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Private Investigations

The New York Times: Getting the goods on those “Non Primary Renters”

IF you are a rent-regulated tenant in New York City, there is a good chance that you have been, are being or will be investigated by a new subspecies of private detective – the lease police.

Landlords are hiring operatives to make background checks on tenants – usually without their knowledge or approval – to find out if they are using their apartments as their primary residences. The targets are tenants who actually live elsewhere but keep their apartments as inexpensive pieds-a-terre or because they hope to buy them cheaply when they are offered as cooperatives or condominiums in conversions. Also targeted are prime tenants who are illegally subletting their units at inflated rents: The demand for housing in the city is so great that tens of thousands of people are believed to be living as illegal subtenants, sometimes at rents many times the legal ceiling.

The law makes clear that the benefits of rent-regulation are intended only for those who make their apartments their primary residences. The definition of a primary residence is much disputed, but generally it means that the occupants live in the unit at least half of each year, pay state and city income taxes, register to vote in the district where the apartment is situated and, if they own cars, register them locally.

If a rent-controlled apartment is not being used as a primary residence, a landlord may go into the Housing Part of Civil Court and seek to evict the tenant. In the case of rent-stabilized units, landlords may refuse to renew the lease of a tenant he believes has another primary residence, an action the tenant can challenge in either Civil or Supreme Court.

The workload of the lease police is growing because landlords believe that illegal subletting is a threat to their economic well-being. On the other hand, many tenants who live elsewhere cling tenaciously to their regulated apartments because of the profits they are making from them.

Although rent-controlled tenants may not sublet unless they were given that right in their original leases, state regulations permit the subletting of stabilized apartments for two years out of any four-year period. In ordinary circumstances, the rent may be no more than 10 percent higher than the stabilized rent, but in an era of great demand for apartments, the spread between the legal rent and the amount that a subtenant is willing to pay can easily reach hundreds of dollars a month.

Also giving more work to the lease police is the increasing conversion of rental buildings into cooperatives and condominiums. The owners of such buildings want as many vacant apartments as possible. Sponsors do not have to offer insider prices, often 50 percent below market prices, to nonprimary tenants, and in noneviction conversions, non-primary tenants may be compelled to leave.

Thus begins the game of primary residence, and private detectives are called in to arm the owners’ laywers with facts. ”Checking for primary residence is definitely a booming business for private detectives here,” said David Barrett, whose agency at 33 Fifth Avenue has made such investigations.

Making such checks is ”very profitable” for private detectives, he said, because a great deal of information on individuals is computerized and relatively easy to find, such as auto drivers’ licenses, voter registration, financial credit and telephone records. Doormen, elevator operators and garage attendants also are normally interviewed.

”You have to have a hook to be successful in the private-detective business,” Mr. Barrett said, ”and checking for residence has become the hook of New York detectives today.”

The evolution of the lease police is a bizarre outgrowth of the enormous increase in the value of New York apartments and of the lack of an exact legal definition of a primary residence. When legislation defining primary residence was enacted in 1971, it was intended to exclude from the legal protection of rent regulation persons living outside of New York City in an effort to make more apartments available to those actually living and working here. BUT the law has been amended repeatedly by the Legislature and interpreted and reinterpreted in so many different ways by the courts that some lawyers say it is becoming less specific almost every day as more suits are filed and decisions handed down. Indeed, landlord-tenant law has become so complicated that two monthly newsletters, The Apartment Law Insider and Landlord vs. Tenant, trace the latest nuances.

This increasing legal amorphousness is spawning a rise in expensive litigation between landlords and tenants in bitterly fought battles over rights to apartments. ”The law is so ill-defined,” said Corey Brent Rabin, a real-estate lawyer, ”that both sides believe they have a good chance of winning suits involving primary residence, and then the stakes in almost every suit have become very high, often several hundred thousand dollars per apartment.”

”While the total number of cases is off slightly,” said Judge Israel Rubin, the administrative judge of the New York City Civil Court, in which landlord-tenant disputes are heard, ”there has been a tremendous increase in the last few years in that subdivision of cases that only deal with primary residence.

”I think it fair to say that in the last year, the number of cases has mushroomed.”

The exact number of such cases is not available. But Vincent Parco, president of an investigating agency bearing his name, said the primary-residence cases his detectives have conducted have been rising so rapidly that he has to lease a computer to keep track of all the information. ”I now have some data on more than 250,000 people,” he said, ”mainly those who rent apartments in Manhattan, and the number grows every day.”

Mr. Parco, who worked for several state agencies before starting his own company in 1980, said that while he did few such investigations in his first year, the number climbed to 300 in 1981, to 600 in 1982 and to 1,000 in 1983. ”My guess is that 1985 and 1986 combined we will conduct between 5,000 and 10,000 such investigations,” he said. His first case, he said, involved the mistress of a perfume manufacturer who had been illegally subletting her apartment on East 39th Street for years while living in a Beekman Place co-op owned by the manufacturer. ”THE doctor who owned the building,”

Mr. Parco said, ”needed her apartment to expand his practice, knew the woman never spent any time there and offered her $25,000 to leave – and she turned it down. The doctor’s lawyers then called me in and I was able to dig up the information needed to prove to the satisfaction of the court that she had been illegally subletting the apartment. The lawyers then started referring me to other landlords.” He now has more than a dozen detectives working for him full time.

