June 2015: Business Law

Small business law for landlords

Columnist Larry Covell

Columnist Larry Covell

One type of small business owner is a landlord who may have one or more residential units for rent. If a landlord has been in the residential rental business for any length of time, he or she will have had the unpleasant task of evicting a tenant. Evictions are governed by the Real Property Actions and Proceedings Law. It establishes the legal framework for when and how an eviction is to occur. The legal term for an eviction is called a summary proceeding and it is designed to grant the landlord possession of the rental unit, a money judgement for unpaid rent, and a warrant of eviction.

Most summary proceedings are either a non-payment proceeding or holdover proceeding. The non-payment proceeding is self-explanatory in that the tenant has not paid the rent as agreed to. Holdover proceedings can be, for example, a month-to-month rental relationship has ceased or a provision in the lease agreement was violated by the tenant.

If the landlord wishes to initiate a summary proceeding either for non-payment or a holdover, notice must be given to the tenant. This is called a “predicate notice.” If the predicate notice is not given, improperly served on the tenant, or has incorrect information in it, the summary proceeding can be dismissed by the court. This means that the landlord must go through the entire predicate notice process again and in the interim, the tenant is allowed to remain on the premises.

If the landlord intends to initiate a non-payment proceeding, the residential lease agreement must be examined first to determine the method of serving a notice on the tenant. In absence of contract language, the landlord must follow the dictates of the RPAPL. The statute provides that the predicate notice is a “demand for payment” and it may be given orally or in writing. If the landlord selects the oral notice method, then the landlord can simply speak with the tenant after the rent has become due. The oral demand for payment must be decisive, unequivocal and specify the time period and amount of rent due. The major problem with this method is that the landlord has the burden of proving at the summary proceeding that a proper demand for payment was made.

If the landlord selects the written demand method, a “three-day demand notice” is given to the tenant. The three-day notice must state that tenant is obligated to pay the unpaid rent or move out of the premises, the time period for which the rent is owed, and any amount owed in arrears. The three-day notice cannot simply be mailed to the tenant, rather service of the notice must be personally served on the tenant, given to a person of suitable age and discretion who lives in the rental unit, or the notice can be left in a conspicuous location after reasonable attempts to personally give it to the tenant. If service of the three-day notice is performed by any method than other than personal service, a follow up mailing must be made or service is deemed incomplete. This means that the landlord must mail a three-day notice to tenant by certified or regular first class mail.

As mentioned, if the action is for something other than rent owed, it is usually considered a holdover proceeding. A predicate notice is still required but it is different depending on the type of holdover proceeding. In a month-to-month tenancy there is one month or 30-day predicate notice. A month-to-month tenancy usually isn’t created by a written lease and the tenancy continues so long as the tenant pays the monthly rent and the landlord continues to accept the payment. If the landlord wishes to terminate the relationship, a thirty-day notice must be given before the legal proceeding can be initiated. The notice may be oral or written and if written, it is satisfied when the tenant is notified by certified or first class mail. The written notice must be timely served, unequivocal in its terms, and state that the landlord-tenant relationship terminates on the last day of the rental term.

If the landlord wishes to initiate a summary proceeding because the tenant has violated a clause in the lease agreement, notice must be given to tenant as well. The notice must explain what acts the tenant committed which give rise to the notice, give the tenant a time period, usually 10 days, to “cure” the problem and if the tenant fails to do so, a summary proceeding will be started for eviction. Service of the notice on the tenant must conform to the requirements of the lease agreement and if the lease agreement has no such provision, the landlord can serve the notice via personal service or mail.

In the August issue, I will continue with chronological legal steps in a summary proceeding.

Larry Covell is a professor of business at Jefferson Community College and an attorney. Contact him at lcovell@sunyjefferson.edu. His column appears bimonthly in NNY Business.