Lease Mistakenly Changed Combined Apartments from Rent Controlled to Stabilized

Landlord and tenant signed a lease for three combined apartments in 1975 that changed tenant’s status from rent-controlled tenant of his prior apartment to rent-stabilized tenant of the combined apartments. In 2013, landlord sued tenant, seeking a declaration and injunction to force tenant to make repairs in the apartment concerning improvements made by tenant or damage to the building. Tenant claimed that the lease was void as against public policy because it was an improper attempt to decontrol the apartment.

The court found that a trial was needed to determine the facts. Tenant asked the court to reconsider, but neither side had previously presented DHCR decisions issued after 1981 that affected the apartment, and tenant presented no new facts that would change the court’s decision and any reasonable justification for failing to present that proof previously. Both sides appealed.

The appeals court found that tenant’s lease wasn’t void as against public policy. The lease didn’t seek to completely deregulate the apartment. The case was unique, and the parties didn’t know the rent-regulatory status of the combined apartments when they signed the 1975 lease. There was no knowing attempt to evade the rent laws. And, even though the DHCR later determined that the apartment wasn't decontrolled, other lease provisions--including a clause requiring tenant to repair damage caused by him--were valid and enforceable. However, landlord’s request for an injunction against tenant should have been dismissed because landlord had an adequate remedy at law and could get money damages. 

204 Columbia Heights, LLC v. Manheim: 2017 NY Slip Op 00425, 2017 WL 213589 (App. Div. 1 Dept.; 1/19/17; Tom, JP, Renwick, Manzanet-Daniels, Gische, Webber, JJ)