Q: How do the new rent regulation laws affect a corporate lease to a nonprofit organization?
If I want to lease the whole vacant building to a nonprofit how can we ensure that the potential tenants won't become stabilized?
A: If the building is operating under a municipal contract to provide housing to the homeless, then the tenants are exempt from rent stabilization. If there is no municipal contract, however, it is subject to rent stabilization unless otherwise exempt. One of those exemptions is where a charitable organization or non-profit is using the premises for its affiliates. This does not mean its clients. So, for example, if a University is using the premises to house its professors and students, those are affiliates. If, for example, the Salvation Army is using it to house unwed mothers, those are NOT affiliates. They are clients. However, still another exemption is for an “asylum” and the unwed mothers would fall under that category such as to exempt them from rent stabilization. But mere charitable status is not an exemption. However, under that same scenario, if the Salvation Army rented an apartment to an ordinary person as a mere tenant, that ordinary person would be residing in the unit as a rent stabilized tenant. If, however, that apartment were occupied by a social worker employed by the Salvation Army and having received the apartment for purposes of ministering to the unwed mothers, that apartment would be exempt as an “affiliation” unit, as noted above. As this brief synopsis shows, the issues can get very tangled and wind up relying on nuances of the facts presented.
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