Rent controlled apartment question

Not a lawyer, but I'd have the living one sign, and return the lease with a letter explaining the death of the other.

Buyout is a good idea if the survivor can find someplace else to live where he/she WANTS to move (i.e. it won't kill him to be uprooted from a familiar neighborhood, etc.). But proceeds are taxable as income, and that in turn can affect things like Social Security.

There are professional buyout negotiators, who take a cut (1/3?). Negotiation position is weak if the tenant initiates, of course, and especially if tenant wants to get going quickly. Strongest if LL wants to tear the building down altogether for redevelopment.

Sale of a long term lease might entitle the tenant to receive up to $250,000 tax free

Would not get the 250k exclusion b/c would fail the ownership test. Surrender/sale of long term lease would lead to LTCG treatment tho, not OI.

Anyone have recommendations of an attorney that handles this kind of thing? Or even the buyout specialist alanhart suggested? I have no idea what kind of buyout we could hope to get, but I know that the market value is at least $25k more per year than what the current rent is. Of course, the apartment would have to be renovated to command market rates.

We probably would not bother with this except management has treated them poorly for so long and not looking to throw any bones to them.

Most landlords calculate how much they’re willing to pay for a buyout by calculating their “payback period.” I think a 4 year payback period is fairly common. If he can collect $25k more per year then most landlords would be willing to put out about $100k for that increased cash flow. The cash out would include the buyout plus the amount of work he would need to put in the apartment to legally raise the rent.

It gets tricky to figure out how much the landlord would need to spend.
If the apartment is indeed "rent controlled" then there is one set of rules. But my guess is the apartment is really "rent stabilized.” Accordingly, upon vacancy the landlord would get an 18% increase right away. Then, in buildings with "more than 35 apartments" the owner can raise the rent by 1/60th of the costs of the renovation (note that not all of the renovation costs count but most do). In a 35 unit building the landlord must spend $60,000 to raise the rent by $1,000/month ($40,000 for a $1,000/month increase in a smaller building). Once the landlord gets the rent over $2,500/month, he can charge whatever he wants.

SOOOOOO
If the tenants current rent is $2,200 and the apartment is in great shape - then the landlord wouldn't need to do any renovations to the apartment to rent it for $4,200 and he would probably be willing to give the tenant $100k to move. BUT,,,,,if the tenant is paying $500 and he lives in a large building the landlord would need to spend over $100,000 to legally raise the rent to $2,500 and it may not make sense to give anything.
Also note that once the landlord completes the buyout the City is going to raise his property taxes by 1/3rd of the rent increase (so in this case the property taxes will go up about $8,000/yr and the landlord would really only net about $16,000/year.

To approach the landlord it’s easy. Just tell him about the death. Tell him the other tenant on the lease would like a buyout. Tell the landlord that the tenant needs the money to move and without the money the tenant can’t afford to move. So either give the cash or give the renewal lease.

ps - I am not a lawyer - I am a landlord.

Currently have a friend that has a RS huge 2bd n 2bath with roof terrace in the 40's on the east side. Had the apt since 79 and since she didn't agree to move to a buyout for $125k meanwhile she pays about$1700 management is trying EVERY scumbag trick to get her for back rent from YEARS BACK. If the person can afford to stay...STAY

I agree with MIBNYC on this. Approaching the landlord first (that is, you/the tenant making the first move) is NOT a good negotiating step. Unless the tenant actually wants out of the apartment, WAIT until management/the LL approaches first.

:)

>I agree with MIBNYC

what a shock! MIBNYC, do you agree with Sonya?

>Approaching the landlord first (that is, you/the tenant making the first move) is NOT a good negotiating step. Unless the tenant actually wants out of the apartment, WAIT until management/the LL approaches first.

of course if you want to move, and the landlord is indifferent, this won't work very well, now will it?

Anyone heard from Brooks2 lately?

Jazzman,
Thanks for the info. Yes, the apartment is rent stabilized, not controlled . The rent is currently $1,500. If I understand correctly, the landlord is entitled to the automatic 18% increase to bring it up to $1,770. In order to break the $2,500 to deregulate the apartment, he would then have to spend at least $45,000 in renovations to gain the other $730/month to break the threshold. So a buy-out offer of $50,000 would be a reasonable starting point for us?

UESprospect a few things to consider in the valuation:
- Is $45k in renovations is enough to bring the apartment up to a standard where they can command the $2,900 monthly rent assumed?
- If the landlord has been in a real estate tax abatement program they might not be subject to the 2,500 threshold and may lower the amount they might be interested in paying out. Google "NYC j-51 List", go to the first result, and see if your building is on the list.
- If 50k seems like a fair middle point, don't ruin your negotiating stance by making it your starting point.