RETROACTIVE EFFECT OF HOUSING STABILITY AND TENANT PROTECTION ACT

 LANGDOC v. Warden, 2021 NY Slip Op 21009 - NY: City Court, Cohoes January 25, 2021:

"The tenants took possession of the apartment on November 15, 2018. The lease, by its terms, created a month to month tenancy. Further, the lease provided either party could terminate the lease upon thirty days' written notice. On or about May 29, 2020, the landlord served the tenants with a notice to vacate the apartment by July 1, 2020. The notice was sufficient under the terms of the lease. However, the tenants refused to vacate. In turn, the landlord commenced a holdover proceeding (RPAPL 711[1]).

Tenants have moved to dismiss the Petition. They say that while the thirty-day notice was sufficient under the lease (and it was), the notice was insufficient as a matter of law (Real Property Law ["RPL"] § 226-c). RPL 226-c[1] governs the notice a landlord must provide in situations where "the landlord does not intend to renew the tenancy. . . ." The length of the required notice is set forth in RPL 226-c[2]. As here, where "the tenant has occupied the unit for more than one year but less than two years. . . the landlord [must] provide at least sixty days' notice" to the tenants to vacate (RPL 226-c[2][c]).

This much is clear, the thirty-day notice failed to comply with the required statutory notice. However, before the enactment of RPL 226-c, the parties had agreed that a thirty-day notice would suffice to end the tenancy. So, the initial question is whether RPL 226-c can reach back and alter an established contractual relationship between the parties. The general rule is that a civil statute does not have retroactive effect. "[S]ince the beginning of the Republic and indeed since the early days of the common law: absent specific indication to the contrary, the operation of nonpenal legislation is prospective only" (Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 US 827, 841-42 [1990] [Scalia, J. concurring]. The reason for such a presumption is simple—people should be able to order their lives and make transactions in reliance on the law. Legal changes always come, but change must not cause instability. Stability stems from people's faith that an arrangement consummated one day will not be undone the next by a new act of the legislature.

The Court of Appeals has developed an approach to retroactivity that seizes upon the legal stability founded in settled expectations. As the Court noted, in some instances, the application of a new statute to conduct that has already occurred may not necessarily upset people's reliance interests (Regina Metro. Co., LLC v. New York State Div. of Hous. & Community Renewal, 35 NY3d 332, 365 [2020]). Thus, a statute should not have retroactive effect "if it would impair rights [that] a party possessed when he acted, increase a party's liability for past conduct, or impose new duties with respect to transactions already completed" (Id [internal citations and quotations omitted]). In contrast, "a statute that affects only the propriety of prospective relief or the nonsubstantive provisions governing the procedure for adjudication of a claim going forward has no potentially problematic retroactive effect." (Id at 365-66 [internal citations and quotations omitted]).

To begin with, there is no question that the timing to reassert possession and prevent a tenant from holding over (or allowing a tenant to quit the lease without additional rent) is a fundamental component that defines and creates a property right (see Carlo v. Koch-Matthews, 53 Misc 3d 466, 471-472 [City Ct 2016] [reviewing historical underpinnings of month to month tenancy]). Consequently, if RPL 226-c is read to void the lease's notice provision, it voids a property right and its retroactive application would be problematic. This is because the landlord can only terminate a tenancy upon service of an adequate notice and if the thirty-day notice is invalid, then the tenants' property interest never ended (Anderson v Prindle, 23 Wend 616, 619 [1840]; Sills v. Dellavalle, 9 AD3d 561 [3d Dept 2004]). In other words, in a void notice situation, the tenants' possessory interest in the premises continues until a new and proper notice is served to terminate and extinguish that interest. Therefore, if the landlord's thirty-day notice is void, then the court would have to dismiss this holdover proceeding because the landlord has no right to claim possession of the premises (Chinatown Apartments, Inc. v. Chu Cho Lam, 51 NY2d 786, 788 [1980]).

