Landlord & Tenant

Landlord and Tenant May Agree That Preferential Rent Riders Extend to Renewal Leases

Matter of 218 E. 85th ST. LLC, v. DHCR

NYLJ 1/28/09, p. 26, col. 1

Supreme Ct., N.Y. Cty.

(Shafer, J.)

In this article 78 proceeding, landlord challenged DHCR's interpretation of a 2003 amendment to the rent stabilization law. The court held that DHCR had rationally determined that the regulation did not preclude landlord and tenant from agreeing that a preferential rent rider would apply to renewal leases.

Beginning in 1988, every lease between landlord and tenant included a preferential rent rider in which the parties agreed that tenant would pay a rent lower than the legal regulated rent for her rent-stabilized apartment. The rider provides that “[w]hen the tenant moves out, the owner can compute and charge the new rent based upon” a number of listed factors. In 2005, however, landlord refused to include a preferential rent rider in tenant's lease. Landlord relied on a 2003 amendment to the rent stabilization law, which provided that when the rent paid by the tenant is less than the legal regulated rent, “the amount of rent ' which may be charged upon renewal or upon vacancy ' may, at the option of the owner, be based upon such previously established legal regulated rent.” Landlord argued that the amendment made clear that landlord was not obligated to continue offering a preferential rent rider to existing tenants. DHCR, however, concluded that the statute was inapplicable when landlord and tenant had made an agreement that the preferential rent rider would be included in subsequent leases, and DHCR concluded that landlord and tenant had made such an agreement in this case.

In upholding DHCR's determination, the court started by relying on the rent stabilization provision that requires a landlord to offer a rent stabilized tenant a renewal lease on the “same terms and conditions” as an expiring lease. The court then reasoned that if the expiring lease guaranteed a tenant a preferential rent rider for the duration of tenant's occupancy, tenant was contractually entitled to a preferential rent, even if the statute would otherwise entitle landlord to charge the legal regulated rent. In this case, the court concluded that tenant's prior lease imposed on landlord the obligation to offer tenant a preferential rent rider.

COMMENT

The 2003 amendment to the Rent Stabilization Law, (Administrative Code of City of NY section 26-511(c)(14)), permits a landlord upon lease renewal to increase tenant's rent from the previous preferential rent to the legal regulated rent. The statute is silent, however, as to whether a prior agreement between landlord and tenant to maintain the preferential rent for the duration of the tenancy prevents a landlord from increasing rent to the legal regulated rent.

When a prior lease provides explicitly that preferential rent will last for the duration of the tenancy, New York courts have held that the lease language prevails, and a landlord may not increase rent to the legal regulated rent. In Matter of Sugihara v New York State Div. of Hous. & Community Renewal, 13 Misc. 3d 1239A, the court held that a landlord could not increase rent to the legal regulated rent when landlord and tenant explicitly agreed in the initial lease that all renewals would be based upon the preferential rent. The court held that the 2003 amendment should be read in conjunction with the provision in the Rent Stabilization Code, 9 NYCRR 2522.5(g)(1), which requires renewal leases to be offered on the “same terms and conditions as the expired lease” and held that the 2003 amendment was not intended to permit a landlord to reduce rights granted to tenant by the terms of a prior lease.

When the prior lease language implicitly indicates the parties' intent for the preferential rent to last for the duration of the tenancy, or when the facts and circumstances surrounding the prior lease agreement indicate the same intent, New York courts have held that landlord may not increase rent to the legal regulated rent. In East Side Managers Associates, Inc. v Goodwin, 18 Misc. 3d 1102A, landlord and tenant contracted for preferential rent in exchange for repair work to be done by the tenant, and the lease did not specify the term of duration of the preferential rent. The court, likely concerned that tenant thought she was performing repairs as consideration for tenancy-long preferential rent, held that landlord could not increase rent to the legal regulated rent. Similarly, in Matter of 218 E. 85th St., the prior lease language stated that landlord could increase rent to the legal regulated rent when a new tenant moved in, and the court drew the inference that landlord had agreed not to increase to the legal regulated rent before that time.

However, when no prior agreement contains language indicating the parties' intent to continue preferential rent for the duration of the tenancy, and when there are no facts or circumstances indicating such intent, the 2003 amendment applies and landlord is permitted to increase rent to the legal regulated rent upon renewal. In Savoy Park Owner LLC v. West, 19 Misc. 3d 1107A, the initial 2003 lease and first renewal contained preferential rent, but the agreements were silent as to the duration of the preferential rent. The court held that the landlord was permitted upon subsequent renewals to increase rent to the legal regulated rent under the 2003 amendment.

