The recession slashed 200 dollars off new apartment rentals, so now I want to renegotiate my existing contract and avoid the increase that's set for next month.
December 2, 2008 3:55 PM Subscribe
As contractually agreed by me one year ago, my NYC apartment rent is going up 9% starting next month - from $2,250 to $2,450. But today I found out that, because of the recession, an apartment like mine is now going for $2,050. And now I want to renegotiate. How do I do that?
Yes, I signed it. I knew the increase was coming, but the recession is starting to hit home and, since apparently it's already hit the rental office, I want to renegotiate my contract and not pay 400 dollars more than the guy who just moved in above me.
I decided to check on the current rates because there's been talk around the building about vacancies being up. As it turns out, they must be. I anonymously called the rental office and they told me that a unit with my floorplan is going for 200 dollars less than 12 months ago. (I don't think that changes depending on floor because I remember looking at units on different floors and the rates were the same.)
The building is rental only and run by a large property management company. There are several hundreds apartments in more than one tower. The neighborhood's rental vacancy rate has been among the highest in Manhattan.
There's a pretty large fine if I break the contract so I am not about to move out to a cheaper place, and I may or may not consider that if they don't negotiate with me. For now, I just want to find a way to use the market situation, their vacancies being up and their rent prices being down as leverage to postpone increase on my rent. I'm not even saying go down so I pay the same as a new resident (or should I say that?) I just don't want the increase at this point.
Am I being unethical? While I was prepared for the increase, I am like everyone else starting to feel the recession bite. No more dining out, no more cabs. So I can afford it in theory, but the increase will absolutely make things more difficult for me. Should they "care"? Would they, if I pointed this out?
What arguments should I use to avoid the contractual increase? And will this ever happen?
Yes, I signed it. I knew the increase was coming, but the recession is starting to hit home and, since apparently it's already hit the rental office, I want to renegotiate my contract and not pay 400 dollars more than the guy who just moved in above me.
I decided to check on the current rates because there's been talk around the building about vacancies being up. As it turns out, they must be. I anonymously called the rental office and they told me that a unit with my floorplan is going for 200 dollars less than 12 months ago. (I don't think that changes depending on floor because I remember looking at units on different floors and the rates were the same.)
The building is rental only and run by a large property management company. There are several hundreds apartments in more than one tower. The neighborhood's rental vacancy rate has been among the highest in Manhattan.
There's a pretty large fine if I break the contract so I am not about to move out to a cheaper place, and I may or may not consider that if they don't negotiate with me. For now, I just want to find a way to use the market situation, their vacancies being up and their rent prices being down as leverage to postpone increase on my rent. I'm not even saying go down so I pay the same as a new resident (or should I say that?) I just don't want the increase at this point.
Am I being unethical? While I was prepared for the increase, I am like everyone else starting to feel the recession bite. No more dining out, no more cabs. So I can afford it in theory, but the increase will absolutely make things more difficult for me. Should they "care"? Would they, if I pointed this out?
What arguments should I use to avoid the contractual increase? And will this ever happen?
How large is the large fine, i.e. how many moths of $400? If it's another year of lease that you have, and the fine is less than $4800 (minus moving costs), then it's reasonable for you to move, and that is your leverage. If the fine is greater, it may still be reasonable for you to move later, if rents continue to fall. It's possible the company will give you a modest decrease in exchange for an extension of the lease at the new price, especially if they believe that rents are going to go down more. Of course, this is a trade-off.
posted by alexei at 4:10 PM on December 2, 2008
posted by alexei at 4:10 PM on December 2, 2008
I think it depends on what you signed. I was in a similar position to you several years ago, but I hadn't signed anything when I went to renegotiate. My landlord presented me with a letter to renew my lease and I called him and said that since rental prices in that area had gone down I wanted to lower my rent. He agreed and reduced my rent for that year.
If you have signed an enforceable contract that significantly reduces your ability to negotiate. If you hadn't signed anything, i.e. you were negotiating a new lease I think you would be in a good position to at least have no increase in your rent and likely have it drop some. After all from the landlords point of view it's better to have a unit occupied than have it go vacant while they look for a new tenant.
Even having signed something, you can try to negotiate. Of course they can tell you that you're bound by the contract and they're not going to help you out.
posted by pombe at 4:19 PM on December 2, 2008
If you have signed an enforceable contract that significantly reduces your ability to negotiate. If you hadn't signed anything, i.e. you were negotiating a new lease I think you would be in a good position to at least have no increase in your rent and likely have it drop some. After all from the landlords point of view it's better to have a unit occupied than have it go vacant while they look for a new tenant.