Mr. Parco, who is 36 and has an effervescent personality that would seemingly belie the nature of his trade, can reel off dozens of primary-residence cases from memory, such as that of ”the woman we found living in a $500,000 home in Beverly Hills who had been taking in $2,500-a-month sublet money on an East Side apartment that had a legal ceiling of $800.” ”We located a woman living in her own home in Kent, Conn., who had established primary residences in apartments on East 20th Street, on York Avenue and on upper Broadway,” he went on. ”She had managed to make a good living off the difference between the legal rents she was paying the landlords and the illegal rents she was charging the people who were subletting.”

As an aside, Mr. Parco said he had discovered that most of the people who had been subletting illegally were anything but needy. Indeed, he said, more than three-quarters of the cases involved ”people who might be considered to be wealthy.” ”I can’t remember a single case that involved someone who was poor, old and on welfare,” he continued. ”We get a fair number of cases of actors who really live in Los Angeles, but who want to retain their old apartment here, as well as people who retire to Florida but forget to tell the landlord.”

James Powers, the president of Metro Investigations, another major private-detective agency, agreed that few of those who come under scrutiny are destitute. Mr. Powers, a 37-year-old former city plainclothes police officer, formed the company in 1980 with Paul Glennan, his old police partner, ”because we wanted to strike out on our own.” ”Business is very good for us, especially so because of the increased interest of landlords in primary-residence cases,” said Mr. Powers, who had just moved into a new suite of offices at 1776 Broadway. ”Based on the checks we’ve done on about 5,000 people, we’ve found that most are not really the primary resident because, before the landlord hires us, he usually has some suspicion that something is fishy – like the arrival of a rent check in an envelope stamped ‘Hampton Bays.”

Mr. Powers estimated that 18 to 20 percent of the people living in the average rent-regulated building are illegal subtenants, an estimate with which Mr. Parco agreed. ”Many times a landlord will buy a new building and then call us in to find out who really is living there,” Mr. Powers said. ”So we do a sweep of all the tenants in the building.”

This, he said, entails making a master list of every person using the building as his primary residence and matching the claims against addresses given by the tenants for their drivers’ licenses, credit cards, union memberships, utility hookups, voter registrations, license plates, income-tax filings, insurance claims and even dog licenses. DETECTIVE agencies charge as little as $75 an hour for quick jobs, but more commonly $375 to $500 for a routine primary-residence check. In troublesome cases, fees can run into the thousands of dollars. Sweeps of buildings usually are contracted for on a flat fee per tenant, or, less commonly, a flat bounty for every illegal subtenant found.

The detectives also conduct other investigations involving suspicions that tenants are connected with prostitution, gambling and drugs, or that apartments are being used for commercial or professional purposes.

Both detectives and landlord-tenant lawyers say that tenants who believe they can meet the tests for primary residency should hang on, hire a lawyer and take the case to court: They often can win.

But when a person who is not really a primary resident is faced with the evidence, the detectives say, in most cases he will, in the words of Mr. Parco, ”throw us the keys and say, ‘You got me.’ ” FIGHT IF YOU THINK YOU’RE RIGHT, LAWYERS SAY

Lawyers specializing in real estate advise tenants who believe that they are using their rent-regulated apartments as primary residences to not simply give up and vacate the apartments when they are challenged by their landlords. The lawyers maintain that the laws governing primary residency are so complicated, and their interpretation so varied, that the occupant should at least get competent legal advice before vacating.

”There are any number of nuances regarding tenancy that might come into play,” said Corey Brent Rabin, a New York realty lawyer, ”because the court considers the totality of circumstances of each case, not merely the facts that the landlord might offer as proof.”

As an example, he said, ”the tenant must spend more than 183 days in the preceding calendar year in the apartment or live in the city, yet there are exceptions such as military service.” The single most important factor, he added, might be the filing of a city income-tax return for the period in question. ”As a second example – and there are scores – the landlord is required to give notice to a tenant of between 120 and 150 days before the expiration of the lease should the landlord choose not to renew,” Mr. Rabin said. ”If the landlord fails to send the notice during this window period that he doesn’t intend to renew, he can’t evict on the grounds of non-primary residency.

”My advice to a tenant who might be accused of nonprimary residency would be: First, don’t volunteer any information in writing without the advice of an attorney. You don’t have to be discourteous – simply decline to provide information if asked.

”Recent cases underscore the fact that it can be very difficult for a landlord to win a case against a tenant he accuses of nonprimary residency, and judges generally demand substantial proof, so don’t help the landlord by providing him with information.

”Next, load your attorney’s gun with facts that would help establish that the apartment in question is, in fact, your primary residence. Even small things might help, such as checks cashed in neighborhood stores or prescriptions filled at local pharmacies – things that are recorded and provable.

”Each case is decided on the facts, so there is no exact answer as to whether a landlord will be successful, regardless of how it might seem at the outset.”- RICHARD D. LYONS

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