Tenant Can't Vacate Prior Tenant's Settlement with Landlord Establishing Rent

(Decision submitted by Paul N. Gruber of the Manhattan law firm of Borah, Goldstein, Altschuler, Nahins & Goidel, P.C., who represented the landlord.)

Tenant sued landlord, seeking a declaration that her tenancy was subject to rent stabilization and that her apartment was illegally deregulated in 2000 when landlord and a prior apartment occupant reached a "private agreement" circumventing initial rent registration procedures for decontrolling the apartment. Landlord asked the court to dismiss the case without trial. The court ruled against landlord, who appealed and won. 

The private agreement referred to by tenant was a so-ordered court stipulation between a former occupant and the landlord settling a licensee holdover proceeding that landlord started after the apartment's former rent-controlled tenant died. In that case, landlord and the occupant agreed that the apartment was no longer rent controlled, then became rent stabilized, and that the apartment's initial legal regulated rent would be $1,650 per month. The occupant received a two-year rent-stabilized lease with a preferential rent of $650 per month, subject to renewal increases, and in effect as long as the occupant didn't challenge the rent. Landlord argued on appeal that the case should have been dismissed.

The appeals court agreed and dismissed tenant's complaint despite dissent by two of its judges. The appeals court noted that an agreement by a tenant to waive the benefit of any provision of the rent control law was expressly prohibited by law and was void. But the appeals court found that when landlord and the former occupant settled their dispute over the occupant's status, the occupant was not a tenant, was not on a lease, and had no evident rights, other than being an occupant who claimed succession rights. By settling the eviction proceeding, those parties chose the certainty of settlement, rather than the uncertainty of a judicial declaration about the occupant's status. There is no public policy for disregarding that choice between those parties. In this case, tenant couldn't step into the shoes of the prior occupant and assert rights that she claimed he had when he agreed to the terms of the 2000 court stipulation. The prior occupant became the apartment's first rent-stabilized tenant and never filed a fair market rent appeal challenging the initial legal regulated rent. Since more than four years had passed, there was no basis to challenge that rent.

Liggett v. Lew Realty LLC: Index No. 160420/21, Case No. 2022-01973, 2022 NY Slip Op 07000 (App. Div. 1 Dept.; 12/8/22; Gische, JP, Kern, Gesmer [dissenting], Scarpulla, Rodriguez [dissenting], JJ)