Good Cause Eviction: Are Small Landlords Exempt?

I'm Travis Penny, and when I size DSCR investment loans in New York, this question comes up all the time. In most cases, yes: owners with 10 or fewer units in New York State are exempt from Good Cause Eviction. There are other exemptions too, and an LLC has its own rule you need to know. If you're new to how these loans work, start with my DSCR loans page, and run your own numbers on the DSCR calculator.

This isn't legal advice. Check your situation with a New York attorney. But here's how I read it.

The exemption list

New York's Good Cause Eviction law passed in 2024. Based on the state statute and the city's HPD guidance, these are exempt:

• Small landlords. Owners with 10 or fewer units in New York State total.
• Owner occupied small buildings. Buildings of 10 or fewer units where the owner lives.
• Newer buildings. Units with a certificate of occupancy issued on or after January 1, 2009, for 30 years from that date.
• Condo and co-op units.
• Rent stabilized or rent controlled units. They're already regulated under other rules.
• High rent units. Units renting above 245% of HUD Fair Market Rent. State housing agency HCR updates these thresholds, so check the current number.
• Others on the list include subsidized units, seasonal use, manufactured homes, hotels and dorms.

Since my New York loans are business purpose loans on investment property, the owner occupied exemption won't apply to my borrowers. The unit count, the building age, the condo rule and the high rent rule are the ones that matter.

The LLC rule

This is the part people miss. If you hold the property in an LLC, the small landlord exemption looks through the LLC to the people who own it. Every individual owner has to be at or under 10 units in New York State, and the landlord has to disclose all of the owners.

So if you and a partner own a 4 family in an LLC, and your partner owns 12 other units in the state, the building may not get the small landlord exemption. Count everything every member owns, not just what's in this one company.

That matters because my New York DSCR loans close in an LLC or corporation, with a personal guaranty. The entity doesn't hide the unit count.

What covered tenants get

If a unit is covered, two main things change.

Rent increase cap. An increase above the local limit can be challenged. The limit is 5% plus the annual CPI change, with a maximum of 10%. As of May 4, 2026, the NYC limit is 8.38%, and HCR publishes updated figures every year by August 1. A landlord can still argue a higher increase is justified by costs, but that's the line where it gets challenged.

Good cause to not renew. You can't just decline to renew a lease. You need a good cause reason, such as nonpayment or a lease violation. Ask your attorney about the full list.

What it means when you size a DSCR loan

A DSCR loan qualifies off rent compared to the payment. If you're buying a covered building and your plan depends on big rent increases, Good Cause can cap that plan. I size the loan on rent the property can support today, and I'd tell you to underwrite your own deal the same way.

On the flip side, an exempt building, whether it's a condo unit, a newer building or a small landlord's 2 to 4 family, gives you more flexibility. Know which one you're buying before you sign.

These are business purpose loans on investment property only. For city specifics, see my New York City DSCR page. Not everyone will qualify.

I started in 2004 and I'm still here, and rules like this one are exactly why I ask about your whole portfolio up front.

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Residential home loans in Maine and Florida. DSCR loans on investment and rental properties in 38 states.

Want me to look at your deal? Run it through the DSCR calculator, read up on DSCR loans, then text me at (207) 615-7770 or use the contact form on this site.

Travis Penny, NMLS 1649161 | Vision Mortgage, NMLS 1286953. Subject to credit approval, income, property and program guidelines. Not all applicants qualify. Programs and guidelines can change without notice. Equal Housing Opportunity.