Landlord & Tenant

Civil Ct., N.Y. Cty

(Schneider, J.)

A landlord brought a holdover proceeding seeking possession from a tenant's licensees. The court dismissed the proceeding, holding that the tenant's agreement to vacate the rent-stabilized apartment in return for $10,000 was unenforceable.

The tenant, who is disabled, has occupied the subject apartment for 10 years, and currently occupies it with his four children and a grandchild. The family's only income is the tenant's Social Security disability payments. In July 2003, the landlord's agent approached the tenant and offered to pay him $10,000 if he would vacate the premises. The tenant signed a document written in lay language, reciting that the landlord's agent had offered to pay the tenant to vacate as soon as possible, that the tenant might need an extension to find suitable living arrangements, that the agreement would become effective once the tenant received his [section 8] voucher, and that the agreement was good for 120 days. In September, another of the landlord's agents asked the tenant to sign another agreement, in more formal terms, which recited that the landlord would give the tenant possession by Dec. 31, 2003, in return for the consideration paid by the landlord. The tenant subsequently decided not to move, and offered to return the $2500 the landlord's agent had given him upon signing the first agreement. The landlord brought this holdover proceeding when the tenant did not leave by Dec. 31.

In dismissing the petition, the court noted the tenant's testimony that he thought the agreement always gave him a choice between leaving and receiving the remainder of the payment, or staying and returning the $2500. The court also noted that section 2520.13 of the Rent Stabilization Code invalidates any agreement by a tenant to waive provisions of the Rent Stabilization Code, with narrow exceptions. The court noted that the exceptions generally related to waivers executed as part of in-court settlements. Here, the agreement was not executed as part of a settlement of any legal difficulties. The court therefore held that even if the agreement did obligate the tenant to leave, the agreement was not enforceable against him.

Implementation of Cardkey System Not Breach of Habitability Warranty

Stuyvesant Town-Peter Cooper Village Tenants' Assoc. v. Metropolitan Life Ins. Co.

NYLJ 7/19/04, p. 19, col. 1

Supreme Ct., N.Y. Cty

(Solomon, J.)

In an action by a tenants' association for an injunction against implementation of a cardkey system in Peter Cooper Village, the landlord moved to dismiss the complaint. The court granted the landlord's motion, holding that implementation of the system did not constitute breach of the implied warranty of habitability.

In November 2003, the landlord announced plans to replace metal keys with cardkeys for the lobby doors to buildings in Peter Cooper Village. The landlord would issue cardkeys for all residents, and also for guests, but only on application to him. The landlord would retain discretion over whether to issue cardkeys to guests, and would photograph all cardkey holders, storing a copy of each photo electronically, and embossing a photo on each cardkey. He would cancel cardkeys when they were lost, or when the bearer of the cardkey no longer has a right to access. The tenants' association objected to the conversion, and brought this action, contending that the change constituted an unlawful change in tenants' leases, an illegal reduction in service to rent-stabilized tenants, a breach of the warranty of habitability, and a violation of tenants' right to privacy.

In dismissing the complaint, the court first held that the Division of Housing and Community Renewal (DHCR) had initial jurisdiction over tenants' contentions that the cardkey system constituted a diminution of services and an unauthorized change in tenants' rent-stabilized lease. The court itself lacked jurisdiction to consider those claims until tenants have exhausted their administrative remedies. The court then dismissed the warranty of habitability claim, holding that the change in security system did not make the premises unfit for habitation. Finally, the court rejected the tenants' privacy claim, noting that New York does not recognize a common-law right to privacy.

Lease Requires Increases to Be Based on Preferential Rent

448 West 54th Street Corp. v. Doig-Marx

NYLJ 7/14/04, p. 18, col. 3

Civil Ct., N.Y. Cty

(Fiorella, J.)

A landlord brought this non-payment proceeding against a rent-stabilized tenant, alleging that upon lease renewal, the tenant was obligated to pay rent increases based on the maximum permissible rent rather than the rent previously collected. The court dismissed the proceeding, holding that by the terms of the tenant's original lease, the tenant was entitled to a preferential rent for the duration of the tenant's occupancy.

The landlord originally leased the premises to the tenant in 1992, pursuant to a 1-year lease that provided that the tenant would be entitled to a preferential rent “during the Terms of Tenants' occupancy.” From that point on, upon lease renewal, the landlord based the tenants' rent increase on the preferential rent, not the maximum permissible rent. In 2003, however, the landlord offered tenants a renewal leas,e which for the first time calculated the renewal increase based on the maximum permissible rent. The tenant objected, and refused to pay. The landlord deemed the lease renewed at the higher amount, and brought this nonpayment proceeding.

