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Deals & Dealmakers

Old and new Loft Law rules: What you need to know

By Adam Leitman Bailey and Dov Treiman, Adam Leitman Bailey PC

  1. What is a loft?
  2. The word “loft” has no legal meaning. The word “loft” is used in several laws and in the naming of The New York City Loft Board which was set up for the purpose of taking illegal residential tenancies in buildings that were originally built for commercial use.

These buildings, in their original configuration, are not safe for residential occupancy.

Photo by jinkazamah/ Flickr
Photo by jinkazamah/ Flickr

In the Loft Law, and several related laws, procedures are set up to protect and preserve the residential occupancies through renovations to these buildings to bring them up to the safety standards that are normal in apartment buildings. Not all commercial buildings qualify for this process. Those that do are called “interim multiple dwellings.”

  1. What is the difference between a “loft” and an “interim multiple dwelling” (IMD)?
  2. Although the “Loft Law” uses the word “loft,” the word is never defined. However, an “interim multiple dwelling” is a dwelling space that meets certain statutory criteria for being brought under the jurisdiction of the New York City Loft Board as the residential spaces in a qualifying building are transitioned to protection under a form of rent stabilization.
  3. Is the end of the legalization process in an IMD, rent stabilization?
  4. Once the legalization process for an IMD is completed, the affected units come under the Emergency Tenant Protection Act of 1974 (ETPA).

While rent stabilization needs a building to have six or more residential units to come into effect for a particular building, ETPA buildings that were IMD’s can have as few as three units.

However, ETPA buildings use the same Rent Stabilization Code as rent stabilized buildings.

  1. What is the difference between an IMD tenant and a rent stabilized tenant?
  2. Once the New York City Loft Board determines that a building is an IMD, the Loft Board’s regulations cover the tenancy.

Those regulations bear some similarities to rent stabilization, but they are tailored to the process of moving the building towards legalization.

In many buildings, this means radical architectural changes, while in rent stabilization, the buildings’ architecture tends to remain completely unchanged.

However some things, like the rights to succeed to a tenancy, are the same in IMD regulations and in rent stabilization. So, while the laws are similar, they are also dissimilar. Each is its own system.

  1. Can any building come under the Loft Law?
  2. There are actually two different loft laws, although they are found in one section of Article 7C the Multiple Dwelling Law. These are referred to as “Old Loft Law” buildings and “New Loft Law”.
  3. What qualifies a building to come under the Old Loft Law?
  4. In order for a building to qualify as an IMD under the Old Loft Law, the building in question must:
  • Have been used manufacturing, commercial, or warehouse purposes;
  • Not have a certificate of occupancy for residential occupancy;

Have three or more residences from April 1, 1980 thru December 1, 1981 (“the window period”);

  • Be located in a zone where residential use is permitted as of right or by minor modification or in an area under study for such use or can be achieved by special permit;
  • Not be governmentally owned.
  1. What qualifies a building to come under the New Loft Law?
  2. The only difference between the Old Loft Law and the New Loft Law is in determining which buildings come under the control of the New York City Loft Board while the building is being transitioned from illegal residential use to legalized rent stabilization.

Once a building is brought under the control of the New York City Loft Board, the rules and regulations for bringing those buildings out of Loft Law coverage and under rent stabilization are identical under the Old and New laws. There is only one set of regulations to cover both — except in determining if the building is an IMD at all.

Like the Old Loft Law, the New Loft Law has its own window period. The New Loft Law window period is January 1, 2008 through December 31, 2009. In addition:

  • The building must have three or more residential units during the window period.
  • The qualifying units must: Not be located in a basement or cellar; Have at least one entrance that does not require passage through another residential unit; Have at least one window opening onto a street, yard, or court; Be at least 400 s/f (until June 30, 2015, 550 s/f thereafter) in area.

The building must not only be zoned for residential occupancy or easily be converted to such, but be located in certain specific geographic areas that are set forth in the Loft Law, in various parts of Manhattan, Brooklyn, and Queens

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