Thursday, August 06, 2009

Tenants Struggle to Maintain Utility Service in Owner-Abandoned Building in Foreclosure

We received a call today from a tenant in a multiple dwelling in Brooklyn. Electric and gas utility service had been included in tenants’ rent. The owner stopped paying utility bills and apparently abandoned the property, which is now in foreclosure proceedings.

Tenants were notified by both National Grid and Con Edison of impending termination of utility service to the building for nonpayment by owner. Under the Home Energy Fair Practices Act ("HEFPA"), tenants in multiple dwellings where the landlord’s service is being terminated for nonpayment can get the utility service continued by putting prospective service in their name (which PULP generally does not recommend). Alternatively, and (usually preferred) tenants may pay for current (not past due) charges on the owner’s account, which stays in the owner's name. Public Service Law Section § 33 and Part 11. PSC Regulations 11.7 spell out the details of the arrangements with the utilities, and provide for intervention and assistance of PSC staff to work out problems so that service can be continued when the landlord has defaulted in its obligations to the utilities.

Tenants can then deduct their payments to the utility, which are credited to the landlord's account, from their rent. This course of action is specifically provided for under Real Property Law § 235-a, which provides, in part:
In any case in which a tenant shall lawfully make a payment to a utility company pursuant to he provisions of sections thirty-three, thirty-four and one hundred sixteen of the public service law, such payment shall be deductible from any future payment of rent.
In today's Brooklyn situation, tenants entered into an agreement with National Grid to pay current gas charges and to pay charges going forward, as is contemplated by the statute.

However, Con Edison often tries to get individuals to assume responsibility for the bills of a prior account holder. In this case, apparently an individual tenant allowed Con Edison to put the owner’s entire electric bill in her own name, including the arrears. When tenants who were aware of their HEFPA rights contacted Con Edison and attempted to set up an agreement for payment similar to what National Grid had done. Con Edison refused, because the owner's account balance had already been transferred to the name of the individual tenant.

PULP referred the tenants to the PSC for its assistance under PSL § 33(5) and Commission regulations 16 NYCRR 11.7(d) and (e), to get a proper arrangement set up for them to pay current charges on the owner's bills and to stay renewed threats of termination.

For further information, see PULP’s Law Manual Chapter on HEFPA.

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