Stipulation of Settlement Binding on Rent-Controlled Tenant

Gronowicz v. Perla

NYLJ 1/22/09, p. 36, col. 1

AppDiv, First Dept.

(memorandum opinion)

In an action by rent-controlled tenants to set aside a stipulation of settlement, tenants appealed from the Supreme Court's grant of summary judgment to landlord. The Appellate Division affirmed, holding that tenants had not raised any issue of fact supporting their claim that they had relied on a misrepresentation by landlord in signing the stipulation.

Tenants previously brought an article 78 proceeding in which tenants argued, unsuccessfully, that landlord had obtained a permit to demolish the building, and then a certificate of eviction, based on a false and bad-faith representation that landlord was going to demolish the building. After losing the proceeding, tenants failed to vacate the apartment, and landlord brought a holdover proceeding. Landlord and tenants then entered into a stipulation of settlement, by the terms of which landlord agreed to pay tenant $275,000 in return for tenant's agreement to vacate the apartment and withdraw all
administrative and judicial challenges to their eviction. Tenants were represented by counsel when the stipulation was executed, and the amount landlord agreed to pay was far in excess of the $77,826.24 the certificate of eviction obligated landlord to pay tenants as an alternative to relocating them. Tenants then vacated he apartment, and executed affidavits releasing landlord of any claims that they had vacated the apartment other than by voluntary surrender of possession. Eight months later, when landlord had not commenced demolition, tenants brought this action, contending that the stipulation was fraudulent. The Supreme Court awarded summary judgment to landlord, and tenants appealed.

In affirming, the Appellate Division held that tenant could not plausibly rely on their contention that they justifiably relied on landlord's representation that he was going to demolish the building. The court noted that throughout the prior litigations, tenants had contended that landlord had falsely represented that he was going to demolish the building, and by the terms of the stipulation, tenants withdrew all of its claims in those prior litigations. The court noted that tenants could have made demolition a condition subsequent to the stipulation if tenants had truly relied on the representation, and emphasized that tenant had received $200,000 in exchange for agreeing to the stipulation. In light of this history, the court concluded that no issue of fact remained.

Landlord with Improper Certificate of Occupancy May Not Recover Use and Occupancy

Sheila Properties, Inc. v. A Real Good Plumber, Inc.

NYLJ 2/9/09, p. 31, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In landlord's action for ejectment and use and occupancy, tenant appealed from the Supreme Court's award of summary judgment to landlord on its claim for use and occupancy. The Appellate Division reversed, holding that the owner of a de facto multiple dwelling who fails to obtain a certificate of occupancy or comply with the registration requirements of the Multiple Dwelling Law may not collect rent or use and occupancy.

Landlord's building contains about 100 units, one of which was occupied by tenant Kelleher as a residence. The certificate of occupancy does not authorize residential use, and landlord had never filed a registration statement. Landlord nevertheless brought this action to eject tenant, and to collect use and occupancy. Supreme Court granted landlord summary judgment on the issues of liability and damages on the use and occupancy claim, and awarded use and occupancy retroactive to commencement of the action. Tenant appealed.

In reversing, the Appellate Division held that a landlord may not recover use and occupancy when the landlord has neither obtained a residential certificate of occupancy nor complied with the registration requirements of the Multiple Dwelling Law. As a result, landlord was not entitled to recover use and occupancy. At the same time, the Appellate Division held that Supreme Court had properly denied tenant leave to amend her answer to assert defenses based on the Rent Stabilization Law and the Loft Law. Although the court held that leave to amend should generally be freely given, here the court concluded that the alleged defenses were devoid of merit. The Loft Law applied only to units occupied for residential purposes on April 1, 1980, and this unit was not so occupied at that time. The Rent Stabilization Law can protect tenants in illegally converted commercial premises only when the premises are eligible for residential use under the zoning ordinance and the owner, during the pendency of the proceeding, actually sought to legalize the residential use. Because landlord in this case took no steps to obtain legal authorization of conversion to residential use during the pendency of the proceeding, tenant may not assert rent stabilization protection.

