$2,000 First Rent After Temporary Exemption Didn't Deregulate Apartment

Landlord sued to evict rent-stabilized tenant for nonpayment of rent. Tenant claimed rent overcharge and sought triple damages. Tenant moved into the apartment as the building super in 1994. His employment was terminated in 2007, and he remained in the apartment under a series of unregulated lease agreements. The first lease set a monthly rent of $2,000, with a preferential rent of $1,500. The trial court ruled for landlord, finding that landlord and tenant were free to set a first rent and that the $2,000 rent deregulated the apartment.

Tenant appealed and won. Landlord’s court petition stated that the apartment was subject to rent stabilization coverage and that the rent sought was the “lawful stabilized rent.” This was a binding admission. And while the apartment was temporarily exempt from rent stabilization while tenant was the super, it reverted back to stabilized status when landlord accepted the former super as a tenant. Landlord relied on Rent Stabilization Code Section 2526.1(a)(3)(iii), which provided, prior to January 2014, that when an apartment is vacant on the base rent date, the legal regulated rent is the first rent charged after that date. Landlord incorrectly argued that this provision resulted in the apartment’s deregulation, but that section presumes that the first tenant after a vacancy is offered a rent-stabilized lease. The case was sent back to the lower court to determine tenant’s legal rent and whether there was any overcharge.

Goldman v. Malagic: 2014 NY Slip Op 24264, 2014 WL 4627728 (App. T. 1 Dept.; 9/16/14; Lowe III, PJ, Schoenfeld, Hunter Jr., JJ)