Landlord & Tenant

In reversing and dismissing the petition, the Court of Appeals noted that the housing authority's rules would have permitted the son to obtain permission to care for his mother as a temporary resident, even if his occupation would otherwise have constituted overcrowding. Occupation as a temporary resident, however, would not have entitled the son to RFM status. The court concluded that the housing authority policy, which precluded the son from bypassing the authority's 250,000 household waiting line, was not arbitrary and capricious. The court's majority declined to consider the son's claims under anti-discrimination statutes because the son had not raised those claims at the administrative level.

Judge Rivera, concurring, concluded that the son's associational discrimination claim was properly before the court, but concluded that the claim should be dismissed because he did not establish that the denial of permanent residency status was related to his association with his disabled mother. She went on to argue, however, that the housing authority cannot rely on rules and presumptions to deal with claims under the anti-discrimination statutes. Instead, she concluded that the authority must engage in an interactive process that gives individualized consideration to each disability claim.

Occupant Entitled to Succession Rights to Stabilized Apartment Even If Named Tenant Continued to Sign Leases After Moving Out

Matter of Jourdain v. New York State Division of Housing and Community Renewal
NYLJ 2/2/18, p. 26., col. 1., AppDiv, Second Dept.
(Opinion by Hall, J.)

In occupant's article 78 proceeding to review DHCR's determination that she was not entitled to succession rights in her apartment, landlord appealed from Supreme Court's grant of the petition. The Appellate Division affirmed, holding that occupant was entitled to succession rights even though the named tenant had moved out of the apartment years before expiration of the most recent lease.

Occupant lived in the apartment with her daughter, the named tenant, from the inception of the daughter's tenancy in 2003. In 2008, the daughter and her husband moved out of the rent-stabilized apartment and moved to Virginia. Named tenant continued to pay the rent, and renewed the lease in September 2009 for a term to expire on Dec. 31, 2011. In September 2011, landlord served occupant with a notice of intention not to renew the lease because the named tenant had not been seen around the property since February 2010. Occupant then filed a complaint with DHCR asserting succession rights to the apartment. DHCR initially concluded that occupant had succession rights, prompting landlord to bring an article 78 proceeding, in which the parties ultimately stipulated to remit the matter to DHCR. This time, DHCR concluded that occupant was not entitled to succession rights, relying on the First Department's decision in Third Lennox Terrace Assoc. v Edwards, 91 AD3d 532. Occupant then brought this article 78 proceeding. During the course of the proceeding, DHCR again reversed itself, now concluding that occupant had succession rights. Supreme Court agreed, and granted occupant's petition.

In affirming, the Appellate Division started with section 2523.5(b)(1) of the Rent Stabilization Law, which grants succession rights to a senior citizen family member who has “resided with the tenant” for “a period of no less than one year, immediately prior to the permanent vacating of the housing accommodation by the tenant.” Landlord argued that the named tenant did not permanently vacate the apartment until the expiration of her last renewal lease in December 2011, and that occupant did not “reside with” the named tenant during the year before that date, because the named tenant did not reside in the apartment after she moved to Virginia in 2008. The court rejected this reading of the statute, holding that named tenant had “permanently vacated” the apartment when she moved out, despite her subsequent lease renewal. The court emphasized that occupant would have been entitled to succession rights if she had sought those rights as soon as her daughter moved out, and could see no rational reason why she should be treated differently because her daughter had continued to pay rent and executed a renewal lease after leaving the apartment.

COMMENT

The First and Second Department differ in their interpretation of the “permanently vacated” provision in the Rent Stabilization Code 2523.5 (b)(1). In Third Lenox Terrace Assoc. v. Edwards, 91 A.D.3d 532, the court held that a named tenant who ceases to use an apartment as a primary residence does not permanently vacate the apartment so long as the named tenant continues to renew leases and pay rent., In Third Lennox, the named tenant moved out of the apartment in 1998, but continued to pay rent by money orders issued in her name and personally executed renewal leases extending until 2005. The court denied succession rights to an occupant who had lived in the apartment since 1995, holding that the occupant had not established that she lived with the named tenant with the named tenant for two years immediately preceding 2005.

