Most New York residents—and certainly most New York attorneys are aware of the Warranty of Habitability. Few may know that its origins are statutory, and fewer still care that it contradicts common law, but most would be surprised by the types of occupancy to which the warranty does and does not apply—and the effect it has on the mortgage foreclosure process. While none of these doctrines are exactly new, they are currently enjoying prominence in the popular and legal press as tenant advocacy groups face a massive upsurge of neglected housing in the wake of the foreclosure pandemic.
When a landlord has lost the ability to pay its mortgage on a building, it fairly predictably stops doing repairs to that building. If tenants seek to have the building maintained through court proceedings, finding a funding source for needed repairs can be challenging. In most cases, an unpaid mortgage and neglected repairs create a self-feeding cycle that virtually guarantees that the tenants will live in escalating squalor until the building itself is, of public necessity, torn down.
While superficially appearing to be a great benefit to tenants, the warranty of habitability found in Real Property Law §235-b, winds up working against tenants and for nobody once this cycle initiates.
Understanding the Cycle
This is how it goes: The landlord, for whatever reason, starts neglecting repairs. This can be for any number of reasons. The landlord may simply be unscrupulous and is seeking to yank as much money out of the building as possible while investing as little as possible. This was a fairly common model in the late 1970s and early 1980s, and led to devastation and blight in areas like the South Bronx. The Bronx was particularly vulnerable due to a number of factors, particularly the construction of the Cross-Bronx Expressway in the 1960s, which destroyed huge swaths of middle-class neighborhoods, rendering previously desirable housing undesirable, thanks to an interstate highway suddenly cutting right through the area, churning out vast amounts of dust and noise. Similar—though less severe—effects were seen in parts of Brooklyn after the earlier construction of the Brooklyn-Queens Expressway.