For some Hamptons homeowners, short-term summer rentals provide intentional, meaningful business income. For these folks, the Housing Stability and Tenant Protection Act of 2019 could be catastrophic.
This letter is based on our own experience, renting our own home over the last week, as the profound impact of the law affecting our family “business” became apparent.
Let’s look at the portion of the law on “deposits.” Deposits are now limited in value to one month, and must be returned if the tenant changes their mind.
Is this important? Let’s look at this comment on the law: “For people who are very low-income or even homeless, the security deposit can be a big barrier,” said Maria Foscarinis, the director of the National Law Center on Homelessness & Poverty. Clearly, the law was intended to help these folks. But perhaps this burden belongs on the state, not the landlord.
Let me present the hypothetical experience of George J.
George J. accepted an offer of $100,000 for July and August. His lawyer said that he could ask for one month, or $50,000, as a deposit. But how could he keep that much on July 1, when he was finally allowed, by law, to collect the first month’s rent? Furthermore, since the deposit was fully returnable, did it matter how much?
Therefore, the contract was written for a $25,000 deposit, $50,000 in “rent” payable on July 1, and $50,000 in “rent” payable on August 1.
“You know what?” George said to his lawyer. “If the tenant backs out at the last moment, at the very least, I’ll keep that deposit.”
“Well,” said the lawyer, “if the tenant takes you to court, you could be fined double this amount, according to the new law.”
Let me circle back to the comment about low-income people and security deposits. Clearly, the Housing Stability and Tenant Protection Act was intended to regulate an apartment landlord, with many tenants. If a landlord loses money on one tenant, perhaps he has 20 other successes.
Unlike this landlord, George J. only has one asset. If that tenant backs out in June, George just might become the “low-income” beneficiary that Maria Foscarinis had in mind. But if George has deep pockets, and is an apartment landlord as well, then he, like many landlords in New York, will be moving his money out of New York State. Property devaluation is the hidden impact.
The reader should note that this “security deposit” issue is just one small part of an egregious taking of property owner rights embodied in this new measure. I encourage you to read the law and see what the politics of a one-party system can produce.
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One fine body…