City Not Entitled to Preliminary Injunction Against Use of Apartment Buildings for Short-Term Accommodations

City of New York v. 330 Continental, LLC

NYLJ 2/4/08, p. 27, col. 3

AppDiv, First Dept.

(Opinion by Friedman, J.)

In an action by the City of New York to enjoin use of single-room occupancy (SRO) hotels on Manhattan's Upper West Side as short-term accommodations for tourists and others in New York on temporary stays, hotel owners appealed from Supreme Court's grant of a preliminary injunction. The Appellate Division modified to enjoin preliminary injunctive relief, holding that the city had not demonstrated a likelihood of success on the merits.

The three subject buildings are single room occupancy (SRO) hotels, each with about 200 units. In each of the buildings, some units are rented to tenants for permanent occupancy, while others are rented to tourists on a short-term basis. The owners advertise the units for short-term occupancy on web sited such as Orbitz, Expedia, and Yahoo Travel. The practice of short-term rentals in these buildings dates back to at least the 1940s, as documented by Yellow Page listings and by the daily registers maintained for the buildings during that era. Under New York City's current zoning resolution, adopted in 1961, the buildings are located in an R8 general residence district. In that district, “apartment hotels” are permitted, and such hotels are defined as those “used primarily for permanent occupancy” (Zoning Resolution, section 12-10). “Transient hotels,” which are “used primarily for transient occupancy”, are not permitted. Moreover, the certificate of occupancy for the building is for a “Class A multiple dwelling,” which is defined as one “occupied, as a rule, for permanent residence purposes.” Multiple Dwelling Law, section 4[8][a]. In this action, the city contends that the subject hotels are being used in violation both of the zoning resolution and their certificates of occupancy. The Supreme Court awarded the city a preliminary injunction, and the hotel owners appealed.

In vacating the preliminary injunction, the Appellate Division emphasized that neither the Zoning Resolution nor the Multiple Dwelling Law flatly prohibits short-term occupancy of units. The use of the word “primarily” in the Zoning Resolution suggests the possibility that some units would be used for short-term occupancy. Similarly, the words “as a rule” in the Multiple Dwelling Law suggests that exceptions would be permitted. The Supreme Court had nevertheless granted a preliminary injunction by concluding that these provisions permitted only “minimal” use for transient occupancy. The Appellate Division disagreed, holding that use of a significant portion of the apartments for transient purposes would be permitted so long as it remains true that the building “as a rule” is occupied for permanent resident purposes and so long as the building is used “primarily” for permanent occupancy. In this case, the city made no effort to quantify the proportion of apartments used for short-term occupancy, so the city had not demonstrated a likelihood of success on the merits. The court also emphasized the vagueness of the language in the Multiple Dwelling Law and the Zoning Resolution, and noted that ambiguity should generally be resolved in favor of the property owner. Because these grounds were sufficient to support denial of the preliminary injunction, the court did not reach the hotel owners' argument that short-term use of the buildings was a valid non-conforming use because it predated the current zoning ordinance.

Landlord's Active Encouragement of Illegal Occupancy Precludes Summary Judgment

South Eleventh Street Tenants Association v. Dov Land LLC

NYLJ 2/9/09, p. 33, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In tenants' action for a judgment declaring that their illegally converted loft apartments are subject to rent stabilization, tenants appealed from Supreme Court's grant of summary judgment to landlords. The Appellate Division reversed, holding that a predecessor landlord's active encouragement of illegal residential use presented questions of fact that precluded summary judgment.

Tenants of six illegally converted lofts brought this action seeking rent stabilization protection. The premises are not covered by the Loft Law. Tenants complaint contends that landlord's predecessor knew of, witnessed, and encouraged the residential use for more than 20 years, and that the conversions were undertaken at tenants' expense. Landlord did not dispute those contentions. Supreme Court nevertheless awarded summary judgment to landlord.

In reversing, the Appellate Division relied on Caldwell v. American Package Co., Inc., 57 AD3d 15, in which the court had previously indicated that rent stabilization protection might be available to tenants of illegally converted lofts when the owner acquiesces in the conversion, when the conversion is undertaken at the tenant's expense, when zoning would permit residential use, and when landlord had actually sought to legalize the residential use. Because tenant's complaint alleged all of those factors, and because landlord had conceded that it was seeking to obtain a residential certificate of occupancy, the court held that landlord was not entitled to summary judgment.

