Landlord & Tenant

Acceptance of Rent Precludes Termination for Failure to Sign Renewal Lease

Martine Associates v. Donahoe

NYLJ 3/9/06, p. 29, col. 1

AppTerm, 9^th and 10^th Districts

(memorandum opinion)

In landlord's summary proceeding to remove a rent-regulated tenant for failure to timely exercise a renewal lease, landlord appealed from the White Plains City Court's grant of tenant's motion to dismiss. The Appellate Term affirmed, holding that landlord's acceptance of rent after expiration of the lease precluded termination for failure to sign a renewal lease.

Tenant's 2-year lease was subject to the Emergency Tenant Protection Regulations (ETPR), and was to terminate on July 31, 2004. Landlord asserted that a renewal lease was mailed to tenant on April 30, 2004, and that tenant never signed the lease. Nevertheless, landlord accepted rent from tenant for August, September, and part of October before serving tenant, on Nov. 5, 2004, with a 15-day notice purporting to terminate the lease on Nov. 30 for failure to sign the renewal lease (ETPR sec. 2504.3[c][1]). Landlord then brought this summary proceeding to recover possession, but City Court dismissed, concluding that landlord was obligated to serve a notice to cure on tenant. Landlord appealed, contending that failure to execute a renewal lease on time is not 'curable,' because giving tenant an opportunity to cure would extend tenant's renewal period beyond the time specified in the regulations.

In affirming, the Appellate Term did not reach the cure issue, because the court concluded that landlord's acceptance of rent in the months following expiration vested tenant with new rights ' either the rights of a month-to-month tenant, or the right to renew. The court found it unnecessary to determine the precise scope of tenant's rights because in any event, tenant could not be removed for failure to sign the renewal lease. Even if tenant had only the rights of a month-to-month tenant, landlord would be required to serve her with notice terminating that tenancy, and landlord never served any such notice. As a result, the court dismissed the proceeding.

COMMENT

When a rent-stabilized tenant in New York City (NYC) fails to timely renew a lease, yet remains in possession, judicial interpretation of the Rent Stabilization Code (RSC) requires landlord to provide tenant with the 10-day cure period mandated by RPAPL ' 753(f). The RSC provides that a tenant who remains in possession after failing to renew an expired lease has committed a 'wrongful act.' 9 NYCRR ' 2524.3(f). In addition, RPAPL 753(f) provides that if a holdover proceeding 'is based upon a claim that the tenant ' has breached a provision of the lease, the court shall grant a ten day stay of issuance of the warrant, during which time the respondent may correct such breach.' Thus, in Fairbanks Gardens Co. v. Gandhi, 168 Misc. 2d 128, the court held that a holdover tenant's failure to sign a renewal lease is a 'wrongful act' which constitutes a breach of lease that brings the case within the 'broad remedial ambit' of RPAPL ' 753(f). Accordingly, notwithstanding tenant's initial failure to timely renew, landlord must provide tenant with an additional 10-day opportunity to cure before landlord may begin a holdover proceeding.

Courts are divided in their interpretation of the ETPR, the law covering non-NYC rent-stabilized tenants, regarding a holdover tenant's right to cure after failure to timely renew a lease. Although some courts have suggested that the 2000 ETPR amendments clarified the issue, other courts disagree. In 1985, the court in Carriage House Realty Co. v. Conlon, 128 Misc. 2d 143, held that a landlord is not required to issue a notice to cure before beginning a summary proceeding because tenant's failure to timely renew is not curable. The court based its holding on the old ETPR ' 2503.5, which gave tenant 30 days within which to accept landlord's offer of renewal and did not expressly mention notice to cure. The court reasoned that '[t]o require the landlord to serve a notice to cure would impermissibly extend the tenant's time in which to accept a renewal lease.' In 2000, the legislature added ETPR ” 2503.5(b)(2) and 2503.5(b)(3). Section 2503.5(b)(2) provides that a tenant who remains in occupancy without renewing is deemed to have renewed upon the same terms and conditions as the previous lease. Section 2503.5(b)(3) provides that notwithstanding ' 2503.5(b)(2), landlord may evict a holdover tenant who failed to renew. In ATM Four v. Ramos, 188 Misc. 2d 310, the court dismissed landlord's holdover proceeding against a tenant who failed to timely renew where landlord executed a new lease with tenant and accepted the first month's rent. In dictum, the court went on to interpret ' 2503.5(b)(2) to mean that a tenant's failure to renew can effectively be cured where tenant remains in occupancy and continues to pay rent. Six months later, in ATM Two v. Ramos, 189 Misc. 2d 770, the same court excused tenant's failure to timely renew where landlord's renewal offer was misdirected to another apartment and returned to landlord as 'unclaimed,' yet tenant was not informed of the misdirected letter when tenant spoke with landlord's representative regarding renewal. However, in contrast to ATM Four, the ATM Two court noted, again in dictum, that ' 2503.5(b)(2) in conjunction with ' 2503.5(b)(3), does not address notice of cure. Rather, these sections merely expand landlord's options when tenant defaults to include deeming the lease renewed and collecting rent, or deeming the lease terminated and evicting tenant as a holdover.

