Landlord & Tenant

Declarations on Tax Returns Preclude Tenant's Claim

Goldman v. Davis

NYLJ 9/15/15, p. 22, col. 2

AppTerm, First Dept.

(memorandum opinion)

In landlord's non-primary residence holdover proceeding, landlord appealed from Civil Court's dismissal of the proceeding. The Appellate Term reversed and awarded a judgment of possession to landlord, holding that tenant's tax returns, in which he contended that the apartment was used only for business purposes, precluded his assertion that the rent-stabilized apartment was his primary residence.

The subject rent-stabilized apartment is on Lower Fifth Avenue in Manhattan. Tenant is married to a woman who maintains an apartment on East 82nd Street. When landlord brought this proceeding contending that tenant did not maintain the Fifth Avenue apartment as his primary residence, Civil Court conducted a bench trial and found that tenant and his wife have a non-traditional relationship and do not share a marital residence. The court dismissed as inconclusive tenant's tax return, on which he deducted the rent as a business expense. Landlord appealed.

In reversing, the Appellate Term held that tenant's declarations under penalty of perjury on his tax returns were dispositive in this proceeding, and tenant could not assert that the apartment was his primary residence after declaring that it was not on his returns. The court acknowledged that prior precedent supported tenant's position, but held that the First Department's decision in Ansonia Associates Ltd. Partnership v. Unwin, 130 AD32d 453, unequivocally held tenants bound by assertions made on their tax returns.

COMMENT

New York's Rent Stabilization Code ' 2 520.6(u) provides that “no single factor shall be solely determinative” in deciding whether a rent stabilized apartment is a primary residence. Despite ' 2520.6(u), the First Department in Ansonia Assocs. Ltd. P'ship v. Unwin, 130 A.D.3d 453, held that when a tenant files a tax return taking benefits available only if the apartment is not her primary residence, the declarations made on the tax returns preclude a finding of primary residence. In Unwin, the tenant had previously deducted the apartment's entire rent as a business expense on her federal income tax returns, in effect asserting she did not occupy the apartment for personal use. The court held that landlord was entitled to summary judgment because the tenant's primary residence claim was contrary to declarations she had made under penalty of perjury on her tax returns. The court concluded that tenant's position in the nonprimary residence proceeding was logically incompatible with her position on her tax returns.

Previously courts had held that declarations in a tenant's tax returns are not dispositive. Tenants were provided an opportunity to claim that an apartment was their primary residence despite their tax return assertions. For example, in West 157th Street Assocs. v. Sassoonian, 156 A.D.2d 137, the court held that landlord was not entitled to summary judgment in its nonprimary residence proceeding even though tenant had stated a different address on his tax returns for 1985 and 1986, and had deducted the rent-controlled apartment's entire rent as a commercial expense. In Sassoonian, the court found that the tenant's allegations that the apartment was his primary residence raised triable issues of fact; he maintained his bank accounts, stock accounts, voter and driver registrations, driver's license, and utility and telephone accounts exclusively at his apartment's address.

The court in Unwin did not address the inconsistency with prior case law. The court did rely in part on two Court of Appeals decisions dealing with analogous problems. In Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415, the court held, in the context of an equitable distribution dispute following a divorce, that husband was estopped from contending that funds he received from the sale of stock were separate property when he had previously reported the funds as business income, and hence marital property, on his joint tax returns. The Court of Appeals held that the spouse had obtained a benefit of a tax law provision by making a representation on his tax return, under penalty of perjury, and consequently was prohibited from subsequently asserting an inconsistent position . In Katz Park Ave. Corp. v. Jagger, 11 N.Y.3d 314, the court held a tenant could not claim a rent stabilized apartment as her primary residence while she had a B-2 tourist visa, which requires the visa holder to have a principal dwelling outside the United States. The court indicated that the result might be different if tenant offered an explanation of unusual circumstance not present in the Jagger case .

