Prime Tenants must live in their space to be protected.  For Prime Tenants who sublet all of their space to subtenants and do not live in their space — the Loft Law does not protect you.

Subtenants, to the extent that they occupy individual units (typically with a separate kitchen and bath), and prime tenants who do live in their spaces, will end up with direct individual leases with the building owner under the Loft Law if they are covered, once their respective leases are up. As the rules are written, subtenants will pay the same rent that they have paid to their prime tenants, even if that rent is more than what the landlord is charging the prime tenant.

The rule for what prime tenants pay is complicated, but generally speaking the prime tenant will lose half of the “profit” they are making from their subtenants. They also lose control over the space once their lease expires, and the subtenants will start paying rent directly to the landlord. Again, prime tenants who do not live in the building do not have any rights under the Loft Law, once their lease expires. 

Obviously, there can sometimes be a conflict of interest between prime- and sub-tenants, with prime tenants wanting to avoid Loft Law coverage and subtenants wanting to get it. There are also very stringent rules over when a prime tenant can reclaim a subtenant’s space. (In short: it’s not easy.) There were some very tough battles over this in the 80’s and 90’s, but by now there is plenty of legal precedent, and this is how it has played out.

You can read Rule 2-09 through a link on this page. It’s a doozy, so feel free to contact us if you have questions.