Landlord and Tenant May Agree That Preferential Rent Riders Extend to Renewal Leases

Matter of 218 E. 85th ST. LLC, v. DHCR

NYLJ 1/28/09, p. 26, col. 1

Supreme Ct., N.Y. Cty.

(Shafer, J.)

In this article 78 proceeding, landlord challenged DHCR's interpretation of a 2003 amendment to the rent stabilization law. The court held that DHCR had rationally determined that the regulation did not preclude landlord and tenant from agreeing that a preferential rent rider would apply to renewal leases.

Beginning in 1988, every lease between landlord and tenant included a preferential rent rider in which the parties agreed that tenant would pay a rent lower than the legal regulated rent for her rent-stabilized apartment. The rider provides that “[w]hen the tenant moves out, the owner can compute and charge the new rent based upon” a number of listed factors. In 2005, however, landlord refused to include a preferential rent rider in tenant's lease. Landlord relied on a 2003 amendment to the rent stabilization law, which provided that when the rent paid by the tenant is less than the legal regulated rent, “the amount of rent ' which may be charged upon renewal or upon vacancy ' may, at the option of the owner, be based upon such previously established legal regulated rent.” Landlord argued that the amendment made clear that landlord was not obligated to continue offering a preferential rent rider to existing tenants. DHCR, however, concluded that the statute was inapplicable when landlord and tenant had made an agreement that the preferential rent rider would be included in subsequent leases, and DHCR concluded that landlord and tenant had made such an agreement in this case.

In upholding DHCR's determination, the court started by relying on the rent stabilization provision that requires a landlord to offer a rent stabilized tenant a renewal lease on the “same terms and conditions” as an expiring lease. The court then reasoned that if the expiring lease guaranteed a tenant a preferential rent rider for the duration of tenant's occupancy, tenant was contractually entitled to a preferential rent, even if the statute would otherwise entitle landlord to charge the legal regulated rent. In this case, the court concluded that tenant's prior lease imposed on landlord the obligation to offer tenant a preferential rent rider.

COMMENT

The 2003 amendment to the Rent Stabilization Law, (Administrative Code of City of NY section 26-511(c)(14)), permits a landlord upon lease renewal to increase tenant's rent from the previous preferential rent to the legal regulated rent. The statute is silent, however, as to whether a prior agreement between landlord and tenant to maintain the preferential rent for the duration of the tenancy prevents a landlord from increasing rent to the legal regulated rent.

When a prior lease provides explicitly that preferential rent will last for the duration of the tenancy, New York courts have held that the lease language prevails, and a landlord may not increase rent to the legal regulated rent. In Matter of Sugihara v New York State Div. of Hous. & Community Renewal, 13 Misc. 3d 1239A, the court held that a landlord could not increase rent to the legal regulated rent when landlord and tenant explicitly agreed in the initial lease that all renewals would be based upon the preferential rent. The court held that the 2003 amendment should be read in conjunction with the provision in the Rent Stabilization Code, 9 NYCRR 2522.5(g)(1), which requires renewal leases to be offered on the “same terms and conditions as the expired lease” and held that the 2003 amendment was not intended to permit a landlord to reduce rights granted to tenant by the terms of a prior lease.

When the prior lease language implicitly indicates the parties' intent for the preferential rent to last for the duration of the tenancy, or when the facts and circumstances surrounding the prior lease agreement indicate the same intent, New York courts have held that landlord may not increase rent to the legal regulated rent. In East Side Managers Associates, Inc. v Goodwin, 18 Misc. 3d 1102A, landlord and tenant contracted for preferential rent in exchange for repair work to be done by the tenant, and the lease did not specify the term of duration of the preferential rent. The court, likely concerned that tenant thought she was performing repairs as consideration for tenancy-long preferential rent, held that landlord could not increase rent to the legal regulated rent. Similarly, in Matter of 218 E. 85th St., the prior lease language stated that landlord could increase rent to the legal regulated rent when a new tenant moved in, and the court drew the inference that landlord had agreed not to increase to the legal regulated rent before that time.

However, when no prior agreement contains language indicating the parties' intent to continue preferential rent for the duration of the tenancy, and when there are no facts or circumstances indicating such intent, the 2003 amendment applies and landlord is permitted to increase rent to the legal regulated rent upon renewal. In Savoy Park Owner LLC v. West, 19 Misc. 3d 1107A, the initial 2003 lease and first renewal contained preferential rent, but the agreements were silent as to the duration of the preferential rent. The court held that the landlord was permitted upon subsequent renewals to increase rent to the legal regulated rent under the 2003 amendment.

