Evicting rent stabilised tenants to convert an SRO to a primary residence?

Question

I am looking at buying a townhouse in NYC that is currently designated as an SRO with two rent stabilised tenants living on one of the floors and the other floor unit is vacant. The townhouse we are looking at has a Certificate of No Harassment in place, open violations and a vacate order. The tenants are currently in court with a title dispute so the house would have to be paid for cash only.

I would like to convert it to a primary residence and turn the garden level into a separate two bedroom apartment for use as an in law suite. I found this fact sheet which seems to indicate it would be possible to evict the rent stabilised tenants so long as they haven't been living there for more than 15 years or are older than 62 or disabled: https://hcr.ny.gov/system/files/documents/2020/10/fact-sheet...

From the fact sheet it's not clear to me if I would be able to evict both tenants or just one of them because it says you can take possession of only one dwelling unit and I am not sure if each of the studio rooms counts as a separate dwelling unit?

Does anyone have any practical experience with similar situations and if so what was the outcome and how long did it take to resolve everything? How long does the legal process take, and can we move in and live in the unoccupied floors while the situation is being resolved? The house currently can't get financing but do you know if the tenant situation was resolved if I would then be able to finance the property so I could do the renovations? If there is no other way to evict the tenants and instead I offered to renovate the garden level into a two bedroom apartment would they have to accept that offer?

Thanks for your advice.

Zalman Ives · Answer

Hi Cassandra, you provide great context and information!

I have a few questions and points, which I'll ask below, but this is definitely a question for a NYC based real estate attorney who is educated and experienced with both evictions and rent stabilization. My questions and points can help guide that conversation.

1. If you're occupying the vacant unit, what makes you think you can evict either tenant from additional units?

2. How did a townhouse become rent stabilized with what sounds like 3 units when the minimum is 6?

3. Once you evict them and are ready to rehab, you have various loan options to cover the renovations costs and pull out equity.

4. A final and general question - is this house worth it? Do you want to get into what can be a years long battle with multiple parties, including our darling city council, until you get to move into your home the way you want it? Or, can you spend a little (or a lot) more and find a home that you'll be able to move into sooner and with less stress along the way?

Please feel free to reach out with further questions and/or for attorney and lender referrals.

Best,

Zalman Ives

Zalman Ives · Answer

You can PM me and I'll give you some names and numbers.

I haven't seen the movie that Melanie quoted, but definitely see her point :)

Melanie P. · Answer

There are attorneys who specialize in this area of law in NYC. If you need a referral you can PM me. I would pay one of them to review the full details of the transaction and give you a road map of how to proceed before going any further. If you're considering just "winging it" please watch Pacific Heights starring Michael Keaton so you can get an idea of what life will be like inside the same building as rent control tenants whose rent control you are trying to terminate. This is a task to handle carefully and at arms length.

Cassandra Devine · Answer

Hi Zalman,

Thanks for your reply, some quick responses:

1. The top unit and rest of the townhouse is completely unliveable without renovation, the only liveable spaces are the two studio apartments that the tenants live in. So I am hoping the council would allow us to move into one of those studios. But since each studio is just one room and we have kids do you know if they would allow us to evict both tenants to allow enough space for the whole family?

2. I have no idea, this is a question for an attorney to look into I think.

3. That's useful to know, thanks.

4. It's definitely priced to sell, but I agree, this would be more stress and more time.

Please do let me know if you have any referrals for lenders and attorneys, thank you!

Evicting rent stabilised tenants to convert an SRO to a primary residence?

Evicting rent stabilised tenants to convert an SRO to a primary residence?

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