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Damage Mitigation Under the HSTPA
When the state legislature enacted the Housing Stability and Tenant Protection Act of 2019 (HSTPA), much of the statute's focus was on increased protection for rent regulated tenants. But the statute also includes a number of significant provisions that apply to market rate tenants. Among those are obligations imposed on landlords with respect to security deposits and a requirement that residential landlords mitigate damages, contrary to the longstanding New York rule. In 14 East 4th Street Unit 509 LLC v. Toporek (NYLJ 1/6/22, p. 18, col. 1), the First Department became the first appellate court to construe these provisions.
|The Case
In October 2017, the owner of a 10-room residential condominium unit in NoHo rented the unit to tenant for a two-year term at a rent of $17,500 per month for the first year and $18,000 per month for the second year. In August of 2019, the parties entered into a one-year renewal lease Tenant from November 2019 to October 2020 at a lower rent of $17,000. The renewal lease was executed after the effective date of the HSTPA. Tenant provided a $17,000 security deposit and the lease provided that the tenant would not use the security deposit towards rent.
In May 2020, when tenant failed to pay rent and indicated that he would live to move, the parties had a conversation which landlord memorialized in an email indicating that the apartment would be listed on StreetEasy as available for rent on July 1, but that tenant was responsible for restoring the apartment to its original condition, and would also be responsible for the cost of listing the apartment. Tenant then notified the landlord that he would be terminating the lease and moving out between June 1 and June 12, and asked landlord to apply the security deposit to the May rent. Landlord's lawyer then notified tenant that his request to terminate the lease prematurely was denied and that tenant would not be allowed to apply the security deposit to unpaid rent. The lawyer's letter also advised tenant he would remain responsible for rent until the close of the lease, and that the security deposit would be withheld until tenant vacated and the damages were assessed.
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