Does Federal Fair Debt Collection Practices Act affect non-payment eviction proceedings?

Real Estate Weekly, July 28, 1999 by Edward L. Schiff

For quite some time, the federal Fair Debt Collections Practices Act (FDCPA) has caused confusion in the courts of New York (as well as in federal courts) as it relates to summary proceedings brought on by landlords against residential tenants for nonpayment of rent.

The FDCPA requires that in order for a "debt collector" to seek payment of a debt (rent), he must serve a 30-day notice upon the debtor (tenant) to verify the debt. Failing to do so may result in an award against the debt collector for money damages, as well as attorneys' fees.

The U.S. Supreme Court held in 1995 that the term "debt collector" applies to lawyers who regularly, through litigation, try to collect consumer debts. Thus, attorneys who regularly engage in consumer debt collection activities through litigation and who attempt to collect back rent on behalf of a landlord client must serve the federally-required 30-day notice upon the tenant. These requirements do not apply when the landlord himself directly attempts to collect the rent, and in doing so uses his own name and not the name of a third person.

As a result of these FDCPA requirements many attorneys are advising their landlord clients to serve all required notices upon defaulting tenants by using only the landlords' own names.

Nevertheless, various judges in the courts of New York still are in conflict as to how FDCPA effects non-payment proceedings, particularly since New York State law also requires formal notices to be served upon defaulting tenants, such as the three-day notice of demand for rent as required by Real Property Actions and Proceedings Law (RPAPL), [section]711(2).

Some months ago, the New York City Civil Court held in the case of Soho Tribeca Space Corp. V. Mills (NYLJ, May 13, 1998 P.28 Col.6) that the three-day demand notice for rent served upon a tenant in arrears, as is required by New York State law, if made by the attorney for the landlord, constituted a violation of FDCPA. In that case, the Civil Court judge dismissed the summary proceedings.

However, in the case of Barstow Road Owners, Inc., Landlord, V. Billing Tenant, (687 NYS 2d 845 Dis. Ct 1998), Judge Christopher G. Quinn of the District Court, Nassau County, First District held that FDCPA does not apply to eviction proceedings for non-payment of rent, and he made a detailed analysis of the effect of FDCPA upon non-payment proceedings.

Barstow Road Owners, Inc., a cooperative, commenced eviction proceedings against the tenant under a proprietary lease for non-payment of maintenance over a long period of time.

The tenant argued that since the three-day notice of demand for rent required by New York law (RPAPL [section]711(2)) and the 10-day notice required by the proprietary lease were both signed the cooperative's attorney and not by the cooperative itself, the provisions of FDCPA were violated because the "debt collector" attorney failed to serve the federally required 30-day notice upon the tenant. The tenant claimed that due to this violation of FDCPA, the eviction proceedings were invalid.

The tenant also counterclaimed against the landlord for the sum of $10,000 as damages for this violation of federal law.

Judge Quinn, in holding that FDCPA does not apply to summary proceedings for the recovery of possession of residential apartments, made a thorough analysis of the impact of FDCPA upon non-payment landlord/tenant matters. His analysis took a step-by-step evaluation of the federal statute and compared it with the New York RPAPL.

Judge Quinn first addressed the question of public policy and the purpose of FDCPA, as opposed to the purpose of a summary proceedings. He stated that the federal statute was enacted to eliminate abusive debt collection practices and to protect consumers by prohibiting a debt collector from using unfair or unconscionable means to collect a consumer debt, and if he does, the law imposes civil liability, including attorneys fees, upon the debt collector. Judge Quinn stated, however, that in the case before him the tenant made no allegation of harassment or unconscionable practices, the very items outlined by Congress which are the targets of the federal legislation.

Judge Quinn stated that New York State has long provided a mechanism in the RPAPL for efficient solutions of landlord/tenant non-payment disputes in residential property. Summary proceedings for nonpayment may be commenced three days after demand for rent is served upon tenant, and such cases may theoretically be resolved in as little as 20 days. Therefore, an immediate conflict arises because federal law requires a debt collector to give the tenant thirty days' notice before litigation can start. Since the primary purpose of summary proceedings is the speedy and expeditious disposition of the issue as to the right of the landlord to immediate possession of his property, it is unlikely that Congress foresaw that FDCPA would be used as a device to dismiss legal summary proceedings commenced by a landlord to reclaim possession of his real property.