Stipulation of Settlement Binding on Rent-Controlled Tenant

Gronowicz v. Perla

NYLJ 1/22/09, p. 36, col. 1

AppDiv, First Dept.

(memorandum opinion)

In an action by rent-controlled tenants to set aside a stipulation of settlement, tenants appealed from the Supreme Court's grant of summary judgment to landlord. The Appellate Division affirmed, holding that tenants had not raised any issue of fact supporting their claim that they had relied on a misrepresentation by landlord in signing the stipulation.

Tenants previously brought an article 78 proceeding in which tenants argued, unsuccessfully, that landlord had obtained a permit to demolish the building, and then a certificate of eviction, based on a false and bad-faith representation that landlord was going to demolish the building. After losing the proceeding, tenants failed to vacate the apartment, and landlord brought a holdover proceeding. Landlord and tenants then entered into a stipulation of settlement, by the terms of which landlord agreed to pay tenant $275,000 in return for tenant's agreement to vacate the apartment and withdraw all
administrative and judicial challenges to their eviction. Tenants were represented by counsel when the stipulation was executed, and the amount landlord agreed to pay was far in excess of the $77,826.24 the certificate of eviction obligated landlord to pay tenants as an alternative to relocating them. Tenants then vacated he apartment, and executed affidavits releasing landlord of any claims that they had vacated the apartment other than by voluntary surrender of possession. Eight months later, when landlord had not commenced demolition, tenants brought this action, contending that the stipulation was fraudulent. The Supreme Court awarded summary judgment to landlord, and tenants appealed.

In affirming, the Appellate Division held that tenant could not plausibly rely on their contention that they justifiably relied on landlord's representation that he was going to demolish the building. The court noted that throughout the prior litigations, tenants had contended that landlord had falsely represented that he was going to demolish the building, and by the terms of the stipulation, tenants withdrew all of its claims in those prior litigations. The court noted that tenants could have made demolition a condition subsequent to the stipulation if tenants had truly relied on the representation, and emphasized that tenant had received $200,000 in exchange for agreeing to the stipulation. In light of this history, the court concluded that no issue of fact remained.

Landlord with Improper Certificate of Occupancy May Not Recover Use and Occupancy

Sheila Properties, Inc. v. A Real Good Plumber, Inc.

NYLJ 2/9/09, p. 31, col. 4

AppDiv, Second Dept.

(memorandum opinion)

In landlord's action for ejectment and use and occupancy, tenant appealed from the Supreme Court's award of summary judgment to landlord on its claim for use and occupancy. The Appellate Division reversed, holding that the owner of a de facto multiple dwelling who fails to obtain a certificate of occupancy or comply with the registration requirements of the Multiple Dwelling Law may not collect rent or use and occupancy.

Landlord's building contains about 100 units, one of which was occupied by tenant Kelleher as a residence. The certificate of occupancy does not authorize residential use, and landlord had never filed a registration statement. Landlord nevertheless brought this action to eject tenant, and to collect use and occupancy. Supreme Court granted landlord summary judgment on the issues of liability and damages on the use and occupancy claim, and awarded use and occupancy retroactive to commencement of the action. Tenant appealed.

In reversing, the Appellate Division held that a landlord may not recover use and occupancy when the landlord has neither obtained a residential certificate of occupancy nor complied with the registration requirements of the Multiple Dwelling Law. As a result, landlord was not entitled to recover use and occupancy. At the same time, the Appellate Division held that Supreme Court had properly denied tenant leave to amend her answer to assert defenses based on the Rent Stabilization Law and the Loft Law. Although the court held that leave to amend should generally be freely given, here the court concluded that the alleged defenses were devoid of merit. The Loft Law applied only to units occupied for residential purposes on April 1, 1980, and this unit was not so occupied at that time. The Rent Stabilization Law can protect tenants in illegally converted commercial premises only when the premises are eligible for residential use under the zoning ordinance and the owner, during the pendency of the proceeding, actually sought to legalize the residential use. Because landlord in this case took no steps to obtain legal authorization of conversion to residential use during the pendency of the proceeding, tenant may not assert rent stabilization protection.

