by Douglas L. Fromme
Over eight million people reside in the City of New York. Residential living space is severely limited. Intense demand for residential living space has driven the price of a tiny studio apartment in Manhattan well above $2,800. per month. The solution for many to obtain a reasonable amount of space at an affordable rent is to seek out “loft-type” space in commercial buildings in the outer boroughs.

Areas of Brooklyn, in particular, lend themselves to this type of use.
Substantial square footage in these areas can often be obtained for a modest
rental thereby providing struggling artists, as well as middle class
tenants, an apparently ideal solution to their housing needs.

Not surprisingly, a cottage industry of entrepreneurs has developed to
capitalize on this phenomenon. Some have leased entire floors in commercial
buildings, converted the space to multiple individual apartments, often at
substantial expense, and then reaped substantial profits from the
residential leasing of these apartments.

Although owners of commercial buildings could collect higher rents if they
directly rented residential space in those buildings, they are often
unwilling to engage directly in this lucrative practice for fear of the
possible consequences. The legislative enactment of the “Loft Law” in
1982(*) has had a chilling effect.

Prior to the enactment of the “Loft Law”, owners of commercial buildings
could rent space in these buildings for residential use, raise the
residential rents without restriction, and could refuse to renew residential
leases without the tenants having any actual recourse. The “Loft Law”
changed all of this. The “Loft Law” required owners to convert their commercial
buildings, at great expense, to lawful residential dwellings. The “Loft
Law” also bestowed upon their “illegal tenants” the protections of the “Loft
Law” and subsequently the Rent Stabilization Law.

Many owners who are unwilling to lease their commercial premises for
residential use often ignore when one of its commercial tenants, under a
purely commercial lease, converts portions of the building to residential
use. These owners believe that they can deny knowledge of the residential
use and thereby avoid the consequences of the illegal use of the building.

Recently, due to the growing practice of illegally converting commercial
rental space to residential use, the attention of various government
agencies in New York City has become focused on these buildings. There have
been exhaustive inspections by various New York City agencies to determine
the location of these illegal residential spaces, and the seriousness of the
health and safety hazards that they present. As a result, both landlords
and tenants have been forced to re-evaluate these living arrangements.
Landlords and tenants are now concerned about the con-sequences of these
situations and how will they will be affected by them.

There are many reasons why the residential use of commercial rental space is
prohibited by law. One reason is the safety of the occupants of residential
premises. In order to protect these tenants, various safety standards have
been imposed upon residential premises by New York City under the Building
Code, Multiple Dwelling Law, Housing Maintenance Code, Health Code and
various other sections of local and state law.

Many commercial premises fall far short of meeting the requirements for
residential living quarters. However, when enforcing the various local
codes and regulations, New York City officials often balance the housing
needs of the residential occupants against the safety concerns arising from
the residential use of the premises.

For more info on this and other legal matter as concerns real estate please contact me below.

Douglas L. Fromme specializes in all aspects
of landlord/tenant litigation.
Mr. Fromme can be reached
at (516) 745-1380.

* McKinney’s Consolidated Laws of New York Annotated, Multiple Dwelling Law,
Chapter 61-A of the Consolidated Laws, Article 7-C - Legalization
of Interim Multiple Dwellings.

** A “de facto” multiple dwelling is a building that, although not legally
classified as a multiple dwelling, is being used as a multiple dwelling.