In dismissing the proceeding, the court acknowledged the enactment of chapter 82 of the Laws of 2003, which provided that when the rent paid by a tenant is less than the legal regulated rent, the increase upon renewal or vacancy should be based on the “previously established legal regulated rent.” But the court then held that the parties to a lease were free to confer additional rights on a tenant by contract, and concluded that the lease between landlord and tenants in this case conferred on tenants a right to have increases based on the preferential rent for the duration of their occupancy. As a result, the tenant was entitled to dismissal of the proceeding.

Beth Din Determination Precludes Yellowstone Injunction

New Eagle, Inc. v. H.R. Neumann Associates, Inc.

NYLJ 7/21/04, p. 19, col. 3

Supreme Ct., Kings Cty

(Lewis, J.)

After a landlord served a tenant a 30-day notice of termination, the tenant applied for a Yellowstone injunction restraining the landlord from terminating the lease pending resolution of the underlying action. The court denied the injunction, concluding that the tenant could not cure the alleged default, because the lease had been terminated by a Beth Din religious tribunal.

The parties had agreed to submit any lease-related disputes to binding rabbinical arbitration, and also provided that the lease would be canceled if one tenant involuntarily terminated the employment of another. When a dispute arose between the tenants, a rabbinical court decreed that if one tenant did not deliver an accounting within 45 days, the lease would terminate. When the accounting was not delivered, the rabbinical court declared the lease canceled. At that point, the landlord served the tenant with a notice of termination, and the tenant sought a Yellowstone injunction. The tenant contended that the Beth Din arbitration award had never been confirmed by any court, and that the landlord could not terminate the lease until the award was confirmed.

In denying the Yellowstone injunction, the court held that an award rendered by a Beth Din is binding on the courts without inquiry into the procedures and methodology of the Beth Din. As a result, no confirmation of the award is necessary. Because the Beth Din had canceled the lease, the tenant could no longer cure any default. Cancellation of the lease created a month-to-month tenancy, which was subject to termination by the landlord.

Tenant Excused from Failure to Timely Exercise Option to Renew

Rachel Bridge Corp. V. Dishi

NYLJ 7/14/04, p. 19, col. 1

Civil Ct., N.Y. Cty

(Singh, J.)

In a commercial landlord's summary holdover proceeding, the court held a hearing to determine whether a tenant should be excused from its default in providing timely notice of its exercise of an option to renew. The court held that the tenant should be excused, citing the substantial forfeiture the tenant would suffer if its default were not excused.

The parties entered into a lease agreement on Aug. 20, 1991. Page 1 of the preprinted lease includes a handwritten and initialed notation that provides that the lease is for a 20-year period to expire on Nov. 30, 2011. Paragraph 40 of a rider to the lease provides, by contrast, that the tenant should pay specified rent to the landlord for a 12-year period, and that the tenant should have a right to renew for an additional 8 years by giving written notice to landlord at least 6 months before expiration of the lease term. The lease also provides that all notice is to be served by registered or certified mail, and provides that in case of conflict between the main lease and the rider, the rider should control.

At the inception of the lease ,the tenant spent $480,000 converting the space to retail use, including filings necessary to obtain zoning approvals and necessary permits. In March 2003, the tenant's secretary prepared a letter exercising the option to renew the lease (although the tenant himself apparently believed that the original lease term was for 20 years, not 12). The secretary testified that she delivered the letter to an employee at the landlord's office, but the landlord denied ever receiving the letter. The landlord subsequently entered into an agreement with a new tenant at substantially more rent, and brought this holdover proceeding to remove tenant, alleging that the lease term had expired on Nov. 30, 2003. At an earlier stage of the proceeding, a judge had held that landlord's interpretation of the lease was correct, and that the original lease term was for 12 years, not 20. That judge also determined that the tenant's notice of its exercise of the lease option was inadequate under the terms of the lease because not delivered by certified or registered mail. That court remanded for a hearing to determine whether the tenant should be excused from its default.

In holding that the tenant should be excused, the court noted that equity intervenes to prevent a substantial forfeiture when the tenant demonstrates that its default is excusable and the landlord will not be prejudiced by exercise of the option. The court concluded that in this case, the landlord was responsible for part of the default because the landlord had drafted the original lease, which was not a model of clarity. The court also noted that the landlord had not called as witnesses any of the employees who might have received the notice allegedly delivered by tenant's secretary. The court then emphasized the tenant's substantial improvements to the premises, and concluded that the landlord's loss of market rent and potential litigation against his new prospective tenant did not constitute sufficient prejudice to preclude tenant from exercising its option to renew. Hence, the court deemed the option exercised for an additional 8 years, and dismissed the holdover proceeding with prejudice.