City Not Entitled to Preliminary Injunction Against Use of Apartment Buildings for Short-Term Accommodations

City of New York v. 330 Continental, LLC

NYLJ 2/4/08, p. 27, col. 3

AppDiv, First Dept.

(Opinion by Friedman, J.)

In an action by the City of New York to enjoin use of single-room occupancy (SRO) hotels on Manhattan's Upper West Side as short-term accommodations for tourists and others in New York on temporary stays, hotel owners appealed from Supreme Court's grant of a preliminary injunction. The Appellate Division modified to enjoin preliminary injunctive relief, holding that the city had not demonstrated a likelihood of success on the merits.

The three subject buildings are single room occupancy (SRO) hotels, each with about 200 units. In each of the buildings, some units are rented to tenants for permanent occupancy, while others are rented to tourists on a short-term basis. The owners advertise the units for short-term occupancy on web sited such as Orbitz, Expedia, and Yahoo Travel. The practice of short-term rentals in these buildings dates back to at least the 1940s, as documented by Yellow Page listings and by the daily registers maintained for the buildings during that era. Under New York City's current zoning resolution, adopted in 1961, the buildings are located in an R8 general residence district. In that district, “apartment hotels” are permitted, and such hotels are defined as those “used primarily for permanent occupancy” (Zoning Resolution, section 12-10). “Transient hotels,” which are “used primarily for transient occupancy”, are not permitted. Moreover, the certificate of occupancy for the building is for a “Class A multiple dwelling,” which is defined as one “occupied, as a rule, for permanent residence purposes.” Multiple Dwelling Law, section 4[8][a]. In this action, the city contends that the subject hotels are being used in violation both of the zoning resolution and their certificates of occupancy. The Supreme Court awarded the city a preliminary injunction, and the hotel owners appealed.

In vacating the preliminary injunction, the Appellate Division emphasized that neither the Zoning Resolution nor the Multiple Dwelling Law flatly prohibits short-term occupancy of units. The use of the word “primarily” in the Zoning Resolution suggests the possibility that some units would be used for short-term occupancy. Similarly, the words “as a rule” in the Multiple Dwelling Law suggests that exceptions would be permitted. The Supreme Court had nevertheless granted a preliminary injunction by concluding that these provisions permitted only “minimal” use for transient occupancy. The Appellate Division disagreed, holding that use of a significant portion of the apartments for transient purposes would be permitted so long as it remains true that the building “as a rule” is occupied for permanent resident purposes and so long as the building is used “primarily” for permanent occupancy. In this case, the city made no effort to quantify the proportion of apartments used for short-term occupancy, so the city had not demonstrated a likelihood of success on the merits. The court also emphasized the vagueness of the language in the Multiple Dwelling Law and the Zoning Resolution, and noted that ambiguity should generally be resolved in favor of the property owner. Because these grounds were sufficient to support denial of the preliminary injunction, the court did not reach the hotel owners' argument that short-term use of the buildings was a valid non-conforming use because it predated the current zoning ordinance.

Landlord's Active Encouragement of Illegal Occupancy Precludes Summary Judgment

South Eleventh Street Tenants Association v. Dov Land LLC

NYLJ 2/9/09, p. 33, col. 2

AppDiv, Second Dept.

(memorandum opinion)

In tenants' action for a judgment declaring that their illegally converted loft apartments are subject to rent stabilization, tenants appealed from Supreme Court's grant of summary judgment to landlords. The Appellate Division reversed, holding that a predecessor landlord's active encouragement of illegal residential use presented questions of fact that precluded summary judgment.

Tenants of six illegally converted lofts brought this action seeking rent stabilization protection. The premises are not covered by the Loft Law. Tenants complaint contends that landlord's predecessor knew of, witnessed, and encouraged the residential use for more than 20 years, and that the conversions were undertaken at tenants' expense. Landlord did not dispute those contentions. Supreme Court nevertheless awarded summary judgment to landlord.

In reversing, the Appellate Division relied on Caldwell v. American Package Co., Inc. , 57 AD3d 15, in which the court had previously indicated that rent stabilization protection might be available to tenants of illegally converted lofts when the owner acquiesces in the conversion, when the conversion is undertaken at the tenant's expense, when zoning would permit residential use, and when landlord had actually sought to legalize the residential use. Because tenant's complaint alleged all of those factors, and because landlord had conceded that it was seeking to obtain a residential certificate of occupancy, the court held that landlord was not entitled to summary judgment.