Tenant Overcharged Subtenant/Roommate

Facts: Landlord sued to evict loft tenant for profiteering. Tenant sublet a portion of her loft to her niece and niece's friend for $1,200 per month. The rent-stabilized rent for the entire loft was $1,085. The portion of the loft occupied by the niece and friend was about one-third of the entire space and had a separate entrance. They couldn't enter tenant's portion of the loft unless tenant let them in because it was separated from their space by a locked door. At tenant's request, the niece and friend paid most of their rent to tenant in cash. At some point, they had a dispute with tenant over the use of air fresheners and eventually moved out. At trial, tenant testified that she was merely helping her niece, that she didn't require payment, and that any payment she did receive was a gift from the niece and friend. Court: Landlord wins. Tenant claimed that her niece and friend were roommates, not subtenants. But either way, she profiteered. Rent Stabilization Code Section 2525.6(b) allows tenant to charge subtenant only the legal rent plus a 10 percent surcharge if fully furnished. If tenant legally sublet the entire loft, she could charge only $1,193. So it was illegal to charge $1,200 for one-third of the loft space. If tenant's niece and friend were treated as roommates under Rent Stabilization Code Section 2525.7(b), tenant could charge them a combined monthly rent of only $722 if the legal monthly rent was divided by three. Either way, tenant profiteered. The eviction would be delayed until July 31, 2004, if tenant paid back rent and use and occupancy she owed, totaling $104,000. The eviction would be further delayed if tenant paid future use and occupancy at a rate of $4,717 per month during the delay period.

Breson Corp. v. Halo: NYLJ, 6/23/04, p. 19, col. 1 (Civ. Ct. NY; Bedford, J)