Since the ruling in Third Lenox, courts within the First Department have consistently ruled that a named tenant who continues to pay rent and sign renewal leases has not “permanently vacated” the apartment, leaving any occupant without succession rights. See, e.g., 206 W. 104th St. LLC v. Zapata, 45 Misc. 3d 135(A) (holding that the named tenant had not permanently vacated because he continued to sign renewal leases and pay rent with checks in his name.); Well Done Realty, LLC v. Epps, 2018 N.Y. Slip Op 50259(U); Mia Terra Realty Corp. v. Sloan, 57 Misc. 3d 141(A).

Prior to Jourdain, the Second Department courts generally followed Third Lenox's definition of “permanently vacating.” In M&B Lincoln Realty Corp. v. Thompson, 49 Misc.3d 154(a), the Court held that because the tenant continued to sign renewal leases and pay rent, she did not permanently vacate the apartment, despite moving out. See also, Jols Realty Corp v. Nunez, 43 Misc.3d 129(a) (court held that named tenant could not be deemed as permanently vacated, as she continued to execute renewal leases and pay rent on behalf of the occupant); see also, Cadillac Leasing, LP v. Kiely, 2016 NY Slip Op 50388(U).

However, six months after Jols, the Second Department Appellate Term deviated from its previous analysis, holding that the Rent Stabilization Code does not preclude succession rights “solely on the ground that the tenant of record has not maintained her primary residency in the stabilized apartment during the two-year period prior to her permanent vacating of the apartment.” Mexico Leasing, LLC v. Jones, 45 Misc.3d 127(a). The Court permitted the adult children and grandchild of the named tenant to exercise succession rights, even though the named tenant had since moved to Pennsylvania, emphasizing that the succession provisions focus on preventing dislocation of long-term occupants after the head of a household permanently vacates. In Jourdain, the Second Department itself rejected the Third Lennox approach and held that a named tenant “permanently vacates” the apartment when he or she ceases occupying the apartment as a residence.

Tenant Entitled to Succession Rights to Rent-Controlled Apartment

Matter of Underhill-Washington Equities, LLC v. Division of Housing and CommunityRenewal (DHCR)
NYLJ 1/16/18, p. 20., col. 2., AppDiv, Second Dept.
(memorandum opinion)

In landlord's article 78 proceeding to review DHCR's denial of its petition for administrative review of a determination that tenant is entitled to succession rights to the rent-controlled apartment, landlord appealed from Supreme Court's denial of the petition and dismissal of the proceeding. The Appellate Division affirmed, holding that DHCR's determination was rationally based on the administrative record.

Tenant's sister was the original tenant of record of the apartment, but current tenant has lived in the apartment since 1972. In 2005, the sister purchased a home in Florida due to her daughter's health issues, and vacated the apartment. She continued to pay rent. In 2009, landlord brought a holdover proceeding to evict tenant and his sister on the ground that sister no longer maintained the apartment as her primary residence. The sister and the tenant answered, maintaining that they lived in the apartment, but the court dismissed the petition on the ground that landlord had failed to comply with notice and filing requirements. Then, in 2011, tenant commenced an administrative proceeding before DHCR, seeking a determination that he was entitled to succession rights. Landlord then brought a second holdover proceeding, and tenant and his sister again maintained that they had resided together in the apartment since 1971. By contrast, in the administrative proceeding, sister conceded that she had vacated the apartment in 2005. DHCR's rent administrator nevertheless concluded that tenant was entitled to succession rights, and the Deputy Commissioner upheld that determination, denying landlord's petition for review. Supreme Court denied landlord's article 78 petition.