Agreement to Vacate Stabilized Apartment for $10,000 Held Unenforceable

Bravo Realty Corp. v. Lewis

NYLJ 7/7/04, p. 18, col. 3

Civil Ct., N.Y. Cty

(Schneider, J.)

A landlord brought a holdover proceeding seeking possession from a tenant's licensees. The court dismissed the proceeding, holding that the tenant's agreement to vacate the rent-stabilized apartment in return for $10,000 was unenforceable.

The tenant, who is disabled, has occupied the subject apartment for 10 years, and currently occupies it with his four children and a grandchild. The family's only income is the tenant's Social Security disability payments. In July 2003, the landlord's agent approached the tenant and offered to pay him $10,000 if he would vacate the premises. The tenant signed a document written in lay language, reciting that the landlord's agent had offered to pay the tenant to vacate as soon as possible, that the tenant might need an extension to find suitable living arrangements, that the agreement would become effective once the tenant received his [section 8] voucher, and that the agreement was good for 120 days. In September, another of the landlord's agents asked the tenant to sign another agreement, in more formal terms, which recited that the landlord would give the tenant possession by Dec. 31, 2003, in return for the consideration paid by the landlord. The tenant subsequently decided not to move, and offered to return the $2500 the landlord's agent had given him upon signing the first agreement. The landlord brought this holdover proceeding when the tenant did not leave by Dec. 31.

In dismissing the petition, the court noted the tenant's testimony that he thought the agreement always gave him a choice between leaving and receiving the remainder of the payment, or staying and returning the $2500. The court also noted that section 2520.13 of the Rent Stabilization Code invalidates any agreement by a tenant to waive provisions of the Rent Stabilization Code, with narrow exceptions. The court noted that the exceptions generally related to waivers executed as part of in-court settlements. Here, the agreement was not executed as part of a settlement of any legal difficulties. The court therefore held that even if the agreement did obligate the tenant to leave, the agreement was not enforceable against him.

Implementation of Cardkey System Not Breach of Habitability Warranty

Stuyvesant Town-Peter Cooper Village Tenants' Assoc. v. Metropolitan Life Ins. Co.

NYLJ 7/19/04, p. 19, col. 1

Supreme Ct., N.Y. Cty

(Solomon, J.)

In an action by a tenants' association for an injunction against implementation of a cardkey system in Peter Cooper Village, the landlord moved to dismiss the complaint. The court granted the landlord's motion, holding that implementation of the system did not constitute breach of the implied warranty of habitability.

In November 2003, the landlord announced plans to replace metal keys with cardkeys for the lobby doors to buildings in Peter Cooper Village. The landlord would issue cardkeys for all residents, and also for guests, but only on application to him. The landlord would retain discretion over whether to issue cardkeys to guests, and would photograph all cardkey holders, storing a copy of each photo electronically, and embossing a photo on each cardkey. He would cancel cardkeys when they were lost, or when the bearer of the cardkey no longer has a right to access. The tenants' association objected to the conversion, and brought this action, contending that the change constituted an unlawful change in tenants' leases, an illegal reduction in service to rent-stabilized tenants, a breach of the warranty of habitability, and a violation of tenants' right to privacy.

In dismissing the complaint, the court first held that the Division of Housing and Community Renewal (DHCR) had initial jurisdiction over tenants' contentions that the cardkey system constituted a diminution of services and an unauthorized change in tenants' rent-stabilized lease. The court itself lacked jurisdiction to consider those claims until tenants have exhausted their administrative remedies. The court then dismissed the warranty of habitability claim, holding that the change in security system did not make the premises unfit for habitation. Finally, the court rejected the tenants' privacy claim, noting that New York does not recognize a common-law right to privacy.

Lease Requires Increases to Be Based on Preferential Rent

448 West 54th Street Corp. v. Doig-Marx

NYLJ 7/14/04, p. 18, col. 3

Civil Ct., N.Y. Cty

(Fiorella, J.)

A landlord brought this non-payment proceeding against a rent-stabilized tenant, alleging that upon lease renewal, the tenant was obligated to pay rent increases based on the maximum permissible rent rather than the rent previously collected. The court dismissed the proceeding, holding that by the terms of the tenant's original lease, the tenant was entitled to a preferential rent for the duration of the tenant's occupancy.

The landlord originally leased the premises to the tenant in 1992, pursuant to a 1-year lease that provided that the tenant would be entitled to a preferential rent “during the Terms of Tenants' occupancy.” From that point on, upon lease renewal, the landlord based the tenants' rent increase on the preferential rent, not the maximum permissible rent. In 2003, however, the landlord offered tenants a renewal leas,e which for the first time calculated the renewal increase based on the maximum permissible rent. The tenant objected, and refused to pay. The landlord deemed the lease renewed at the higher amount, and brought this nonpayment proceeding.

