Illusory Tenancy Entitles Subtenant to Rent-Stabilized Lease

New landlord sued to evict rent-controlled tenant for nonprimary residence upon discovery of unauthorized sublet. Tenant had moved to California 14 years earlier and had agreed to surrender apartment. Subtenant claimed she should get rent-controlled status because there had been an illusory tenancy. The court ruled for subtenant in part. Even though landlord didn't benefit from illusory tenancy, landlord or prior landlord knew or should have known about the long-term unauthorized subletting of the apartment. So there was an illusory tenancy and subtenant could remain in the apartment. But subtenant only moved into the apartment in 1990. So she wasn't subject to rent control, but would be considered the first rent-stabilized tenant of the apartment. The court sent the case to the DHCR to set the current legal rent for the apartment based on a determination of the fair market rent as of 1990.

Primrose Mgmt. Co. v. Donahoe: NYLJ, p. 26, col. 3 (8/31/98) (App. Div. 1 Dept.; Rosenberger, JP, Ellerin, Nardelli, Wallach, JJ)