Landlord Can't Withdraw Legal Fees from Tenant's Bank Account

Cooperative tenant sued landlord, claiming the unauthorized removal of money from tenant's bank account. Tenant and landlord had agreed that landlord was authorized to debit a monthly rent payment from tenant's account through an electronic funds transfer. Landlord billed tenant $1,066 for legal fees resulting from tenant's breach of his proprietary lease, and the bank released this amount to landlord from tenant's account. The court ruled for tenant. Under the federal Consumer Credit Protection Act, landlord or the bank must send tenant a notice before transferring any sum that would vary from the preauthorized amounts. Since tenant never received such a notice, the removal of funds for legal fees from tenant's account was unauthorized, and tenant was entitled to a refund.

Hodes v. Vermeer Owners Inc.: NYLJ, 11/15/06, p. 23, col. 1 (Civ. Ct. NY; Hagler, J)