Landlord & Tenant

In affirming, the Appellate Division first noted that because the summary judgment motion was only on the issue of liability, landlord did not have to establish the amount owed in order to prevail. The court then held that the typographical error on the guaranty was not sufficient to defeat the summary judgment motion in light of guarantor's failure to produce a lease dated Jan. 15, 2001 to which the guaranty purportedly referred. The court also noted that guarantor had produced no evidence other than his own affidavit to support his forgery claim, and observed that notarization is not necessary to make a guaranty binding.

Landlord Did Not Waive Right to Evict Tenant
322 West 47th Street HDFC v. Loo
2017 WL 3850743, 9/5/17
AppDiv, First Dept.
(memorandum opinion)

In residential landlord's summary holdover proceeding, tenant appealed from the Appellate Term's affirmance of Civil Court's award of possession to landlord. The Appellate Division affirmed, holding that landlord did not waive its rights to evict under the terms of the co-op eviction offering plan.

More than 20 years ago, the subject building was converted to co-op ownership pursuant to an eviction offering plan. Following the conversion, landlord continued to offer tenant a series of rent-stabilized leases. Ultimately, however, landlord chose not to renew tenant's lease, and served tenant with a notice of termination. Landlord then brought this holdover proceeding, and the courts below held that landlord was entitled to possession.

In affirming, the Appellate Division started by noting that the subject building is organized as a nonprofit coop under article XI of the Private Housing Finance Law. By statute, the corporation is exempt from the rent stabilization law. The court then held that landlord had not waived its rights under the eviction plan by issuing rent stabilized leases to tenant, and was not estopped from enforcing its rights. The court emphasized that parties cannot agree to opt into or out of rent stabilization.

COMMENT

Generally, courts will enforce express agreements conferring rights similar to rent stabilization, including renewal rights, over an otherwise unregulated tenancy. In requiring the landlord to renew the tenant's lease, the court in Carrano v. Castro, 12 Misc.3d 5, *7, affd 44 AD3d 1038, enforced an agreement between a prior landlord and the current tenant which provided rent-stabilization rights to an unregulated tenancy. This is because the tenant and the prior landlord plainly agreed to “'entitle[] [tenants] to all rights of the Rent Stabilization Law, including renewal leases.'” Id.

Yet in affirming Carrano, the Second Department distinguished agreements granting rent-stabilization rights to otherwise unregulated apartments from those agreements effectively circumventing different, mandatory regulation schemes. Carrano, 44 A.D.3d at 1039. When a statute exempts an apartment from regulation, the parties can agree to confer rent-stabilization rights, but when a law regulates the apartment under an entirely different scheme, an agreement to subject the apartment to rent stabilization is not enforceable by either party. Thus, in 546 W. 156th St. HDFC v. Smalls, 43 A.D.3d 7, the First Department reversed Appellate Term's dismissal of landlord's nonpayment proceeding, rejecting tenant's argument that the petition should be dismissed because the stated rent violated the parties' stipulation to treat the apartment as rent stabilized. The court refused to enforce the stipulation agreement because article XI of the Private Housing Finance Law — a regulation scheme designed to provide low-income housing — proscribed rent-stabilized tenancies. Id. at 11; 14. So even though the parties expressly stipulated to treat the apartment as rent-stabilized, the Private Housing Finance Law barred such an agreement from taking effect. Id. at 9–11.

Courts will also not assume that an agreement conferred all rent stabilization rights on the tenant when the agreement referred only to a subset of those rights. See 17 Maple Ave. Holding, LLC v. Jackson, 26 Misc. 3d 138(A) (2010). For example, the court in 17 Maple did not require the landlord to renew the lease because a mere agreement regarding the monthly rent, even when characterized as rent-stabilized, did not confer such a right. Id. Indeed, the tenant's agreement with the prior landlord to “abide by the [rent-stabilization] 'guidelines' and charge her the same rent as a rent-stabilized tenant” showed only an intent to charge rent-stabilized rates, and did not touch upon renewal rights. Id.