'

Declarations on Tax Returns Preclude Tenant's Claim

Goldman v. Davis

NYLJ 9/15/15, p. 22, col. 2

AppTerm, First Dept.

(memorandum opinion)

In landlord's non-primary residence holdover proceeding, landlord appealed from Civil Court's dismissal of the proceeding. The Appellate Term reversed and awarded a judgment of possession to landlord, holding that tenant's tax returns, in which he contended that the apartment was used only for business purposes, precluded his assertion that the rent-stabilized apartment was his primary residence.

The subject rent-stabilized apartment is on Lower Fifth Avenue in Manhattan. Tenant is married to a woman who maintains an apartment on East 82nd Street. When landlord brought this proceeding contending that tenant did not maintain the Fifth Avenue apartment as his primary residence, Civil Court conducted a bench trial and found that tenant and his wife have a non-traditional relationship and do not share a marital residence. The court dismissed as inconclusive tenant's tax return, on which he deducted the rent as a business expense. Landlord appealed.

In reversing, the Appellate Term held that tenant's declarations under penalty of perjury on his tax returns were dispositive in this proceeding, and tenant could not assert that the apartment was his primary residence after declaring that it was not on his returns. The court acknowledged that prior precedent supported tenant's position, but held that the First Department's decision in Ansonia Associates Ltd. Partnership v. Unwin , 130 AD32d 453, unequivocally held tenants bound by assertions made on their tax returns.

COMMENT

New York's Rent Stabilization Code ' 2 520.6(u) provides that “no single factor shall be solely determinative” in deciding whether a rent stabilized apartment is a primary residence. Despite ' 2520.6(u), the First Department in Ansonia Assocs. Ltd. P'ship v. Unwin, 130 A.D.3d 453, held that when a tenant files a tax return taking benefits available only if the apartment is not her primary residence, the declarations made on the tax returns preclude a finding of primary residence. In Unwin, the tenant had previously deducted the apartment's entire rent as a business expense on her federal income tax returns, in effect asserting she did not occupy the apartment for personal use. The court held that landlord was entitled to summary judgment because the tenant's primary residence claim was contrary to declarations she had made under penalty of perjury on her tax returns. The court concluded that tenant's position in the nonprimary residence proceeding was logically incompatible with her position on her tax returns.

Previously courts had held that declarations in a tenant's tax returns are not dispositive. Tenants were provided an opportunity to claim that an apartment was their primary residence despite their tax return assertions. For example, in West 157th Street Assocs. v. Sassoonian, 156 A.D.2d 137, the court held that landlord was not entitled to summary judgment in its nonprimary residence proceeding even though tenant had stated a different address on his tax returns for 1985 and 1986, and had deducted the rent-controlled apartment's entire rent as a commercial expense. In Sassoonian, the court found that the tenant's allegations that the apartment was his primary residence raised triable issues of fact; he maintained his bank accounts, stock accounts, voter and driver registrations, driver's license, and utility and telephone accounts exclusively at his apartment's address.

The court in Unwin did not address the inconsistency with prior case law. The court did rely in part on two Court of Appeals decisions dealing with analogous problems. In Mahoney-Buntzman v. Buntzman, 12 N.Y.3d 415, the court held, in the context of an equitable distribution dispute following a divorce, that husband was estopped from contending that funds he received from the sale of stock were separate property when he had previously reported the funds as business income, and hence marital property, on his joint tax returns. The Court of Appeals held that the spouse had obtained a benefit of a tax law provision by making a representation on his tax return, under penalty of perjury, and consequently was prohibited from subsequently asserting an inconsistent position . In Katz Park Ave. Corp. v. Jagger, 11 N.Y.3d 314, the court held a tenant could not claim a rent stabilized apartment as her primary residence while she had a B-2 tourist visa, which requires the visa holder to have a principal dwelling outside the United States. The court indicated that the result might be different if tenant offered an explanation of unusual circumstance not present in the Jagger case .

'