Section 286. Tenant protection

1. It shall not be a ground for an action
  or proceeding to recover possession of a unit occupied by a  residential
  occupant qualified for the protection of this article that the occupancy
  of  the  unit  is  illegal or in violation of provisions of the tenant's
  lease or rental agreement because a residential certificate of occupancy
  has not been issued for the building, or because  residential  occupancy
  is not permitted by the lease or rental agreement.
    2.  (i)  Prior to compliance with safety and fire protection standards
  of article seven-B of this chapter, residential occupants qualified  for
  protection  pursuant  to  this  article  shall  be entitled to continued
  occupancy, provided that the unit is their primary residence, and  shall
  pay  the  same  rent, including escalations, specified in their lease or
  rental agreement to the extent to which such lease or  rental  agreement
  remains in effect or, in the absence of a lease or rental agreement, the
  same  rent  most recently paid and accepted by the owner; if there is no
  lease or other rental agreement in effect,  rent  adjustments  prior  to
  article  seven-B compliance shall be in conformity with guidelines to be
  set by the loft board for such residential occupants within  six  months
  from the effective date of this article.
    (ii)  In  addition to any rent adjustment pursuant to paragraph (i) of
  this subdivision,  on  or  after  June  twenty-first,  nineteen  hundred
  ninety-two, the rent for residential units in interim multiple dwellings
  that  are not yet in compliance with the requirements of subdivision one
  of section two hundred eighty-four of this article shall be adjusted  as
  follows:
    (A)  Upon the owners' filing of an alteration application, as required
  by paragraph (ii), (iii), (iv) or (v) of subdivision one of section  two
  hundred  eighty-four of this article, an adjustment equal to six percent
  of the rent in effect  at  the  time  the  owner  files  the  alteration
  application.
    (B)  Upon  obtaining  an  alteration  permit, as required by paragraph
  (ii), (iii), (iv) or (v) of  subdivision  one  of  section  two  hundred
  eighty-four of this article, an adjustment equal to eight percent of the
  rent in effect at the time the owner obtains the alteration permit.
    (C)  Upon  achieving  compliance with the standards of safety and fire
  protection set  forth  in  article  seven-B  of  this  chapter  for  the
  residential portions of the building, an adjustment equal to six percent
  of the rent in effect at the time the owner achieves such compliance.
    (D)  Owners who filed an alteration application prior to the effective
  date of this subparagraph shall be entitled to a prospective  adjustment
  equal  to  six  percent  of  the  rent  on  the  effective  date of this
  subparagraph.
    (E)  Owners  who  obtained  an  alteration  permit   prior   to   June
  twenty-first,  nineteen  hundred  ninety-two  shall  be  entitled  to  a
  prospective adjustment equal to fourteen percent of  the  rent  on  June
  twenty-first, nineteen hundred ninety-two.
    (F)  Owners  who  achieved compliance with the standards of safety and
  fire protection set forth in article seven-B of  this  chapter  for  the
  residential  portions  of  the  building  prior  to  June  twenty-first,
  nineteen  hundred  ninety-two  shall  be  entitled  to   a   prospective
  adjustment  equal  to  twenty  percent of the rent on June twenty-first,
  nineteen hundred ninety-two.
    (iii)  Any  rent  adjustments  pursuant  to  paragraph  (ii)  of  this
  subdivision  shall  not apply to units which were rented at market value
  after June twenty-first, nineteen hundred eighty-two and prior  to  June
  twenty-first, nineteen hundred ninety-two.

    (iv)  Payment  of  any  rent adjustments pursuant to paragraph (ii) of
  this subdivision shall commence  the  month  immediately  following  the
  month in which the act entitling the owner to the adjustment occurred.
    3.  Upon  or  after  compliance  with  the  safety and fire protection
  standards of article seven-B of this chapter, an owner may apply to  the
  loft  board  for  an  adjustment  of  rent  based  upon the cost of such
  compliance. Upon approval by the loft board of such compliance, the loft
  board shall set the initial legal regulated rent, and  each  residential
  occupant  qualified  for  protection  pursuant  to this article shall be
  offered  a  residential  lease  subject  to  the  provisions   regarding
  evictions  and  regulation  of  rent  set  forth in the emergency tenant
  protection act of  nineteen  seventy-four,  except  to  the  extent  the
  provisions of this article are inconsistent with such act. At such time,
  the  owners  of  such  buildings  shall  join  a  real  estate  industry
  stabilization association in accordance with such act.
    4. The initial legal regulated rent  established  by  the  loft  board
  shall  be  equal to (i) the rent in effect, including escalations, as of
  the date of application for adjustment ("base  rent"),  plus,  (ii)  the
  maximum  annual  amount  of  any  increase  allocable  to  compliance as
  provided herein; and (iii) the percentage increase  then  applicable  to
  one,  two or three year leases, as elected by the tenant, as established
  by the local rent guidelines  board,  and  applied  to  the  base  rent,
  provided, however, such percentage increases may be adjusted downward by
  the  loft  board if prior increases based on loft board guidelines cover
  part of the same time period to be covered by the rent guidelines  board
  adjustments.
    5.  An  owner  may  apply  to the loft board for rent adjustments once
  based upon the cost of compliance with article seven-B of  this  chapter
  and  once  based  upon  the  obtaining  of  a residential certificate of
  occupancy.  If the initial legal regulated rent has been set based  only
  upon  article  seven-B  compliance, a further adjustment may be obtained
  upon the obtaining of  a  residential  certificate  of  occupancy.  Upon
  receipt  of such records as the loft board shall require, the loft board
  shall determine the costs necessarily and reasonably incurred, including
  financing, in obtaining compliance  with  this  article  pursuant  to  a
  schedule  of reasonable costs to be promulgated by it. The adjustment in
  maximum rents for compliance  with  this  article  shall  be  determined
  either  (i) by dividing the amount of the cash cost of such improvements
  exclusive of interest and service charges over  a  ten  year  period  of
  amortization,  or  (ii)  by dividing the amount of the cash cost of such
  improvements exclusive of interest and service charges  over  a  fifteen
  year  period  of  amortization,  plus  the  actual  annual mortgage debt
  service attributable to interest and service charges  in  each  year  of
  indebtedness to an institutional lender, or other lender approved by the
  loft  board,  incurred  by  the  owner  to  pay  the  cash  cost  of the
  improvements, provided that  the  maximum  amount  of  interest  charged
  includable  in  rent  shall  reflect  an  annual  amortization factor of
  one-fifteenth of the outstanding principal balance.  Rental  adjustments
  to  each residential unit shall be determined on a basis approved by the
  loft board. An owner may elect that the loft board shall deem the  total
  cost  of compliance with this article to be the amounts certified by the
  local  department  of  housing  preservation  and  development  of  such
  municipality in any certificate of eligibility issued in connection with
  an  application  for  tax  exemption or tax abatement to the extent such
  certificate reflects categories of costs approved by the loft  board  as
  reasonable   and  necessary  for  such  compliance.  Rental  adjustments
  attributable to the cost of  compliance  with  this  article  shall  not

