No Back Rent Owed by Illegal Loft Tenants

Brooklyn tenants living in a commercial loft building sued landlord over ETPA coverage, rent owed, and building conditions. Among other things, tenants claimed that they shouldn't have to pay outstanding back rent because their occupancy was illegal. Landlord asked the court to dismiss this claim without a trial. The court ruled for landlord. Tenants appealed and won. Landlord may evict tenants for not paying rent, but can't recover unpaid back rent. Multiple Dwelling Law Section 302 bars landlord of a commercial building from collecting residential rent. The court found that this rule should be strictly enforced. Notably, the appeals court's decision was different from a ruling in the First Department, where that appeals court has held that a tenant who knows that a tenancy is illegal may not enjoy the benefits of occupancy and then refuse to pay rent.

Caldwell v. American Package Co., Inc.: NYLJ, 10/29/08, p. 31, col. 1 (App. Div. 2 Dept.; Spolzino, JP, Miller, Dillon, McCarthy, JJ)