Agreement to Deregulate Apartment Void

Landlord sued to evict rent-stabilized tenant’s roommate after tenant moved out in 2005. Landlord claimed that roommate was a licensee, while roommate claimed that she had pass-on rights. Landlord and roommate, both represented by attorneys, signed a settlement agreement in court. Roommate agreed to move out temporarily while landlord renovated the apartment. She then moved back in under a nonregulated one-year lease at a rent of $1,000 per month, with an option to renew at $1,050 per month. When it was time to renew, the roommate sought to change some of the lease terms. Landlord refused, but still collected rent from the roommate on a month-to-month basis. Landlord then sued to evict the roommate, and the roommate claimed that the settlement agreement in the prior case was void. The parties went back to court in the initial case where the roommate asked the court to vacate the settlement agreement.

The court ruled for roommate. The settlement agreement was void as against public policy. Parties to a lease governing a rent-stabilized apartment can, by agreement, provide for terms that compromise the effect of the Rent Stabilization Law. Here, the settlement agreement required the roommate to give up any succession rights she may have had and effectively removed the apartment from rent stabilization. It didn’t matter that the roommate wasn’t a tenant when the agreement was signed. There was also proof indicating that the building was subject to J-51, so landlord couldn’t deregulate the apartment. The court denied tenant’s request for attorney's fees. Since the agreement was void, her lease containing an attorney’s fees clause was void. But she was now a rent-stabilized tenant whether or not she proved succession rights, because landlord had accepted rent from her on a month-to-month basis after the invalid initial lease signed under the settlement agreement expired.

Second Lennox Terrace Assoc. v. Cuevas: NYLJ, 7/30/09, p. 27, col. 3 (Civ. Ct. NY; Martino, J)