However, the court does not read RPL 226-c to invalidate a notice that fails to comply with its mandate. On this point, the statutory language is clear: "[i]f the landlord fails to provide timely notice, the occupant's lawful tenancy shall continue from the date on which the landlord gave actual written notice until the [statutory] notice period [as defined in RPL 226-c[2][a-c]] expire[s]" (RPL 226-c[1] [emphasis added]). Thus, a notice that fails to comply with RPL 226-c is not void and nothing in the statutory scheme requires the landlord to serve the tenants with a new notice to vacate the apartment. Rather, RPL 226-c extends the tenancy for a period to match the notice required by statute. That means the day after the required statutory notice expires, the tenant's occupation becomes illegal.

In sum, RPL 226-c does not destroy a property interest, it only makes the landlord wait before he can assert that interest in court. Thus, the court concludes that RPL 226-c "affects only the propriety of prospective relief" without disrupting the landlord's property right (Regina Metro. Co., LLC, 35 NY3d at 365). Therefore, RPL 226-c's time frames govern this case and not the lease provision, even though the parties had agreed to what would constitute proper notice prior to RPL 226-c's passage. In this case, since the tenants were served on May 29, the tenancy continued for sixty days (RPL 226-c[2][c]). After the sixty days expired (which was on July 28), the tenant's occupation became illegal and the holdover proceeding became ripe to be heard without the necessity of the landlord serving another notice to vacate upon the tenant.

This brings the case to a second timing issue. The landlord filed the Notice of Petition and the Petition on July 27. These documents were served upon the tenants August 13. Both these dates have legal significance. This holdover proceeding was commenced on the date of filing of the Notice of Petition and the Petition, which was a day before the expiration of the tenancy (UCCA 400[1]). However, the court obtained jurisdiction over the tenant upon the service of the papers which occurred after the expiration of the tenancy (UCCA 400[2]). This means that the holdover proceeding was premature at the time of filing but ripe at the time of service. Which time controls, all the difference makes.

The outcome of the case turns upon when the holdover proceeding is considered commenced. Determining a commencement date for a special proceeding is murky business and context dependent. "[T]he question of when a summary proceeding is `commenced' must be answered differently, in this context and others, depending on the context in which the question arises" (92 Bergenbrooklyn, LLC v. Cisarano, 50 Misc 3d 21, 24 [App Term, 2d, 11th & 13th Jud Dists 2015]).

Here, service represents the critical moment in a holdover action. Indeed, the law provides for the initiation of a holdover proceeding via Order to Show Cause "on the day of the expiration of the lease" (RPAPL 733)—which means that a holdover proceeding technically can be commenced in anticipation of a tenant holding over. This lends support to the proposition that service of the Petition rather than its filing is the key to determine ripeness. After all, it is the service of the Petition, not its filing, that places the tenant under legal compulsion to respond. Therefore, the court holds that commencement occurs upon service for the purposes of determining ripeness in the context of a notice to quit.^[1]

Accordingly, the court concludes that if on the day of service, the tenant still has possessory interest in the premises because the notice to quit has yet to expire, then the case has been brought prematurely and must be dismissed. In contrast, if on the day that the Petition is served, the landlord has possessory interest, then the case has matured and should not be dismissed. Here, the date of service was after the expiration of the notice to quit, thus the landlord has the prima facia right of possession. Thus, the landlord's holdover proceeding is ripe to adjudicate and the tenants' motion to dismiss is denied.

Finally, the landlord commenced this proceeding prior to the effective date of the Emergency Eviction and Foreclosure Prevention Act ("EEFPA") (C 381, L 2020). Section 2 of the EEFPA directs that all such proceedings be stayed for a period of at least sixty days from December 29, 2020. Therefore, the court will stay this proceeding until March 1, 2021 at 9:30 a.m., at which time the court will hold a conference. Parties may appear virtually.

The forgoing constitutes the Decision and Order of the court.

[1] Moreover, the court's reasoning is in accord with analogous situations. For example, the commencement of a hold over proceeding is determined from the date of service (rather than the date of filing) in applying the rule that the landlord's acceptance of rent from a tenant before commencing a holdover proceeding voids the proceeding (92 Bergenbrooklyn, LLC, 50 Misc 3d at 24-25)."