Co-Tenant Added After J-51 Benefits Expired Remains Rent Stabilized

Landlord sued to evict tenant Orenstein after tenant's lease expired. Landlord claimed that the apartment wasn't subject to rent regulation. Tenant claimed that she was rent stabilized because the building received J-51 tax benefits while she lived there and her lease didn't contain a J-51 rider notice of eventual deregulation. Tenant claimed that she was illegally deregulated. She also claimed rent overcharge.

The court ruled for tenant. The building was substantially rehabilitated in the early 1980s. Landlord applied for and received J-51 benefits, which expired during the 1998 - 1999 tax year. Landlord had signed a vacancy lease in 1995 with Benjamin Hughes. Kate Todesco was added as a co-tenant to Hughes' rent-stabilized renewal lease in December 1999 after the J-51 benefits had ended. Since Hughes' renewal leases hadn't contained J-51 riders, he and Todesco remained rent stabilized. By 2002, Hughes had moved out and landlord had Todesco sign a surrender agreement in exchange for giving Todesco and her roommate Orenstein a new 10-year lease. The court noted that a rent-stabilized tenant can't contract away her rights. While landlord may have been entitled to collect a vacancy increase from Todesco and Orenstein for the new lease, this didn't automatically remove the apartment from rent stabilization. Since Todesco, who was rent stabilized, remained in possession in 2002, and landlord made Orenstein Todesco's co-tenant through the new lease, the apartment remained subject to rent stabilization. And tenant Orenstein remained rent-stabilized even after Todesco moved out in 2003. Tenant's rent overcharge claim would be heard by the court.

Valsac 906 LLC v. Orenstein: 42 Misc.3d 1206(A), 2014 NY Slip Op 50000(U) (Civ. Ct. NY; 1/2/14; Gonzalez, J)