East 122 Realty LLC v Perez

[*1] East 122 Realty LLC v Perez 2009 NY Slip Op 51037(U) [23 Misc 3d 1131(A)] Decided on April 14, 2009 Civil Court Of The City Of New York, New York County Martino, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on April 14, 2009
Civil Court of the City of New York, New York County

East 122 Realty LLC, Petitioner,

against

Jesus Perez, Respondent.



252559/08



Appearances: Petitioner: Fischman & Fischman, by Michael Aryeh, Esq.

Respondent: Urban Justice Center, Garrett Wright, Esq, of Counsel

Ruben Andres Martino, J.

Respondent moves to dismiss this holdover proceeding pursuant to CPLR 3211 and other related relief. Petitioner moves for summary judgment. Based on the respondent's Notice of Motion and supplemental papers (1), petitioner's Notice of Motion (2) and the Memorandum of Law in Reply (3), the Court decides as follows.

This is a holdover proceeding based on respondent's failure to sign a renewal lease which was to commence on August 1, 2008. The facts are not in dispute. Respondent is the tenant of this Rent Stabilized apartment. He entered into an original lease with petitioner's predecessor which had a preferential rent. In 2003 and 2004, the tenants in the building were involved in extensive litigation with the prior landlord. There was a group Housing Part action and a nonpayment case. A rent strike was in place and the parties negotiated over a long period of time to reach a "global" settlement. Both sides were represented by counsel. The result was a stipulation on April 22, 2004 under index numbers 206045/03 and 251376/03. Part of the agreement set the legal rent for twenty-two of the apartments in the building:

6. The Landlord shall register the rents set forth in column 3 of

Schedule A as Tenant's legal rent within 30 days. Except for

the Tenants living in apartment 5A and 5F, the tenants shall

agree that these registered rents are their legal rents.

***

18. This agreement shall run with the land and shall be recorded at

the City Register's Office. [*2]

The prior owner never registered the stipulated legal rents with the Division of Housing and Community Renewal. Instead, the prior owner registered the stipulated rents as preferential with a higher legal rent. After the agreement, renewal leases were offered and executed with the preferential rent and higher legal rent. The registrations and executed renewal leases for the last four years set forth the legal and preferential rents. Respondent never objected to the leases or registrations. Petitioner recently purchased the premises and decided to end the rent preference. The latest lease renewal offer contains only the higher legal rent. Respondent, at all times, had only been charged the lower stipulated rent with appropriate increases. Respondent failed to sign the most recent renewal arguing that it is unlawful based on the 2004 stipulation. Petitioner then started this holdover proceeding.

The Court finds that petitioner is bound by the April 22, 2004 stipulation setting the legal rent. There is no ambiguity in the language of the agreement. The parties agreed that respondent's legal rent would be $634.36. The former landlord was to register it as the legal rent and respondent agreed that this was his legal rent, thereby precluding a challenge. This was a two attorney, so-ordered agreement. It represented part of a global settlement between the building wide, rent - striking tenants and the former landlord. No one has moved to vacate that agreement.

The 2004 stipulation is not against public policy as argued by petitioner. The Rent Stabilization Code allows overcharge complaints to be settled by two attorney agreements approved by a court. RSC § 2520.13. Here, the parties settled the legal rent issue to forestall the filing of overcharge complaints and end the protracted litigation and fighting between the parties. There is nothing improper about a landlord agreeing to a lower rent. For example, preferential rents can continue indefinitely at the owner's option pursuant to the regulatory scheme. RSC § 2521.2. Therefore, there was nothing done in the 2004 agreement which was against public policy.

The 2004 stipulation was not modified by the subsequent lease renewals which contained the preferential and higher legal rents. The stipulation does allow modification in writing if executed by the parties. Petitioner does not allege that there was ever a letter, memo, conversation or communication of any kind where the parties discussed, negotiated or agreed to a modification of the 2004 stipulation. The lease renewals do not make any mention of the 2004 stipulation or that by signing the renewal, respondent agrees to modify the stipulation. Petitioner has not alleged what the consideration was for respondent agreeing to a higher legal rent. Petitioner unilaterally increased the legal rent. The fact that respondent signed the renewal leases does not change the result because an agreement by a tenant to waive the benefits of the Rent Stabilization Law - in this case signing renewals based on the wrong legal rent- is void. RSC § 2520.13.

The Court is not precluded from considering the 2004 stipulation although it was made more than four years before respondent challenged the rent. The 2004 agreement , similar to a rent reduction order, is not part of the rental history and may be examined even if made outside of the four year statute of limitations (see Jenkins v Fieldbridge Assoc. LLC, 15 Misc 3d 6, 832 NYS2d 741 [AT 2nd Dept 2007]). It imposes a continuing duty on the part of the landlord to charge a rent based on the stipulated amount. Such a continuing duty, which presently remains in effect, may be examined even if it was imposed prior to the four year limitations period (see [*3]Matter of Condo Units, LP v NYS DHCR, 4 AD3d 424, 771 NYS2d 380 [2nd Dept 2004]).[FN1] In Coffina v NYS DHCR, 2009 WL 857527 (AD 1st Dept 2009), the Appellate Division of this department held that it was permissible to review an original lease made more that four years before an overcharge complaint to determine whether a landlord was able to collect a higher rent. Similar to the instant case, in Coffina, a landlord claimed that an agreed upon rent was actually a preferential rent and that he elected to end the preference. The landlord showed that all of the rent registrations and renewal leases made during the four year statute of limitations period contained the preference. The Appellate Division held that it was irrational for DHCR not to consider the original lease (made more than ten years before the overcharge complaint) to determine the intent of the parties as to whether the rent was the legal rent or a preferential rent. In the instant case, this Court considers the 2004 stipulation and holds that the parties agreed to set the rent as the legal rent and not a preferential rent.

Accordingly, petitioner's renewal offer, based on an unlawful rent, was not proper and respondent was not obligated to sign it. The respondent's motion for dismissal is granted and the petitioner's motion for summary judgment is denied. The proceeding is dismissed. This constitutes the order of the Court.

__________________________________

Hon. Ruben Andres Martino

Acting Supreme Court Justice

April 14, 2009

Harlem, New York Footnotes

Footnote 1: Courts have also made exceptions to the four year statute of limitations for determination of willfulness of an overcharge, longevity increases and whether an apartment is subject to Rent Stabilization (H.O. Realty Corp. v State DHCR, 46 AD3d 103, 844 NYS2d 204 [1st Dept 2007]).