On March 25, 2022, DHCR issued Operational Bulletin 2022-1, entitled “Electronic Lease Offering and Tenant’s Voluntary Consent”, as a result of the recent enactment of Chapter 74 of the Laws of 2022, which requires property owners to obtain voluntary consent* from tenants to accept electronic lease offerings. Concurrent with Operational Bulletin 2022-1, DHCR promulgated a companion form EL-TVC Electronic Lease Offer: Tenant’s Voluntary Consent Form to establish the standard form to obtain consent. The Consent Form must be completed by the owner and served on the tenant by email, placement in an electronic portal, or by personal service or mail, if necessary. Although the Operational Bulletin allows for service of the form either prior to or concurrent with the lease or renewal lease offer, the instructions included with the Voluntary Consent Form state that consent must be obtained “prior to the use of electronic records to execute a lease or renewal form.” Therefore, it is recommended to obtain consent “prior to” to minimize any doubt.Once owners prepare and serve the consent form, tenants may choose to participate in electronic lease offers by signing the Voluntary Consent Form – either manually or electronically – and returning it to the owner by regular mail or personal service. Without the Voluntary Consent Form from the tenant, an owner cannot offer leases electronically or require electronic signatures. Other than spouses or domestic partners, all tenants must sign for the consent to be effective. Once signed, the consent is applicable for the entirety of the tenancy, but owners and tenants may opt-out at any time. Should an owner or tenant information change, both owners and tenants are required to provide written notice, and a new consent must be completed.Although the Operational Bulletin allows an owner to utilize whichever software product or electronic portal to facilitate lease offerings that it chooses, it is important to remember that Operational Bulletin 2022-1 does not allow an owner to deviate from the use of DHCR-promulgated lease renewal forms or affect the “window period” timeframes for offering a lease renewal.The Operational Bulletin requires owners (and tenants) to maintain proof of service of the Voluntary Consent Form, the lease renewal offer, and the acceptance or refusal. That proof may come in a number of forms but, in all cases, an owner must be able to print copies of electronic communications and all documents to provide to DHCR or the courts upon request in a proceeding.Summary of ConsiderationsAn owner who wishes to offer electronic leases may want to consider the following action items:
- Develop a strategy and implement procedures to streamline the delivery and intake of the Voluntary Consent Forms.
- Consider whether additional software is necessary to facilitate electronic signatures.
- Create processes to: track the status of outstanding forms, validate information on the consent form(s) are consistent with agreements, retain proof of service, and implement procedures to handle opt-outs as well as situations where a new Voluntary Consent Form is required.
- Consider whether any amendments are necessary on lease offerings or any related forms to account for electronic signatures.
We understand that DHCR’s new Operational Bulletin may raise many questions as it relates to electronic leasing requirements, so we encourage you to reach out to your BBG attorney on record for assistance.*Note: These new rules do not require an owner to offer electronic leases, nor does it allow an owner to require tenants sign electronic leases.