Even having signed something, you can try to negotiate. Of course they can tell you that you're bound by the contract and they're not going to help you out.
posted by pombe at 4:19 PM on December 2, 2008
I'm a law student, not a lawyer, and most certainly not your lawyer: If the "fine" will greatly exceed the actual damages suffered by the landlord (in this case, the difference between what you agreed to pay, and what he'll be able to rent it out for) then that's called a "penalty clause," and it's unenforceable. The standard for determining whether a liquidated damages clause, like this one, is sufficiently disproportionate to be a penalty clause is vague and would likely require real lawyers to sort out.
Practically speaking, it's probably not worth his time to chase you down.
Ethically speaking, there was a reason you signed a contract locking in a price: he assumed the risk of the market price going above the contract price, you assumed the risk of market price falling below the contract price. His gamble paid off, and yours didn't. That doesn't excuse your moral obligation to pay.
posted by ewiar at 5:01 PM on December 2, 2008 [1 favorite]
Practically speaking, it's probably not worth his time to chase you down.
Ethically speaking, there was a reason you signed a contract locking in a price: he assumed the risk of the market price going above the contract price, you assumed the risk of market price falling below the contract price. His gamble paid off, and yours didn't. That doesn't excuse your moral obligation to pay.
posted by ewiar at 5:01 PM on December 2, 2008 [1 favorite]
*If the fine will greatly exceed the actual damages suffered by the landlord in the event of breach (i.e. you walking away from the contract)...
posted by ewiar at 5:03 PM on December 2, 2008
posted by ewiar at 5:03 PM on December 2, 2008
Kinda like cell phone contracts- the low advertised prices are there to entice new customers, not the ones who already signed contracts.
I agree- live up to the contract you signed. But that doesn't stop you from asking the landlord to amend the contract. Or using the current situation to your advantage, and renegotiate for next year for a lower price. "Hey Mr. Landlord- I'll pay your $400 a month this year, but then I'm probably gone. What say you lock my rent at its current value, and I'll sign for another year."
(Also, read the fine print. There might be something in there that lets you off the hook, or gives you some kind of advantage. Nothing unethical in that- you are standing by what you signed, make him (potentially) stand up to what he signed.)
posted by gjc at 5:16 PM on December 2, 2008
I agree- live up to the contract you signed. But that doesn't stop you from asking the landlord to amend the contract. Or using the current situation to your advantage, and renegotiate for next year for a lower price. "Hey Mr. Landlord- I'll pay your $400 a month this year, but then I'm probably gone. What say you lock my rent at its current value, and I'll sign for another year."
(Also, read the fine print. There might be something in there that lets you off the hook, or gives you some kind of advantage. Nothing unethical in that- you are standing by what you signed, make him (potentially) stand up to what he signed.)
posted by gjc at 5:16 PM on December 2, 2008
former nyc real estate agent here.
You don't say if you're rent stabilized or not. That makes a difference. But i'm going to assume not.
We went through this about three years ago, not for the same reasons, but rents dropped, and people in buildings like yours were finding out that newcomers were getting better deals than they had.
it's not a matter of living up to the contract or not. it's perfectly fine to go in and talk to them about the situation. they're not stupid. they know what's going on. it costs money to fill a vacant apartment. even with the fine, in this market there's no guarantee that they'll rent it. and a known quantity who pays their rent on time and doesn't cause problems is valuable to a landlord, even a large management company.
my only caveat is this: make SURE you are comparing apples to apples when you say "prices on a unit like mine". You can't compare an A line with a D line, or even A line on floor 2 with A line on floor 6. You have to be comparing apples to apples exactly.
If it were me, I would walk in with an attitude of, "so, I've been hearing some chat around the building, and I understand that prices are dropping. I realize I've signed a lease with a pending increase, but I was wondering if there wasn't something we could work out." What's the worst that'll happen? They'll say no.
I doubt you will get out of any increase, however. They'll charge you something for sure.
posted by micawber at 6:24 PM on December 2, 2008 [1 favorite]
You don't say if you're rent stabilized or not. That makes a difference. But i'm going to assume not.
