Lease Clauses Giving Tenants Extra Rights Violate Rent Stabilization Law

Facts: Shortly before its building went into foreclosure, prior landlord gave two new tenants rent-stabilized leases with unlimited rights to sublet and assign their apartments. The leases also stated that tenants didn't have to primarily reside in the apartments. One of the tenants was prior landlord's niece. Another was the sister of a plumber that landlord owed $40,000 to. New landlord later sued tenants, asking the court for a declaration that the ''sweetheart'' leases were illegal. The court ruled against landlord without holding a trial, finding that landlord was bound by prior landlord's leases. Landlord appealed. Court: Landlord wins in part. The lease clauses that gave tenants unlimited rights to sublet and assign their apartments violated Real Property Law section 226-b and were void because they were illegal. The clauses allowing tenants to keep the rent-stabilized apartments as nonprimary residences were contrary to the purpose of the Rent Stabilization Law and were void as a matter of public policy. The leases otherwise appeared valid. But a trial was required to determine if landlord had the right to recover the apartments from tenants.

Rima 106 L.P. v. Alvarez: NYLJ, p. 25, col. 2 (5/17/99) (App. Div. 1 Dept.; Ellerin, PJ, Rosenberger, Wallach, Saxe, JJ)