Recently, we were asked by a client (let’s call him “Landlord”) whether it would be wise to put a mandatory arbitration clause on a lease agreement for an apartment in a building he owned in the Bronx, and whether such clause would limit his exposure to legal proceedings and would offer him more protection than a court of law in case of non payment of rent by his tenant. Landlord was under the impression that New York law favors the tenants in almost every case. He mentioned from his experience that evictions for non payment of rent can be delayed for close to 6 months and in the case of illegal-to-rent apartments such as semi-basement apartments, tenants can get away without paying any rent at all. He also believed that an arbitrator is not required to follow the law, nor is an arbitrator required to have knowledge of the law, since they usually base their decision on fairness, as it applies to the facts of each case rather then the letter of the law. Thus, he asked us whether to include an arbitration clause in the lease agreement. What Landlord is missing, however, is that New York Citys Housing Court (especially in the Bronx) could be easily considered as more friendly to landlords as it is to tenants. Indeed, thousands of evictions are conducted in New York City every week. According to a report, the Bronx led the city in 2012 with 10,966 families evicted through legal proceedings, followed by 8,514 in Brooklyn, the most populous borough; 4,606 in Queens; 3,776 in Manhattan; and 894 on Staten Island, according to city marshals. The report made also the following claim: “Bronx Housing Court does not currently operate as a place where tenants can access justice, but rather as a place where tenants are brought to court and evicted at a disturbing and unprecedented rate.” (We include this quote in this posting for the benefit of those who are tenants as well as landlords) The truth is that the New York State has had roughly two hundred years experience with the summary proceeding (such as those in the case of an eviction of a tenant), and state law, does not allow for any eviction of a tenant to take place without the process of the law and a “court proceeding”. An arbitrator cannot order an eviction, end a tenancy, or enter a judgment for possession. Furthermore, since an arbitrator does not have the same constraints as a regular judge, he or she can weigh the facts and equities in favor of the tenant rather than the Landlord, and since, typically, an arbitrators decision is not appealable, Landlord would be stuck with any decision he doesn’t like. So for those of you that are tenants, please read your lease agreements carefully and understand your rights and obligations. For those of you that are landlords, be careful with what clauses you include in your leases. We do not necessarily believe that your interests are properly protected by making arbitration mandatory for any landlord/tenant disputes. Arbitration is a tremendous legal device to achieve dispute resolutions, but not for all areas of law. However, as with everything in legal matters, knowing the facts and circumstances makes all the difference, so get proper advice before entering into a contractual agreement such as a lease.
Posted on: Tue, 20 May 2014 04:17:05 +0000
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