Landlord Can't Discontinue Preferential Rent

In 1998, rent-stabilized tenant signed a lease with prior landlord containing a rider stating that “landlord will rent at a preferred tenant rate of $600 monthly in lieu of rehab to be done by tenant.” The rider didn’t state how long the preferential rate would continue. Landlord and tenant renewed the lease using the preferential rate three times--in 2000 for $600, in 2003 for $600, and in 2005 for $624. In 2007, new landlord demanded $733 upon lease renewal, claiming that this was the legal rent. Tenant offered to pay $669 instead. Landlord then sued to evict tenant for refusing to renew her lease. The court ruled against landlord, finding that tenant had a preferential rent agreement. Landlord appealed.

The appeals court found the lease rider ambiguous and sent the case back for a hearing on whether tenant’s initial lease actually contained a preferential rent agreement intended to continue throughout the tenancy. Tenant testified that her understanding was that she was given a lifetime preferential rent.

The court ruled for tenant. The original lease rider contained an implied provision that tenant’s lease would be renewed at the preferential rent throughout her tenancy. And since tenant signed the rider before the Rent Stabilization Law was amended in 2003 to permit discontinuation of a preferential rent upon lease renewal, the amendment didn’t apply.

East Side Managers Associates, Inc. v. Goodwin: 26 Misc.3d 1233 (3/11/10) (Civ. Ct. NY; Lebovits, J)