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Ask Sam: My landlord is offering me a buyout to leave my rent-stabilized apartment. Can I negotiate for more?

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Question:

I'm the last rent-stabilized tenant in a Cobble Hill building, where I've lived for many years. My landlord has offered to buy me out, either through a lump sum or by allowing me to live in another of his apartments rent-free for one year. My current rent is about $2,000. Am I eligible to get a larger buyout? What's a reasonable amount to ask for?

Answer:

First of all, says Sam Himmelstein, a lawyer who represents residential and commercial tenants and tenant associations, renters in this situation are under no obligation to move, unless the landlord can come up with grounds to force them out within the bounds of rent stabilization laws (illegal sublets and non-primary residence claims are two main grounds for eviction from stabilized apartments). 

One way a landlord could force out an otherwise rule-following stabilized tenant is if he intends to demolish the building and develop a new property on the site.

"But then he'd have to file a case at the Division of Housing and Community Renewal, which could drag on for years," Himmelstein says. This doesn't seem like your landlord’s plan, nor is it likely in a neighborhood like Cobble Hill, where zoning laws restrict the development of high-rises. 

If you are a stabilized tenant whose landlord plans to demolish the building, you may be entitled to a stipend, based on the difference between the rent you're paying now and what it would cost to get a new apartment. Tenants paying significantly below market rate, therefore, stand to get much larger stipends than ones paying a higher rent. However, in many demolition cases, tenants negotiate seven-figure buyout payments that are far above the stipend amounts. 

Another way a landlord might try to deregulate a unit is by doing Individual Apartment Improvements (IAIs)—for example, renovating your bathroom or kitchen, installing new flooring, or making other significant upgrades—which would then allow them to increase the rent, in some cases over the threshold for deregulation. In this case, your landlord still can't charge the market rate for the apartment until you vacate. But don't expect a seven-figure buyout if this is what's happening.

"People tend to get some multiple of the difference between what they're paying and what the landlord could get for the apartment," Himmelstein says. 

If your landlord doesn't have grounds to deregulate and just wants you out, then being the last stabilized tenant in your building may provide you some added leverage.

"The landlord doesn't have to worry that if he pays them a certain number, other tenants will find out and come also looking for buyouts," Himmelstein says of holdouts. "Being the last man standing is always something that's valuable."

A buyout isn't a question of eligibility, he adds, but rather a number of objective and subjective factors—most significantly, the temperament of your landlord.

"Are they a cheapskate or a big spender? I find that when negotiating buyouts, there's often no rhyme or reason to it other than the individual," he says. "Some never pay buyouts, some pay less than others, and some just want to get it done quickly and will pay the maximum so they can move on." 

Whoever your landlord is, it's crucial that you speak to a lawyer before engaging in negotiations. Himmelstein cautions that a tenant who has had a conversation with her landlord about buyouts before retaining an attorney may have limited her prospects, by suggesting an amount lower than what a lawyer could get.

"After a tenant says they'll take a certain amount, the landlord will probably say 'No way' to more," he says. "People begin negotiations and think they're being noncommittal, but they're not. Landlords are professionals who negotiate these things all the time."

Related

Ask Sam: My landlord is demolishing our building. Is he allowed to evict me, and can I get a buyout? (sponsored)

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Ask Sam: My landlady moved me out of a stabilized unit, and now she wants to raise my rent by $400. What can I do? (sponsored)

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Sam Himmelstein, Esq., represents NYC tenants and tenant associations in disputes over evictions, rent increases, rental conversions, rent stabilization law, lease buyouts, and many other issues. He is a partner at Himmelstein, McConnell, Gribben, Donoghue & Joseph in Manhattan.  To submit a question for this column, click here. To ask about a legal consultation, email Sam or call (212) 349-3000.

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