Seller Misrepresented Facts About Rent

Landlord-buyer of rent-stabilized building sued prior owner-seller for fraud. The sales contract contained a rider listing the building's registered rents. After the sale, buyer discovered that seller had never initially registered one of the listed apartments with the DHCR. The rent for the unregistered apartment was frozen as the result of a rent overcharge complaint. Buyer suffered $45,000 in damages. Buyer claimed that seller had knowingly and falsely represented that the apartments were registered with the DHCR. Seller asked the court to dismiss the complaint, based on a contract provision that ''no representation is made by seller to the purchaser that the said rentals are the legal rentals.'' The court found that the contract provision as to ''no representation'' was illegal and, therefore, unenforceable and void. Otherwise, the provision would be an unlawful attempt to evade the rent stabilization code. Although the tenant wasn't a party to this action, enforcement of the contract provision would have the same effect as an impermissible enforcement of a tenant's waiver of his own rights. Seller's motion to dismiss was denied.

Costantino v. Lynch: NYLJ, p. 31, col. 6 (2/22/95) (Sup. Ct. NY; Goodman, J)