Facts: Tenants subleased one of three combined rent-stabilized apartments from another tenant. Landlord sued to evict them. Landlord and tenants settled this case in 1996. In the settlement agreement tenants agreed to pay $2,000 per month for their apartment, even though the legal regulated rent for the apartment was $1,425. Landlord in turn agreed to let tenants remain in the apartment even if it wasn’t their primary residence. In 2000, the apartment was deregulated. Under the terms of the agreement, landlord continued to offer tenants renewal leases every two years at 8 percent rent increases. In 2004, new management for landlord started eviction proceedings against tenants and sought to have the 1996 agreement declared void and contrary to the public policy of the Rent Stabilization Code. The court upheld the agreement. Landlord appealed and won. The appeals court found that the agreement was illegal. Tenants then appealed to New York's highest court. Court: Tenants lose. An agreement by tenants to pay an illegal rent for a rent-stabilized apartment, in exchange for landlord's agreement to let tenants use the apartment as a second home is void and can't be enforced by either landlord or tenants. Rent Stabilization Code Section 2520.13 allows tenant to waive the benefit of rent stabilization as part of an agreement to withdraw a complaint before the DHCR. In this case, there was no complaint before the agency. And since the agreement allows a tenant who already has one home, and who is able to pay more than the legal rent for a second one, to use the law as a means of getting that second home forever at a bargain price, the agreement violates the basic policies and purposes of rent regulation.
Riverside Syndicate v. Munroe: NYLJ, 2/8/08, p. 28, col. 3 (Ct. App. N.Y.; Smith, J, Kaye, Ciparick, Graffeo, Reed, Pigott, Jones, JJ)