Moreover, neither a landlord's mistaken use of rent-stabilization riders nor his mistaken registration of the apartment as rent-stabilized will confer rent-stabilization status. See 12-62 Realty Corp. v. Scapula, 2 Misc. 3d 132(A) , appeal denied, 2004 N.Y. App. Div. LEXIS 12590; Ruiz v. Chwatt Assoc., 247 A.D.2d 308. Thus, in Scapula, the court held that tenant was not entitled to rent-stabilized status merely because the landlord tendered rent-stabilized forms. 2 Misc. 3d at *132(A). The Appellate Term held that the mere use of a rent-stabilization form did not evince “a meeting of the minds to confer stabilized status or benefits upon the tenant,” especially in light of the parties' stipulation that the apartment was not subject to rent stabilization. Similarly, in Ruiz v. Chwatt Assoc., 247 A.D.2d 308, the court held that, absent an express agreement, the landlord's mistaken registration of the apartment as rent-stabilized did not confer such status. 247 A.D.2d at 308. The lease provided that the tenant could only use the premises to practice medicine — excluding it from rent-stabilization law — and the landlord's error in registering the apartment did not supersede that agreement. Id.

Notice of Termination Sent By Attorney Not Defective
Port Royal Owners Corp. v. Navy Beach Restaurant Group, LLC
AppTerm, Second Dept, 9/20/17
(memorandum opinion)

In landlord's commercial holdover proceeding, tenant appealed from Justice Court's denial of its motion for summary judgment dismissing the proceeding. The Appellate Term affirmed, holding that a notice of termination sent by landlord's attorney was not defective.

Tenant operates a restaurant in Montauk. Landlord's attorney sent tenant a 20-day notice to cure as a result of ongoing violations of the town code, followed by a notice of termination of the lease. Landlord then brought this holdover proceeding. Tenant sought summary judgment, contending that because the lease did not include language authorizing the attorney to serve the notice to cure and the notice of termination, the notices were defective, and could not support the holdover proceeding. Justice Court denied the motion.

In affirming, the Appellate Term relied on the language of the lease, and noted that the lease did not restrict who might give notice of default, providing only that tenant would have 20 days “after receipt of written notice to cure such default.” Moreover, the lease did not require landlord to act personally or through an identified agent in serving the notice of termination. Instead, the lease provided only that “[l]andlord may declare the term of this lease ended and terminated by giving Tenant written notice of such intention.” In light of this language, the notices from landlord's attorney were sufficient to support the holdover proceeding.

COMMENT

If the language of a lease agreement requires landlord to send a notice of default to tenant, without any more specification as to who may send the notice, both the Second and Third Departments have held that a notice provided by landlord's agent is effective. In QPII-143-45 Sanford Ave., LLC v. Spinner, 108 A.D.3d 558, the Second Department held a notice of default effective when the notice was signed by a person who signed as “agent for” the landlord, even though the notice provided tenant with no proof that the tenant was authorized to act on landlord's behalf. Similarly, in Owego Properties v. Campfield, 182 A.D.2d 1058, the Third Department held effective a notice to cure signed by landlord's agent. As in QPII, the agent provided tenant with no evidence of authority, but in Owego, unlike QPII, tenant had previously been informed that the agent's officers had authority to act on landlord's behalf.

Both the Second and the Third Department adopted a narrow reading of Siegel v. Kentucky Fried Chicken, 67 N.Y.2d 792, in which the Court of Appeals invoked the language of the lease to invalidate a notice of termination served by landlord's agent, rather than by landlord personally. In Siegel, the lease defined landlord to include only “the owner or mortgagee in possession,” and required landlord to serve a five-day notice on tenant, while referring to “Landlord or Landlord's agent,” on numerous other occasions. The Court of Appeals concluded that in light of the limiting language in the lease, a notice served by an agent not mentioned in the lease was ineffective.

The First Department's reading of Siegel is more equivocal. In Oriburger Inc. v. B.W.H.N.V. Assocs., 305 A.D.2d 275, as in QPII, the default provision of the lease stated that notice must be given by “Landlord, but the notice was signed by someone other than the landlord followed by, 'agent.'” Id. at 276. Also. as in QPII, the agent attached no written authorization from landlord. Because Oriburger reached the First Department on tenant's motion of a preliminary injunction, the court did not definitively resolve the effectiveness of the notice of termination. In granting tenant a preliminary injunction, however, the court remanded for additional hearings regarding the validity of the notice, suggesting only that tenant's claim had “merit,” a conclusion that suggests a broader view of Siegel than that taken by the Second and Third Departments.