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Unraveling the Deemed Lease

17 September 2014

Common reasons that owners hire a property management company usually center around property upkeep, maintenance, and rent collection. As an owner, you might be concerned about filling vacant units or making sure that snow is removed. Now, here is the big question…how often do you think about the legal matters that owners face or how those legal matters might impact your bottom line?

When we are approached by new clients/owners, they usually fall into two groups – panicked and confused, or frustrated that they have been unable to navigate the complexity of property management and tenant law specific to New York City. At Newgent Management, we have proven that there is always a way to protect your investment.
You don’t own a property for the fun of it, right? Because let’s face it, owning a property (especially without hiring a property management company) is a massive amount of work! The goal should be to organically grow your investment and build wealth – which begs the question – how do deemed leases and holdover proceedings fit into generating revenue?

That’s where we come in.

Start at the beginning

The best place to start is at the beginning and make sure that we properly define two common terms.
Deemed Lease – In the past, when a rent regulated tenant failed to respond to the owner’s attempt to renew a lease, the owner had the right to “deem” the lease and collect increased rent.

Holdover – According to Robert Mizrahi, Esq. of Mizrahi Law Offices, a holdover proceeding “is where the focus of the suit is to evict a tenant/occupant in order to regain legal possession of the premises (whether or not a tenant is current on their rent is irrelevant.)

In other words, the law was on the side of the owners.

How the law has changed

At the end of 2012, the Rent Stabilization Code 2523.5©(2) dealing with renewal leases on rent regulated units was invalidated as a result of a property management ruling by the Appellate Division. What used to be a fairly straightforward process became increasingly complicated. We found that owners attempting to navigate deemed leases by themselves had trouble applying the new statutes without violating some portion of the new ruling.
We saw an increasing number of potential clients with fines, DHCR violations, and worst of all, we saw unhappy residents. Back in school, we were all taught the shortest distance between two points is a straight line. Right? The fastest way to increase wealth is to keep tenants happy!

  • Satisfied residents keep vacancies low
  • Satisfied residents tend to pay their rent on time
  • Most importantly, satisfied residents have pride in where they live


So, what happened?

We created an internal property management “roadmap” for successfully handling deemed leases, renewal leases on rent regulated units, and proper handling of holdover tenants.

Our methodology clearly outlines the timeframe that each step in the lease renewal process must be completed, and for each of our properties, we maintain a master calendar that includes key dates. Once the renewal lease has been sent (and if the tenant doesn’t respond) we go one step further than the regulations require by sending one final reminder to the tenant.

We feel that this extra step goes a long way toward positive residential relations, which almost always leads to profit. If the tenant still fails to respond, then we will engage our legal teams (always within DHCR regulations.)

Take a Trip on Newgent’s Property Management Roadmap

Still feeling a bit overwhelmed? We offer property management services for clients throughout the New York City metropolitan area including Manhattan, Bronx, Queens, and Brooklyn. Please contact us via our website or directly at CONTACT US for a personalized quote and walk-through.