DCA Ruled Wrong on Posting Tenants’ Rights Sign

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The Department of Consumer affairs charged a real estate broker with failing to post a sign alerting tenants of their rights. Arash Real Estate & Management Co is a residential and real estate broker located in Queens. In January 2013 the Department of Consumer Affairs charged Arash with violating the City Administrative Code by failing to post signs advising tenants of their rights to one free tenant screening report annually from each consumer reporting agency. Tenant screening reports are used primarily by residential landlords and property managers to assess the likelihood that a tenant will fulfill the terms of the lease or rental agreement. The signs alert tenants to their right to dispute inaccurate information.

Arash, at a hearing before OATH, argued that the Code provision did not apply to it because Arash’s principal business was selling real estate, not renting or leasing property.  Arash also claimed that the Code was preempted by State law. On July 9, 2013 Oath rejected both arguments and imposed a fine of $500.

Arash filed an article 78 petition. Queens Supreme Court Justice Janice A. Taylor denied the petition and Arash appealed.

The Appellate Division, Second Department, reversed, overruled OATH and the Department of Consumer Affairs, and voided the $500 fine. The appellate court held that DCA had incorrectly interpreted the Administrative Code’s requirement. Only businesses principally in the business of renting residential property were required to post tenant screening signs. Arash’s principle business was selling property. The court also ruled that the Administrative Code provision was not preempted by State law. Accordingly, the court reversed the violation and voided the penalty.

Arash Real Estate & Management Co. v. NYC Department of Consumer Affairs, 52 N.Y.S.3d 102 (2nd Dep’t 2017).

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