Live Free and Let the Landlord Die

By now most of you know of the latest Mayor Bloomberg stupidity, that is, the proposed banning of sugary sodas in cups too big for his taste.

But you may not know of the latest in New York State housing law. If the loft you live in has not been brought up to various housing codes, you can live there free. The New York State Court of Appeals (our highest and wisest) court has said that a landlord cannot evict a tenant for nine years of nonpayment of rent because the landlord had not yet brought the property up to the safety and fire residential code. ( I am unaware of any evidence that these lofts have, in fact, experienced more fires or injuries than up-to-code apartments.) Of course, her rent reflected this — “under” $600.00 per month. According to The New York Times:

In 2008, the building owner, Chazon L.L.C., sued to evict Ms. Maugenest for nonpayment, and two lower courts ruled in Chazon’s favor. But on Thursday, the appeals court said that because Chazon had missed deadlines for bringing the building up to residential code, and did not receive an extension from the city’s Loft Board, state law prohibited it from evicting tenants, even for nonpayment.

But lest you think the tenant is a bad person the Times concludes thae article:

Though Ms. Maugenest has not paid rent for nine years, she has not adopted the habits of someone who lives rent-free either, her lawyer said. Instead, she has put aside her rent money every month and saved it, just in case a court demanded that she pay. She may have just found herself with an extra $60,000.

I am no expert on New York State housing law so it may be the case that the court was simply applying the clear law (although the lower courts did not think it was so obvious). So either the court is exhibiting its limited intellectual powers or the authors of the 1982 Loft Law were totally misguided.

It is, however, typical of the “New York” economics mentality. First, there is no perceived relevance to the fact that the rent most probably reflected the sub-code attributes of the loft. Second, by agreeing to live there and by staying there the loft was definitely worth something to the tenant. But she need not pay anything. Third, ” [t]hirty years after the passage of the law…almost one-third of the total number [of lofts] under the Loft Board’s purview” have still not received residential certification. How much is this is due to the fact that people are not willing to pay the additional rent necessary to make such changes profitable for landlords? Fourth, New York City is continually (and forever?) experiencing the post World War II housing “shortage.” Maybe there is something wrong with housing policy?

Some day I should give a course on the “Economic Fallacies Believed by New Yorkers.” It is also informative how these fallacies typically dovetail with the interests of certain politically more powerful groups. But that is a topic for another time.

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About Mario Rizzo 75 Articles

Affiliation: New York University

Dr. Mario J. Rizzo is associate professor of economics and co-director of the Austrian Economics Program at New York University. He was also a fellow in law and economics at the University of Chicago and at Yale University.

Professor Rizzo's major fields of research has been law-and economics and ethics-and economics, as well as Austrian economics. He has been the director of at least fifteen major research conferences, the proceedings of which have often been published.

Professor Rizzo received his BA from Fordham University, and his MA and PhD from the University of Chicago.

Visit: Mario Rizzo's Page

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