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L & Tea Time with Michelle: Episode 3

Topic: CO’s & Multi-Family Buildings
Guest: Elan Kels, The Power of Being Proactive

MMI: Welcome to Landlords TV, a production of LandlordsNY. This is L & Tea Time with Michelle. This is the show where you get to hang out with me, Michelle Maratto Itkowitz, and have a cup of tea, and talk about the area of law that I have been practicing in in New York for over 20 years, and that’s landlord-and-tenant litigation. Today I am honored to be joined by Elan Kels. Hi Elan.

E: Hello.

MMI: So you’re a LandlordsNY member almost from the beginning. You’re the principal and owner of EK Jordan Properties.

E: Correct. I have a partner, Jason Gordon that I’d like to mention.

MMI: Ok, shout out to Jason. So, in addition to property management, you’re also doing brokerage, you own your own buildings, so you’re wearing a lot of hats.

E: Yes.

MMI: We wanted to start with this question -- LandlordsNY -- I’m associated with them, I talk it up, and here is the disconnect that I get from people, especially who are more mature: It’s a social online network for landlords and property managers, so landlord and property management, that’s professional, but it’s a social network. So, what’s going on there? How is this a social network?

E: Listen, we’re social animals. Bottom line, we’re not computer code. We need to interact with each other, and that’s a major element of every business, a major element of every business, especially in a landscape like real estate, where it’s all about who you know and connections. Depending on what you’re profession is, if you’re an investor, you got to know all the brokers, all the people that are looking at deals. So, there’s a major networking aspect to being successful in real estate. Do you have to network? No, but it definitely gives you a major edge.

MMI: Do you find you’re using the LandlordsNY platform for other things in addition to networking?

E: No, there’s Facebook for that. Oh, you mean for other services? Absolutely.

MMI: Well, I didn’t mean to find a bride yet.

E: We’re going to need LandlordsNY, Facebook, LinkedIn...we’re gonna need to get them all together for that. But, yes, there’s a feature on the site where you can ask an expert a question, and I’ve used that before. Whereas before, you’d call an expert in any field, and they're not just going to give you answers. They want to get paid for it. I think that the idea here for the vendors is that they can give some free advice, and the more involved stuff is gonna be at a paid level. I think that’s a great model.

MMI: You know, what we’re doing with the legal questions, anyway, I anonymously put on the blog the answer if it’s a question that I think other people will have, and it almost always is.

E: Why do you do it anonymously?

MMI: Because I don’t want to say, “Oh, Elan had this question.”

E: Oh, I see what you’re saying.

MMI: So, I say, “Oh, somebody asked this question, and I put up, ‘here’s the answer,’” and it’s always about leases or MCI’s or stuff that people are asking about anyway.

E: I love the forum. You know I get so much information from over there. I love answering questions, and I love asking questions.

MMI: I think that’s the heart of it.

E: Correct, it’s a very complex landscape, and there’s so many things that, I think even if you dig all the way deep, it’s still a mystery, you know? So, you want to know as much information as you can. We help each other. It’s landlords, so theoretically people are looking for deals.

MMI: But, it’s a next-generation thing, I personally think, because with the new influx of younger people, maybe not chronologically younger, but newer to real estate, I think they’re more open to technology and connecting in this way.

E: Right, you’re leveraging that at maybe the cost of sharing privileged information, but I think it trumps it every time, just working together.

MMI: At the end of the day, I don’t think there are really any secrets. It’s just about everybody’s learning curve.

E: Well, here’s the thing. If you know a lot more than the next guy, that’s an edge. So when two people share the information and they grow together, you’re giving up a little bit of the edge, by growing with someone, as opposed to growing alone.

MMI: I love that. That’s good. It should be easy for you to find, like, a beautiful wife.

E: Oh, thank you. Are you single? No, I’m just kidding.

MMI: No, but I have a list. I’m gonna be in touch with you when we’re off-camera.

E: Ok, that sounds great. Am I turning red yet?

E: So, in New York City, there’s such a big market. There’s so much money to be made here, and so much value to capture. Working together is always going to be the best policy in my opinion.

MMI: I love it. Thank you very much. So, can you hang around while we do our teaching portion now? We’ll catch up with you after.

E: Absolutely.

MMI: Thank you.

Teaching portion

MMI: Ok, so today we’re talking about the phenomenon of when the C of O does not match the use of the building. So, the “C of O”: the Certificate of Occupancy. Every building has a Certificate of Occupancy at the Department of Buildings -- or most buildings actually, some don’t have them, they just never got one, but you see that less and less frequently. So, in general, every building has a Certificate of Occupancy, and it says how that building must be used. So, let’s just start with an easy example. Let’s say have a C of O for a two-family house, you have a two-family house, but somebody put an extra apartment in the basement. They put in an extra kitchen, an extra toilet, there’s an extra apartment there, so there are three families living in what is legally a two-family building. The problem here is that the Multiple Dwelling Law 302 says this is a very serious situation, and in this case, there are two things that the landlord may not do. One is charge rent, so the tenants can refuse to pay rent, and that means all tenants in the building. And the other thing is that you can't bring a landlord and tenant case against a tenant when the building is not being used in conformity with the Certificate of Occupancy, so this is a very serious situation. On top of that, the building is liable to have fines put against it by HPD and DOB -- Housing Preservation and Development and the Department of Buildings. So, you get fines on this as well and correct it, and you have to correct it, and correcting it costs money and take time. You’re in a double-bind because at this point, you need to get the tenant out to make the corrections, and sometimes that presents a challenge. So, my advice here is, when you’re acquiring a new property, it’s very important to do the due diligence, and make sure the building is being occupied in accordance with the C of O. This has really been a ubiquitous process where lots of apartments got broken up because landlords wanted more rent, and tenants wanted to pay less, and so you see this in many different size buildings and in many different places. It is a really serious problem, and if you’re in an acquisition process, it’s really something you want to pay attention to right up at the front.

MMI: Elan, thank you for hanging around, and watching the teaching portion of our program. We would love to have you back, so maybe you’ll come back sometime?

E: I would love to, this was great.

MMI: Ok, thank you. Thank you for watching L & Tea Time with Michelle.

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