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New York City Loft Board
What Tenants Should Know

The Loft Law confers rights and obligations on all IMD tenants.  Among the many rights IMD tenants enjoy is the right to sell the improvements a tenant has made to his or her unit and the right to sell the tenant's interest in an IMD unit.  Additionally, the Loft Law imposes certain obligations on IMD tenants, such as the requirement to provide an owner access to their IMD unit for the owner to conduct work, repairs, and inspections.

Sales of Improvements
The improvements in a unit are those fixtures and alterations that were made to the unit by the residential tenant. The terms "fixtures" and "alterations" are defined in § 2-07(a) of the Loft Board's rules. Improvements may include kitchen and bathroom fixtures, as well as interior partitions and special flooring. A protected occupant of a covered IMD unit who has decided to move out may sell the improvements to a prospective incoming tenant. The improvements in a unit may be sold only once. If there has been a prior sale of improvements in that unit, there can be no further sales of improvements.

The owner of the building must be given the right of first refusal, that is, the tenant must first offer the improvements to the owner for an amount equal to their fair market value. The rules governing sales of improvements (§2-07 of the Loft Board's rules), contain detailed instructions on the timing of various steps.

If the owner purchases the improvements, the owner may charge a higher rent to the next residential occupant of the unit. If the building had fewer than six residential units on the effective date of the Loft Law, the unit becomes fully exempt from rent regulation. If the building had six or more residential units on the effective date of the Loft Law, the owner may rent the unit at market rate subject to subsequent rent regulation. If the owner chooses not to purchase the improvements at the price determined by the Board, the sale between the tenant and the prospective tenant may take place.

An owner whose tenant has offered to sell the improvements in accordance with the provisions of § 2-07 is entitled to inspect the improvements to determine their value and decide whether to purchase them. An owner also has the right to ask the tenant to supply additional information about the improvements or about the prospective tenant, as long as the requests are reasonable. The owner must act expeditiously and adhere to the deadlines set forth in the rules, or else risk waiving the right to purchase the improvements or the right to challenge the sale or the suitability of the incoming tenant.

If the owner chooses to challenge the sale, the owner must commence a proceeding with the Loft Board following the special rules for such proceedings set forth in § 2-07. If the owner challenges the fair market value of the improvements, the Loft Board will have an independent appraiser inspect the unit and place a value on the improvements. If necessary, a hearing will be held to determine the value of the improvements.

An owner who purchases a unit's improvements must notify the Loft Board of the sale, using forms obtained from the Loft Board. Failure to do so may result in the imposition of fines.

Related Forms
Sales of Improvements Disclosure Form
Improvements Sales Record

Sales of Rights
The residential occupant of an IMD unit may sell the rights to the unit i.e., sell the protections granted to IMD occupants pursuant to Article 7-C of the Multiple Dwelling Law ("MDL") to the owner of the building.  Such a sale constitutes a sale of all rights in the unit.  The owner must file a record of the sale on the sales record form issued by the Loft Board.  Failure to file the sales record within 30 days of the date of the sale may subject the owner to a civil penalty, as determined by the Loft Board.

If, after the sale, the owner intends to use the unit for non-residential purposes, the owner must file a Declaration of Intent form with the Loft Board and the owner will be relieved of its obligation to comply with the requirements of legalization pursuant to Article 7-C of the MDL. However, the unit may not be converted to non-residential use if there is a harassment finding by the Loft Board as to any occupant(s) of the unit, which has not been terminated pursuant to § 2-02(d) of the Loft Board's rules.

If, after the sale, the unit is to remain residential, the owner remains subject to all of the requirements of Article 7-C, and the regulations and orders of the Loft Board, including legalization requirements, except that the unit will no longer be subject to rent regulation, provided that there is no finding by the Loft Board of harassment as to any occupant(s) of the unit, which has not been terminated pursuant to § 2-02(d) of the Loft Board's rules.

The Loft Board rules governing sales of rights are set forth in § 2-10 of the Loft Board rules.

Related Forms
Sales Record
Declaration of Intent form

Access
The Loft Law requires every IMD tenant, upon appropriate notice regarding the timing and scope of the work to be performed, to provide the owner with reasonable access to its units so that the work necessary for legalization of the unit can be carried out.

Access also must be provided, upon appropriate notice, to allow inspections and surveys of an IMD unit, as may be required for the purpose of legalization. 

Upon the failure of an IMD occupant to provide such access, the owner may apply to the Loft Board for an order directing the tenant to give the owner reasonable access to the unit.  Access applications are processed via expedited procedures.  The failure of a tenant to comply with a Loft Board order regarding access is grounds for eviction of that occupant in a proceeding brought before a court of competent jurisdiction.

The Loft Board rules governing access issues are set forth in § 2-01(g) of the Loft Board rules.

Related Forms
Access Application

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