New York State Law Now Prohibits Landlords from Charging Legal Fees Incurred Without a Court Order

Governor Kathy Hochul recently signed RPL 234-a into law prohibiting landlords
from assessing legal fees and other administrative charges in connection with the operation or
rental of a residential dwelling. The bill outlaws assessing these fees unless they are awarded
pursuant to a court order.

It had been a common practice for a landlord, who was compelled to enlist the aid of counsel to
serve a rent demand or other notice of default, to bill the tenant for its costs associated with
the preparation of such demand or notice, even if the matter never eventually proceeded to
court. The law now expressly prohibits this practice.

Now, the only way to collect legal fees, despite any lease language to the contrary, is for a court
to award such fees in a legal proceeding, usually a landlord-tenant eviction proceeding.
As a practical matter, it would rarely, if ever, be cost-effective for a landlord to bring such an action to collect such fees independently in a separate legal action.

Landlords should also be reminded that based on the provisions of Housing Stability
and Tenant Protections Act of 2019 (HTSPA), even an award of legal fees granted by the court in
an eviction proceeding, cannot be sought as additional rent in a subsequent non-payment
proceeding. A landlord’s remedy is limited to the commencement of a civil court plenary action
which cannot bring about an eviction and can only result in a money judgment in favor of a
landlord.

However, as most landlords have experienced, collecting a judgment from a tenant comes with
its own set of hurdles and unless the judgment itself is very large, it will likely not be worth the
effort to attempt to collect. This is especially true in the circumstance where the tenant has
vacated and the tenant’s whereabouts are unknown.

As a final note, the original bill failed to exempt cooperative housing from its aegis. After fervent lobbying efforts, the law was ultimately amended to exclude cooperatives from its
ambit. The law will still apply to individual shareholders who sublet their apartments.
These shareholders are treated as residential landlords for the purposes of imposing the
original law’s restrictions.