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June 2019 Bill Amends Article 7-C of Loft Law-
More Buildings and Units are Now Eligible
Loft Law changes you might have missed following HSTPA enactment
On June 25, 2019, Governor Andrew Cuomo signed a bill amending Article 7-C of the Multiple Dwelling Law (the “Loft Law), expanding the number of buildings and units now eligible for coverage (the “2019 Amendments”). The 2019 Amendment did not gain much attention, as they were largely overshadowed by the enactment of the HSTPA and its wide-ranging impact on rent-stabilized buildings. However, by removing the limitations on coverage imposed by the 2010 amendments to the Loft Law (the “2010 Amendments”) and creating a new window period for coverage eligibility, the 2019 Amendments will potentially impact hundreds of existing loft buildings, as well as hundreds of new buildings that were not previously eligible for Loft Law coverage.
Under the 2010 Amendments, which became effective on June 21, 2010, buildings that lacked a Multiple Dwelling Law § 301 residential certificate of occupancy on the effective date, which were at one time used for manufacturing, commercial, or warehouse purposes and were occupied by three or more families living independently from one another for 12 consecutive months between January 1, 2008 and December 31, 2009, became eligible for Loft Law coverage, provided that the units (1) had at least one window opening onto a street, lawful yard or court, (2) were at least 550 square feet in area, (3) were not located in a basement or cellar, (4) were not located in an industrial business zone other than Greenpoint/Williamsburg, North Brooklyn and certain areas of the Long Island City’s industrial business zone and (5) were not located in a building that contained certain inherently incompatible use listed in Use Groups 15 through 18 of the Zoning Resolution. In 2013, the Legislature softened the 2010 Amendments by reducing the size of eligibility units from 550 square feet to 400 square feet which, in turn, increased the number of units eligible for coverage. The 2013 Amendments also set a deadline by which landlords and tenants had to file a registration and coverage application in order to qualify for Loft Law protection.
The 2019 Amendments significantly alter the restrictions implemented by the 2010 and 2013 Amendments. The 2019 Amendments abolish the filing deadline for the 2008/2009 window period. Accordingly, any unit that was eligible for coverage under the 2008-2009 window period that missed the filing deadline can now file for coverage. The 2019 Amendments remove the window requirement, meaning that units that do not meet the minimum light and air requirements of applicable zoning and building codes are now eligible for coverage. As such, the amendments place the onus of legalizing loft units that do not have adequate light and air on the owner during the legalization process.
In addition, units located in a basement are now also eligible for coverage. This shifts the burden to the owner to determine how to legalize units that otherwise would not qualify for residential use. Under the 2019 Amendments, inherently incompatible uses are now limited to uses within Use Group 18 which creates an actual risk of harm that cannot be reasonably mitigated. Furthermore, the maximum civil penalty for the failure to comply with the Loft Law was increased from $17,500 to $25,000.
Most significantly, however, the 2019 Amendments established a new window 2015/2016 period for eligibility. Specifically, units located in commercial, manufacturing and warehouse buildings, which were residentially occupied by three or more families living independently for 12 consecutive months between January 1, 2015 and December 31, 2016, are eligible for Loft Law coverage, provided the other elements of coverage are satisfied.
Accordingly, the 2019 Amendments have far-reaching implications by removing restrictions for coverage eligibility and establishing a new coverage window period.
In addition to the legislative changes contained in the 2019 Amendments, the Loft Board is in the process of amending its rules to address issues of coverage, the requirements for protected occupancy status and the rules governing legalization. These changes, like the 2019 Amendments, will significantly affect owners of buildings subject to the Loft Law. Of course, we will not know the true effect of the rule amendments until they are promulgated.