Agreement to Legalize, Deregulate Combined Apartments Void

Landlord sued to evict rent-stabilized tenant for illegally altering two adjoining apartments. Tenant had removed a wall between the two apartments without landlord's permission. Landlord and tenant signed a settlement agreement in court. Tenant agreed to legalize the combined apartments, and to sign a deregulated lease for the new apartment at $2,001 per month. This amount was more than the combined prior rents of the two apartments. Tenant later claimed that the agreement was void as against public policy. The court ruled against tenant. Tenant appealed and won. A settlement agreement that waives the benefit of the rent-stabilization law is unenforceable as a matter of public policy, even if it benefits tenant. The agreement here effectively deregulated two rent-stabilized apartments and provided for payment of an unlawful rent. Under rent stabilization, landlord could combine two vacant apartments and charge a new, deregulated "first rent." But landlord and tenant couldn't, by private agreement, deregulate the apartments.

Ruxton Towers, LP v. Floratos: NYLJ, 4/3/09, p. 39, col. 2 (App. T. 1 Dept.; McKeon, PJ, Schoenfeld, Heitler, JJ)