Landlord Can Seek Entire Building for Owner Occupancy

Facts: Landlords, husband and wife, bought a five-story, 15-apartment building. Six apartments were rent stabilized. In June and September 2004, landlords sent two rent-stabilized tenants nonrenewal notices. Landlords said they needed tenants' apartments for owner occupancy. Landlords claimed that they intended to convert tenants' floors into a single-family residence. All of the rent-stabilized tenants then sued landlords and asked the court to declare that landlords' plan violated the Rent Stabilization Law and to stop landlord from going forward in housing court with eviction proceedings. In 2006, the court ruled for tenants, finding that landlords should have gotten permission from the DHCR under Rent Stabilization Code Section 2524.5(a)(1) to withdraw the building from the rental market before going to housing court. The court ruled that Rent Stabilization Code Section 2524.4(a), governing owner occupancy, didn't apply in this case. Landlords appealed and won. The appeals court found that the Code allowed landlords to seek "one or more" rent-stabilized apartments for owner occupancy, without limitation. Tenants then appealed to New York's highest court.

Court: Tenants lose. Code Section 2524.5(a)(1) doesn't apply because landlords didn't seek to withdraw the building in connection with a business they operated or because the cost of removing violations was more than the value of the building. Tenants also argued that the intent of rent stabilization was to alleviate an acute housing shortage and that allowing landlord to recover all of the stabilized apartments was contrary to the legislative intent of the law. But the law also allowed landlords to recover apartments for owner occupancy, and the language of Code Section 2524.4(a) clearly allowed landlords to recover any number of apartments. Landlords could go forward with eviction cases, where they would have to prove that they had the good-faith intent to live in tenants' apartments.

Pultz v. Economakis: NYLJ, 6/4/08, p. 29, col.3 (Ct. App.; Jones, J.)