In affirming, the Appellate Division rejected landlord's argument that judicial estoppel precluded DHCR from relying on tenant's sister's affidavit regarding her departure from the apartment, noting that the holdover proceedings in which the sister had made contrary assertions had never been litigated to a conclusion. Moreover, the court concluded that in any event, the focus should be on preventing displacement of family members who have resided with tenants for long periods of time. In this case, landlord did not contest tenant's status as a family member who has resided in the apartment since 1972

Landlord Did Not Establish Use of Apartment to Facilitate Drug Trading

551 West 172^nd Street LLC v. Taveras
NYLJ 1/31/18, p. 26., col. 2., AppTerm, First Dept.
(memorandum opinion)

In landlord's summary holdover proceeding, landlord appealed from Civil Court's judgment dismissing the proceeding. The Appellate Term affirmed, holding that landlord had not met its burden of establishing that the premises had been used to facilitate trading in drugs and that the tenant knew or should have known of the illegal drug activity.

Tenant's adult son, who lived with tenant, had engaged in the sale of drugs. Landlord brought this proceeding, relying both on statutory grounds and on lease provision authorizing termination if tenant created a nuisance of engaged in activity detrimental to the safety of other tenants. In dismissing the proceeding, Civil Court concluded that there was little evidence that the son used the apartment or the building in an illegal trade or business, and no evidence that she knew or should have known of her son's activities.

In affirming, the Appellate Term noted that after a bench trial, an appellate court should not disturb findings of fact unless the trial court's conclusions could not be reached under a fair interpretation of the evidence. Here, there was no basis to disturb the trial court's conclusions, especially because the tenant was a full-time home attendant who slept away from the apartment one night a week.

421-G Buildings Subject to Luxury Deregulation

Kuzmich v. 50 Murray Street Acquisition LLC
NYLJ 1/19/18, p. 23., col. 3., AppDiv, First Dept.
(memorandum opinion)

In tenants' action for a declaration that their apartments are subject to rent stabilization, landlord appealed from Supreme Court's grant of partial summary judgment declaring the apartments subject to rent stabilization and ordering that a special referee be designated to determine the amount of overcharges and attorney's fees due to tenants. The Appellate Division reversed and held that apartments receiving 421-g tax benefits are subject to luxury deregulation.

Landlord's building receives tax benefits pursuant to section 421-g of the Real Property Tax Law. Landlord set the initial rent for apartments at a price in excess of the threshold for luxury deregulation. Tenants challenged landlord's action, contending that receipt of tax benefits under section 421-g precluded landlord from taking advantage of the luxury decontrol provisions of the rent stabilization law. Supreme Court agreed, and awarded partial summary judgment to tenants.

In reversing, the Appellate Division held that the section 421-g(6)'s prefatory phrase “[n[otwithstanding the provisions of any local law for [rent stabilization]” should be read in tandem with the statute's coverage clause. The court observed that the prefatory phrase was necessary to extend rent stabilization coverage to certain dwellings in buildings receiving 421-g benefits. The prefatory phrase was not, the court held, designed to carve 421-g buildings out of the rent stabilization law's luxury deregulation provisions. The court acknowledged that its holding meant that most 421-g buildings would never be rent stabilized because rents in virtually all apartments in those buildings exceed the luxury decontrol threshold. The court concluded, however, that the legislatures was aware of that consequence when it enacted the statute.

Incarcerated Son Note Entitled to Succession Rights

528 West 123^rd St. LLC v. Baptiste
NYLJ 3/2/18, p. 26., col. 1., AppTerm, First Dept (memorandum opinion).

Tenant's son appealed from Civil Court's rejection of his claim for succession rights to tenant's rent-stabilized apartment. The Appellate Term affirmed, holding that tenant's incarceration at the time of his father's death precluded the claim.

Tenant died in 2015. His son began living with him in August 2012, but has been incarcerated since November 2013 and will not be eligible for release until March 2021. As a result, the son did not reside with the tenant for the requisite two-year period before the father's death.

In affirming Civil Court's denial of succession rights, the Appellate Term rejected the son's claim that his incarceration is a protected “temporary absence” within the meaning of section 2523.5(b)(2) of the Rent Stabilization Code. The court noted that the enumerated temporary absences included military service, time as a full-time student, and relocation for employment purposes, but held that allowing a lengthy period of incarceration to qualify as a temporary absence would not further the purposes of the rent stabilization code's primary residence requirement, which is designed to return underutilized apartments to the marketplace.