Hamptons Real Estate Law: Never Overlook the Lease

Summer rentals are as much a part of the season on the East End as days on the beach and flowing bottles of rosé. When it comes to seasonal rentals, however, one of the most important aspects isn’t the infinity pool or the chef’s kitchen, as nice as such amenities may be. What we’re talking about is something far more essential: the lease.

A seasonal or month-to-month lease in Suffolk County is required to include a signed writing that states that the tenants waive their election of a written lease with a term of one year or more, which is the mandatory minimum term for landlords to offer to tenants in the County. Consequently, it would follow that every lease in Suffolk County should be written, since a signed written document is required for an oral lease to comply with this Suffolk County law.

Pursuant to Chapter 696 of the Suffolk County Code, landlords who do not have this signed written waiver for a seasonal lease (even when the seasonal lease is otherwise in writing) are exposed to liability of $500 plus attorney’s fees, per violation. For oral month-to-month leases, the potential liability is much greater. Since each month that passes without a signed written waiver is arguably a new violation, landlords with tenants who have lived at their property for the past six years are exposed to a lawsuit for $36,000. Six years is the maximum period that a tenant can seek compensation for in a lawsuit, because the statute of limitations for a breach of contract lawsuit is six years in the State of New York. Presuming attorney’s fees are set at a one-third contingency, as a reasonable attorney’s fee, maximum attorney’s fees would be $12,000, for a total of $48,000 exposure to the landlord when adding the attorney’s fees and damages exposure.

A lease is a contract where one party conveys the right to possess real property to another party for a specified period of time. In New York, any lease that has a term for more than one year must be in writing. If a lease with a term of more than one year is made orally, such lease is void or invalid pursuant to General Obligation Law 5-701, which is commonly known as the Statute of Frauds. Although month-to-month leases may be made orally by State law, because a month is capable of completion within a year, leases in Suffolk County cannot just be effectuated through an oral agreement. In Suffolk County, a signed written waiver of a tenant’s right to rent property for a minimum one-year period is always required. Specifically, any lease for less than one year in Suffolk County must include a written provision whereby tenants waive their election of a lease for a term of one year or more, or else tenants may recover $500 from their landlord for each violation of the Suffolk County Code and any associated attorney’s fees in pursuing the penalty.

An example of such a waiver may look like this:

I, [TENANT’S NAME], residing at [PROPERTY ADDRESS] from [INITIAL DATE OF OCCUPANCY] until I surrender possession of the above referenced property, hereby waive my right to a lease with a term of one year or more pursuant to Section 696-3 of the Suffolk County Code.

TENANT’S SIGNATURE DATE

The exposure in failing to obtain this waiver is magnified in light of the ease in which a tenant can pursue this type of lawsuit. Small claims courts in the Eastern Towns and Villages can entertain claims of up to $3,000 with just a $10 filing fee. As such, Suffolk County month-to-month residential tenants who only have oral leases and seasonal tenants whose leases do not include this waiver have minimal barriers to bringing suit against their landlord.

Consequently, it makes more sense for landlords who want to avoid court and attorney’s fees to write their tenants a check of $500 in consideration of the tenants’ written release of a claim under Suffolk County Code Section 696-3. However, if landlords just give $500 to their tenants without memorializing the parties’ understanding that the money is in exchange for the tenant waiving their right to bring suit, which would be done in a formalized release, landlords will not be able to prove they were released from liability for future violations of the Suffolk County Code.

On top of this exposure for mom and pop landlords (those who think the rules just don’t apply because they are small), the Suffolk County Code makes a willful failure to get a written waiver from the tenant chargeable as a criminal misdemeanor.

As a result, landlords of seasonal and month-to-month leases in Suffolk County may face a lot of exposure. Keep in mind that all oral leases are, by default, month-to-month leases. If landlords have seasonal or month-to-month leases without this written waiver, they should retain counsel to amend their future leases and to prepare releases for their current tenants to sign immediately before the tenants bring suit. The potential exposure is just too great to ignore.

Andrew M. Lieb, Esq., MPH, is the managing attorney of Lieb at Law P.C. and is a contributing writer for Behind the Hedges.