  become  part of the base rent for purposes of calculating rents adjusted
  pursuant to rent guidelines board increases.
    6. Notwithstanding any provision of law to the contrary, a residential
  tenant  qualified  for  protection pursuant to this chapter may sell any
  improvements to the unit made or purchased by him to an incoming  tenant
  provided, however, that the tenant shall first offer the improvements to
  the  owner for an amount equal to their fair market value. Upon purchase
  of such improvements by the owner, any unit subject to  rent  regulation
  solely  by reason of this article and not receiving any benefits of real
  estate tax exemption or  tax  abatement,  shall  be  exempted  from  the
  provisions  of  this  article requiring rent regulation if such building
  had fewer than six residential units as of the effective date of the act
  which  added  this  article,  or  rented  at  market  value  subject  to
  subsequent  rent regulation if such building had six or more residential
  units at such time. The loft board shall establish rules and regulations
  regarding such sale of improvements which shall include provisions  that
  such right to sell improvements may be exercised only once for each unit
  subject  to  this  article,  and  that  the opportunity for decontrol or
  market rentals shall not be available to an owner found  guilty  by  the
  loft board of harassment of tenants.
    7. The local rent guidelines board shall annually establish guidelines
  for  rent  adjustments  for  the  category  of buildings covered by this
  article in accordance with the standards  established  pursuant  to  the
  emergency tenant protection act of nineteen seventy-four. The local rent
  guidelines board shall consider the necessity of a separate category for
  such   buildings,   and  a  separately  determined  guideline  for  rent
  adjustments for those units in which heat is not required to be provided
  by the owner, and may establish such separate  category  and  guideline.
  The  loft  board  shall  annually  commission  a study by an independent
  consultant to assist  the  rent  guidelines  board  in  determining  the
  economics of loft housing.
    8.   Cooperative   and   condominium   units  occupied  by  owners  or
  tenant-shareholders shall not be subject to rent regulation pursuant  to
  this article.
    9.  No  eviction  plan  for  conversion  to cooperative or condominium
  ownership for a building which is, or a portion of which is  an  interim
  multiple dwelling shall be submitted for filing to the department of law
  pursuant  to the general business law until a residential certificate of
  occupancy is obtained as required by this article, and  the  residential
  occupants  qualified for protection pursuant to this article are offered
  one, two or three year leases, as elected by such persons, in accordance
  with the provisions for establishment of initial  legal  regulated  rent
  contained herein. Non-eviction plans for such buildings may be submitted
  for  filing  only if the sponsor remains responsible for compliance with
  article seven-B and for all work in common areas required  to  obtain  a
  residential  certificate  of  occupancy. Cooperative conversion shall be
  fully in accordance with section three  hundred  fifty-two-eeee  of  the
  general  business  law,  the  requirements of the code of the local real
  estate industry  stabilization  association,  and  with  the  rules  and
  regulations promulgated by the attorney general.
    10.  The functions of the local conciliation and appeals board of such
  municipality regarding owners and tenants  subject  to  rent  regulation
  pursuant  to  this  article shall be carried out by the loft board until
  such time as provided otherwise by local law.
    11. Residential occupants qualified for protection  pursuant  to  this
  article  shall  be  afforded  the  protections  available to residential
  tenants pursuant to the real property law and the real property  actions
  and proceedings law.

    12.  No  waiver  of  rights  pursuant to this article by a residential
  occupant qualified for protection pursuant to this article made prior to
  the effective date of the act which added this article shall be accorded
  any force or effect; however, subsequent to the effective date an  owner
  and  a  residential  occupant  may agree to the purchase by the owner of
  such person's rights in a unit.
    13. The applicability  of  the  emergency  tenant  protection  act  of
  nineteen  seventy-four  to  buildings  occupied  by  residential tenants
  qualified for protection pursuant to this article shall be subject to  a
  declaration  of  emergency  by  the local legislative body. In the event
  such act expires prior to the expiration of  this  article,  tenents  in
  interim  multiple  dwellings  shall  be included in coverage of the rent
  stabilization law of nineteen hundred sixty-nine  of  the  city  of  New
  York.
    * NB Terminates at the close of the calendar day May 31, 2010