Apartment Was Rent Stabilized Despite Settlement Agreement to the Contrary

Tenant sued landlord after landlord refused to renew his lease, seeking a determination that he was rent stabilized and had been overcharged. The court ruled for tenant, and landlord appealed.

The appeals court ruled against landlord. In January 1983, prior landlord registered the building as a deregulated interim multiple dwelling (IMD) with the NYC Loft Board. In 1997, current landlord purchased the loft rights to the unit from prior tenant under Multiple Dwelling Law (MDL) Section 286(12) and rented the unit as residential space to tenant at a market rate under a court-ordered settlement agreement resolving a nonpayment proceeding against prior tenant. The settlement agreement waived tenant's rights to protection under either the Loft Law or Rent Stabilization Law, and extended his right to occupancy through 2017. The appeals court stated that, because the apartment was located in a pre-1974 building containing six or more residential units, and is covered by the Loft Law, it reverted to rent stabilization after landlord purchased the prior tenant's rights under MDL Section 286(12). Contrary to landlord's claim, when the building was registered as an IMD, it was deemed under Zoning Resolution 42-133 residential as of right, and therefore capable of being legalized and was subject to rent stabilization.

In any event, the building would've reverted to rent-regulated status because it contains six or more units. So, the exemption from rent stabilization found in Rent Stabilization Code Section 2520.11(g) for housing accommodations that would otherwise be subject to rent regulation solely due to Loft Law provisions didn't apply here. Whatever the prior court settlement agreement may have said, parties can't contract away their rights under rent stabilization.

Costanzo v. Joseph Rosen Found., Inc.: 2019 NY Slip Op 08928, Index Nos. 10544, 150904/17 (App. Div. 1 Dept.; 12/12/19; Renwick, JP, Gische, Mazzarelli, Moulton, JJ)