Prior Tenant's Waiver of Right to File Fair Market Rent Appeal Was Void

Tenant sued landlord, seeking a declaration that her tenancy was subject to rent stabilization and that her apartment was illegally deregulated in 2000 when landlord and a prior apartment occupant reached a "private agreement" circumventing initial rent registration procedures under rent stabilization following vacancy decontrol. The court denied landlord's request to dismiss the case.

Landlord then appealed and won before the First Department appeals court. The appeals court found that the private agreement referred to by tenant was a so-ordered court stipulation between a former occupant and landlord settling a licensee holdover proceeding that landlord started after the former rent-controlled tenant died and the occupant claimed succession rights. In that case, landlord and the occupant agreed that the apartment was no longer rent controlled, but became rent stabilized, and that the apartment's initial legal regulated rent would be $1,650 per month. The occupant received a two-year rent-stabilized lease with a preferential rent of $650 per month, subject to renewal increases. The agreement would remain in effect as long as the occupant didn't challenge the rent. Landlord argued on appeal that the case should've been dismissed. The appeals court ruled for landlord although two judges dissented, and noted that, since the occupant wasn't a tenant when his dispute with landlord was settled, there was no violation of law. The prior occupant became the apartment's first rent-stabilized tenant and never filed a fair market rent appeal challenging the initial legal regulated rent. Since more than four years had passed, there was no basis to challenge that rent.

New York's highest court allowed tenant to appeal further, and ruled in tenant's favor. By securing the prior tenant's explicit agreement not to challenge the initial rent-stabilized rent, the court stipulation waived that tenant's right to file a fair market rent appeal despite the RSC's bar against waiver of statutory protections. The stipulation was void no matter what the prior tenant's status was when agreed to, and so was landlord's rent registration statement that was based on the stipulation. The Court made no ruling on whether the apartment had been properly deregulated or whether there was a rent overcharge.

Liggett v. Lew Realty LLC: App. No. 63, 2024 NY Slip Op 03378 (Ct. App. 6/20/24; Halligan, PJ, Wilson, CH, Rivera, Gracia, Singas, Cannataro, Troutman, JJ)