Trial Needed to Determine Legal Rent Applicable to Successor Tenant Under DHCR Agreement

Landlord sued to evict family member successor tenant of rent-stabilized apartment for failure to sign a renewal lease. Tenant claimed that the offered rent amounts were incorrect. In 2005, the prior landlord had filed a DHCR application to adjust the legal regulated rents following the building's exit from the Mitchell-Lama program. Prior landlord and building tenants later signed a settlement agreement of that proceeding by which landlord would be able to set the legal regulated rent (LRR) while the tenant paid a lower, preferential rent that couldn't be assigned or sold to anyone other than the tenant then in occupancy. The agreement specified that any successor tenants generally would have to pay the higher LRR. The DHCR incorporated the terms of the agreement into an order.

The last renewal the prior tenant signed under the agreement was in 2017, shortly before he died. In June 2019, the HSTPA included a provision that that disallowed landlord from discontinuing preferential rents for successor tenants. Tenant relied on this in refusing to renew the offered renewal lease.

The court ruled against landlord, rejecting its argument that the DHCR's ratification of the 2005 settlement agreement created an "increase permissible by law." And HSTPA superseded any private agreement between the parties.

Landlord appealed and won. Since tenant's entitlement to a renewal lease did not arise "on or after" the June 14, 2019, effective date of the HSTPA, the amendment to RSL Section 26-511(c)(14) found in the HSTPA didn't apply. The appeals court also found there were triable issues of fact regarding the interpretation and application of the DHCR-approved WSM Agreement with respect to the successor tenant.

West Side Marquis LLC v. DeJourdan: Index No. 570015/24, 2024 NY Slip Op 50454(U)(App. T. 1 Dept.; 4/23/24; Hagler, PJ, Brigantti, Perez, JJ)