Prohibits a state chartered banking institution from providing financing to a landlord who has engaged in certain bad faith acts.
Summary
This bill would amend New York’s banking law to prohibit state-chartered banking institutions and other entities licensed under the banking law from knowingly financing or investing in the securities or obligations of certain property-owning entities that have engaged in specified “bad faith” landlord conduct. The covered conduct includes recent rent abatements tied to housing, building, or health code violations; certain violations of tenant-protection and housing regulations; repeated fraudulent or illegal acts; deceptive business practices; hazardous building violations; inclusion in New York City’s alternative enforcement program; harassment or retaliation against tenants; and certain fair housing violations.
The bill creates a limited exception for financing used solely to cure or prevent an immediately hazardous violation of fire, building, or housing codes. It also requires applicants for financing to self-certify that they are not covered by the prohibited conduct, or to document that the financing will be used only for the exempted remedial purpose. False certifications or false supporting documents would be subject to civil penalties of $10,000 to $50,000. The Department of Financial Services superintendent would be required to issue regulations and a sample certification form, and the law would apply to contracts entered into, renewed, modified, or amended after the effective date.
Impact
If enacted, the bill would add a new section to the Banking Law restricting lending and investment activity by state-chartered banks and other licensed entities when the borrower or target entity is a landlord or real-estate holding entity with a recent history of specified code violations, tenant harassment, fraud, or related misconduct. It would effectively create a compliance screen for financing tied to landlords with poor housing-law records, while preserving access to credit for urgent repairs that address immediate hazards. The bill would also expand the regulatory role of the Department of Financial Services by requiring implementing rules and standardized certification procedures, and it would expose applicants to civil penalties for false statements.
Sentiment
The available context suggests generally supportive intent toward tenant protection and accountability for landlords, with the bill framed as a measure to curb financing of bad-faith property owners. There are no recorded committee transcripts or votes in the provided materials, so there is no formal evidence of opposition or amendment debate in the record supplied. The bill’s structure, including a repair-related exemption, indicates an effort to balance enforcement against landlords with the practical need to finance urgent building repairs.
Contention
The main likely point of contention is whether banks should be required to police landlord conduct as a condition of financing, and whether the bill could reduce credit availability for property owners with past violations, including those seeking funds for legitimate repairs or turnaround efforts. Another possible issue is the breadth of the covered conduct and lookback periods, which may be viewed as either necessary tenant protection or as overly expansive and administratively burdensome. Supporters would likely emphasize tenant safety, anti-harassment enforcement, and deterrence of repeat code violators, while critics would likely focus on lender compliance costs, due process concerns, and the risk of limiting financing for distressed housing stock.