Tenant's Lower Rent, Based on Providing Maintenance Services, Wasn't a Preferential Rent

Landlord sued to evict rent-stabilized tenant for nonpayment of rent. The court ruled for landlord, awarding it possession and directing payment by tenant of $29,395 in rent arrears.

Tenant appealed and lost. Tenant argued that landlord improperly charged him the full legal regulated rent although his lease provided for a preferential rent. The tenant's initial lease with prior landlord set forth a legal regulated rent as well as a reduced rent payable if tenant performed maintenance-type services in and around the building. The lease also provided that landlord could revoke the reduced rent upon 30 days' written notice if it was dissatisfied with tenant's performance of services. The new landlord served tenant the 30-day notice on that grounds before charging tenant the legal regulated rent preserved in the lease agreement. 

The lower court held that the reduced rent in tenant's lease didn't constitute a preferential rent because tenant gave consideration in exchange for the reduced rent. The appeals court agreed that landlord was entitled to charge the legal regulated rent after revoking the lower rent but disagreed with the reasoning for doing so.  Where, as here, the tenant had an obligation to provide ongoing consideration in exchange for a reduced rent, there was no preferential rent because that ongoing consideration constituted a form of partial payment of the full legal regulated rent. Since the performance of services acted as payment of the difference in rent, tenant wasn't entitled to the reduced rent without performing the agreed-upon services. So tenant's reduced rent didn't meet the definition of preferential rent set forth in RSC Section 2521.2(a).

834 Bay Ridge, LLC v. Castillo: Case No. 2024-608 C, 229 NYS3d 818, 2025 NY Slip Op 50507(U)(App. T. 2 Dept.; 4/4/25; Toussaint, PJ, Buggs, Mundy, JJ)