40-Year Lease for Corporate Tenant Without Named Occupant in Rent-Stabilized Unit Was Void

Landlord sued tenant and asked the court to declare that tenant's lease was illegal and void as against public policy. The court ruled for landlord, declared the lease void, terminated tenant's rights of possession, and awarded attorney's fees to landlord.

Tenant appealed and won, in part. The lower court properly found that the lease was void because it reflected an impermissible intention to remove the apartment from rent stabilization. In 1991, the corporate tenant signed a lease with prior landlord for a rent-stabilized apartment in a 421-a building. Tenant's lease provided for a fixed 40-year term that would expire in 2031. Although the lease also required the tenant to name an occupant of the apartment, it never did so. On the same day tenant signed the lease, it sublet the apartment to two sisters for the same 40-year term. Landlord bought the building in 2016. By 2017, the two sisters had left the apartment, and landlord commenced the court action. The requirements of rent stabilization aren't waivable, even if favorable to tenant. The 40-year lease term effectively removed the apartment from rent stabilization for a generation. And the lease failed to name an occupant, which is required for corporate tenants so that the apartment is occupied by an individual as his primary residence.  However, the trial court erred in awarding attorney's fees to landlord. Since the lease was deemed void, there was no lease, and therefore no attorney's fee clause to rely on.

River Tower Owner, LLC v. 140 West 57th Street Corp.: Index Nos. 9338-9341, 2019 NY Slip Op 03899 (App. Div. 1 Dept.; 5/16/19; Gische, JP, Kahn, Gesmer, Singh, Moulton, JJ)