurisdiction over co-ops, condominiums or market-rate apartments.
"The statute just really doesn’t work on its face," the attorney says. "The statute speaks of landlords and owners on one hand, and tenants on the other hand, and a 'vacancy lease,'" which is a specific compound noun under rent-stabilization law. "Co-ops don’t line up that way," Talel notes. "The legal structure of a co-op doesn’t have traditional landlords or building-owners. The buildings have tenant-shareholders. The statute doesn’t really line up at all with the realities of New York law as regards co-ops."
None of this should be taken as an endorsement of not informing new residents of past bedbug infestations. Doing so is a good and ethical thing. But vaguely worded law is bad in a policy sense, and opens the door to a domino effect of unintended consequences.
Real-estate professionals expect the law to be amended to add a line saying something to the effect of, "Nothing in this statute shall apply to condominium owners or residential cooperative corporations." Why it wasn't in the first place, given Rosenthal's reasonable desire to focus on vulnerable rental tenants, is simply a case of human oversight. If ever the profession of editor should be valued, it's times like these.
Illustration by Marcellus Hall