In dismissing the proceeding, the court acknowledged the enactment of chapter 82 of the Laws of 2003, which provided that when the rent paid by a tenant is less than the legal regulated rent, the increase upon renewal or vacancy should be based on the “previously established legal regulated rent.” But the court then held that the parties to a lease were free to confer additional rights on a tenant by contract, and concluded that the lease between landlord and tenants in this case conferred on tenants a right to have increases based on the preferential rent for the duration of their occupancy. As a result, the tenant was entitled to dismissal of the proceeding.

Beth Din Determination Precludes Yellowstone Injunction

New Eagle, Inc. v. H.R. Neumann Associates, Inc.

NYLJ 7/21/04, p. 19, col. 3

Supreme Ct., Kings Cty

(Lewis, J.)

After a landlord served a tenant a 30-day notice of termination, the tenant applied for a Yellowstone injunction restraining the landlord from terminating the lease pending resolution of the underlying action. The court denied the injunction, concluding that the tenant could not cure the alleged default, because the lease had been terminated by a Beth Din religious tribunal.

The parties had agreed to submit any lease-related disputes to binding rabbinical arbitration, and also provided that the lease would be canceled if one tenant involuntarily terminated the employment of another. When a dispute arose between the tenants, a rabbinical court decreed that if one tenant did not deliver an accounting within 45 days, the lease would terminate. When the accounting was not delivered, the rabbinical court declared the lease canceled. At that point, the landlord served the tenant with a notice of termination, and the tenant sought a Yellowstone injunction. The tenant contended that the Beth Din arbitration award had never been confirmed by any court, and that the landlord could not terminate the lease until the award was confirmed.

In denying the Yellowstone injunction, the court held that an award rendered by a Beth Din is binding on the courts without inquiry into the procedures and methodology of the Beth Din. As a result, no confirmation of the award is necessary. Because the Beth Din had canceled the lease, the tenant could no longer cure any default. Cancellation of the lease created a month-to-month tenancy, which was subject to termination by the landlord.

Tenant Excused from Failure to Timely Exercise Option to Renew

Rachel Bridge Corp. V. Dishi

NYLJ 7/14/04, p. 19, col. 1

Civil Ct., N.Y. Cty

(Singh, J.)

In a commercial landlord's summary holdover proceeding, the court held a hearing to determine whether a tenant should be excused from its default in providing timely notice of its exercise of an option to renew. The court held that the tenant should be excused, citing the substantial forfeiture the tenant would suffer if its default were not excused.

The parties entered into a lease agreement on Aug. 20, 1991. Page 1 of the preprinted lease includes a handwritten and initialed notation that provides that the lease is for a 20-year period to expire on Nov. 30, 2011. Paragraph 40 of a rider to the lease provides, by contrast, that the tenant should pay specified rent to the landlord for a 12-year period, and that the tenant should have a right to renew for an additional 8 years by giving written notice to landlord at least 6 months before expiration of the lease term. The lease also provides that all notice is to be served by registered or certified mail, and provides that in case of conflict between the main lease and the rider, the rider should control.

At the inception of the lease ,the tenant spent $480,000 converting the space to retail use, including filings necessary to obtain zoning approvals and necessary permits. In March 2003, the tenant's secretary prepared a letter exercising the option to renew the lease (although the tenant himself apparently believed that the original lease term was for 20 years, not 12). The secretary testified that she delivered the letter to an employee at the landlord's office, but the landlord denied ever receiving the letter. The landlord subsequently entered into an agreement with a new tenant at substantially more rent, and brought this holdover proceeding to remove tenant, alleging that the lease term had expired on Nov. 30, 2003. At an earlier stage of the proceeding, a judge had held that landlord's interpretation of the lease was correct, and that the original lease term was for 12 years, not 20. That judge also determined that the tenant's notice of its exercise of the lease option was inadequate under the terms of the lease because not delivered by certified or registered mail. That court remanded for a hearing to determine whether the tenant should be excused from its default.

In holding that the tenant should be excused, the court noted that equity intervenes to prevent a substantial forfeiture when the tenant demonstrates that its default is excusable and the landlord will not be prejudiced by exercise of the option. The court concluded that in this case, the landlord was responsible for part of the default because the landlord had drafted the original lease, which was not a model of clarity. The court also noted that the landlord had not called as witnesses any of the employees who might have received the notice allegedly delivered by tenant's secretary. The court then emphasized the tenant's substantial improvements to the premises, and concluded that the landlord's loss of market rent and potential litigation against his new prospective tenant did not constitute sufficient prejudice to preclude tenant from exercising its option to renew. Hence, the court deemed the option exercised for an additional 8 years, and dismissed the holdover proceeding with prejudice.