We went through this about three years ago, not for the same reasons, but rents dropped, and people in buildings like yours were finding out that newcomers were getting better deals than they had.
it's not a matter of living up to the contract or not. it's perfectly fine to go in and talk to them about the situation. they're not stupid. they know what's going on. it costs money to fill a vacant apartment. even with the fine, in this market there's no guarantee that they'll rent it. and a known quantity who pays their rent on time and doesn't cause problems is valuable to a landlord, even a large management company.
my only caveat is this: make SURE you are comparing apples to apples when you say "prices on a unit like mine". You can't compare an A line with a D line, or even A line on floor 2 with A line on floor 6. You have to be comparing apples to apples exactly.
If it were me, I would walk in with an attitude of, "so, I've been hearing some chat around the building, and I understand that prices are dropping. I realize I've signed a lease with a pending increase, but I was wondering if there wasn't something we could work out." What's the worst that'll happen? They'll say no.
I doubt you will get out of any increase, however. They'll charge you something for sure.
posted by micawber at 6:24 PM on December 2, 2008 [1 favorite]
I think your best bet is as gjc said -- offer to add another year to your contract but only if they lower your increase. That gives the landlord some security in return for your cash flow. If you can't do that, you probably don't have much leverage.
posted by dhartung at 10:09 PM on December 2, 2008
posted by dhartung at 10:09 PM on December 2, 2008
As contractually agreed by me one year ago, my NYC apartment rent is going up 9% starting next month
Unless I've missed something in the reading (or something got left out), all you're saying is that the rent will go up. It doesn't sound as though you're contractually obligated to stay in the apartment. Of course, by virtue of your still being there on day 1 of the next year, it would presume you'll be there - and be paying.
There's a reason rents are being lowered - maybe they're having a harder time finding tenants willing / able to make payments, or maybe there's some more competition. Either way, it's to your advantage.
Were it me, Plan A: walk into the office and politely but firmly ask for the market price on your size / style / shape apartment. If that doesn't work, Plan B: make another anonymous call about apartments for rent of the same size / shape / style as yours - apples to apples, as micawber says. Arrange to see the person via appointment, then walk downstairs. Plan C: new apartment in the same complex - unless there's something against it in the lease. Plan D: Move to new apartment - other places are probably having to cut their rent as well, and aren't as likely to give you the runaround.
posted by chrisinseoul at 1:12 AM on December 3, 2008
Unless I've missed something in the reading (or something got left out), all you're saying is that the rent will go up. It doesn't sound as though you're contractually obligated to stay in the apartment. Of course, by virtue of your still being there on day 1 of the next year, it would presume you'll be there - and be paying.
There's a reason rents are being lowered - maybe they're having a harder time finding tenants willing / able to make payments, or maybe there's some more competition. Either way, it's to your advantage.
Were it me, Plan A: walk into the office and politely but firmly ask for the market price on your size / style / shape apartment. If that doesn't work, Plan B: make another anonymous call about apartments for rent of the same size / shape / style as yours - apples to apples, as micawber says. Arrange to see the person via appointment, then walk downstairs. Plan C: new apartment in the same complex - unless there's something against it in the lease. Plan D: Move to new apartment - other places are probably having to cut their rent as well, and aren't as likely to give you the runaround.
posted by chrisinseoul at 1:12 AM on December 3, 2008
it sounds like you are a residental tenant, not a commercial one.
it looks like UPON RENEWAL, your rent goes up a percentage per the lease.
on a COMMERCIAL space, there is what is called "step -ups" ,where you remain contractually obligated to pay a base rate plus increases in future years. (say $3,00 a month years 1-5, $3500 a month years 5-10, $4,000 a month years 10-15).
is this a "long lease with built in increases" or a "renewal increase" ?
big difference....
posted by Izzmeister at 10:26 AM on December 8, 2008
it looks like UPON RENEWAL, your rent goes up a percentage per the lease.
on a COMMERCIAL space, there is what is called "step -ups" ,where you remain contractually obligated to pay a base rate plus increases in future years. (say $3,00 a month years 1-5, $3500 a month years 5-10, $4,000 a month years 10-15).
is this a "long lease with built in increases" or a "renewal increase" ?
big difference....
posted by Izzmeister at 10:26 AM on December 8, 2008
This thread is closed to new comments.
What exactly did you sign? Is it a lease? Or was it a piece of paper saying, "Effective XX your rent will be this much. Your signature means you agree with this."
posted by Civil_Disobedient at 4:05 PM on December 2, 2008