Exemption for Not-for-Profit Hospital Stricken Down

Facts: Landlords of rent-stabilized apartments asked the court to invalidate a provision of the Rent Stabilization Code that gave not-for-profit hospitals special subletting right---thereby allowing them to sublet their apartments indefinitely to hospital employees. Landlords argued that this provision was unconstitutional because it deprived them of their right to refuse to sublet. All other tenants could sublet their apartments for only two years out of every four-year period, and had to maintain the apartments as their primary residence. Both the trial court and the appeals court upheld the law, and landlords appealed again. Court: The court of appeals struck down the provision as unconstitutional. It gave the hospitals preferential treatment, and wasn't consistent with the purpose of the rent stabilization laws: to address the housing shortage and prevent excessive rents and profiteering. The provision also deprived landlords of their right to refuse to sublet, and let the hospitals give tenant status to their employees for an unlimited time. Plus, the exemption gave hospital employees a fringe benefit unavailable to other tenants who sublet apartments.

Manocherian v. Lenox Hill Hospital: NYLJ, p. 27, col. 1 (10/21/94) (Ct. App. NY; Kaye, CJ, Bellacosa, Simons, Titone, Smith, JJ)