Acceptance of Rent Precludes Termination for Failure to Sign Renewal Lease

Martine Associates v. Donahoe

NYLJ 3/9/06, p. 29, col. 1

AppTerm, 9^th and 10^th Districts

(memorandum opinion)

In landlord's summary proceeding to remove a rent-regulated tenant for failure to timely exercise a renewal lease, landlord appealed from the White Plains City Court's grant of tenant's motion to dismiss. The Appellate Term affirmed, holding that landlord's acceptance of rent after expiration of the lease precluded termination for failure to sign a renewal lease.

Tenant's 2-year lease was subject to the Emergency Tenant Protection Regulations (ETPR), and was to terminate on July 31, 2004. Landlord asserted that a renewal lease was mailed to tenant on April 30, 2004, and that tenant never signed the lease. Nevertheless, landlord accepted rent from tenant for August, September, and part of October before serving tenant, on Nov. 5, 2004, with a 15-day notice purporting to terminate the lease on Nov. 30 for failure to sign the renewal lease (ETPR sec. 2504.3[c][1]). Landlord then brought this summary proceeding to recover possession, but City Court dismissed, concluding that landlord was obligated to serve a notice to cure on tenant. Landlord appealed, contending that failure to execute a renewal lease on time is not 'curable,' because giving tenant an opportunity to cure would extend tenant's renewal period beyond the time specified in the regulations.

In affirming, the Appellate Term did not reach the cure issue, because the court concluded that landlord's acceptance of rent in the months following expiration vested tenant with new rights ' either the rights of a month-to-month tenant, or the right to renew. The court found it unnecessary to determine the precise scope of tenant's rights because in any event, tenant could not be removed for failure to sign the renewal lease. Even if tenant had only the rights of a month-to-month tenant, landlord would be required to serve her with notice terminating that tenancy, and landlord never served any such notice. As a result, the court dismissed the proceeding.

COMMENT

When a rent-stabilized tenant in New York City (NYC) fails to timely renew a lease, yet remains in possession, judicial interpretation of the Rent Stabilization Code (RSC) requires landlord to provide tenant with the 10-day cure period mandated by RPAPL ' 753(f). The RSC provides that a tenant who remains in possession after failing to renew an expired lease has committed a 'wrongful act.' 9 NYCRR ' 2524.3(f). In addition, RPAPL 753(f) provides that if a holdover proceeding 'is based upon a claim that the tenant ' has breached a provision of the lease, the court shall grant a ten day stay of issuance of the warrant, during which time the respondent may correct such breach.' Thus, in Fairbanks Gardens Co. v. Gandhi, 168 Misc. 2d 128, the court held that a holdover tenant's failure to sign a renewal lease is a 'wrongful act' which constitutes a breach of lease that brings the case within the 'broad remedial ambit' of RPAPL ' 753(f). Accordingly, notwithstanding tenant's initial failure to timely renew, landlord must provide tenant with an additional 10-day opportunity to cure before landlord may begin a holdover proceeding.

Courts are divided in their interpretation of the ETPR, the law covering non-NYC rent-stabilized tenants, regarding a holdover tenant's right to cure after failure to timely renew a lease. Although some courts have suggested that the 2000 ETPR amendments clarified the issue, other courts disagree. In 1985, the court in Carriage House Realty Co. v. Conlon, 128 Misc. 2d 143, held that a landlord is not required to issue a notice to cure before beginning a summary proceeding because tenant's failure to timely renew is not curable. The court based its holding on the old ETPR ' 2503.5, which gave tenant 30 days within which to accept landlord's offer of renewal and did not expressly mention notice to cure. The court reasoned that '[t]o require the landlord to serve a notice to cure would impermissibly extend the tenant's time in which to accept a renewal lease.' In 2000, the legislature added ETPR ” 2503.5(b)(2) and 2503.5(b)(3). Section 2503.5(b)(2) provides that a tenant who remains in occupancy without renewing is deemed to have renewed upon the same terms and conditions as the previous lease. Section 2503.5(b)(3) provides that notwithstanding ' 2503.5(b)(2), landlord may evict a holdover tenant who failed to renew. In ATM Four v. Ramos, 188 Misc. 2d 310, the court dismissed landlord's holdover proceeding against a tenant who failed to timely renew where landlord executed a new lease with tenant and accepted the first month's rent. In dictum, the court went on to interpret ' 2503.5(b)(2) to mean that a tenant's failure to renew can effectively be cured where tenant remains in occupancy and continues to pay rent. Six months later, in ATM Two v. Ramos, 189 Misc. 2d 770, the same court excused tenant's failure to timely renew where landlord's renewal offer was misdirected to another apartment and returned to landlord as 'unclaimed,' yet tenant was not informed of the misdirected letter when tenant spoke with landlord's representative regarding renewal. However, in contrast to ATM Four, the ATM Two court noted, again in dictum, that ' 2503.5(b)(2) in conjunction with ' 2503.5(b)(3), does not address notice of cure. Rather, these sections merely expand landlord's options when tenant defaults to include deeming the lease renewed and collecting rent, or deeming the lease terminated and evicting tenant as a holdover.