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Contract Surrendering Succession Rights?

NYC Rent Regulation: Rent Control/Rent Stabilized, DHCR Practice/Procedures

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Contract Surrendering Succession Rights?

Postby Sky » Mon Mar 16, 2009 12:56 am

I've recently spoken to a Rent Stabilized tenant in my building who has stated that for the most recent renewal lease, the LL offered a lower preferential rent on the condition that the tenant also sign an included lease rider stating that the tenant surrenders all succession and assignment rights.
The tenant had signed the rider.

This LL is rapidly vacating and deregulating apartments in the building (via eviction proceedings, harassment, and buyouts).

I need to examine the rider myself and read the wording.
Until then, I was wondering if anyone has heard of similar renewal lease riders and/or if they are legally recognized, i.e., can a RS tenant via signing a document, surrender succession and assignment rights?

Regardless of the legal answer, it may succeed as a tactic of deceit to dissuade the tenant from preparing for and/or pursuing lease succession or assignment.

Postby TenantNet » Mon Mar 16, 2009 10:07 am

That would be illegal. See the case below. I think there was a Court of Appeals decision on this case, but I would need to spend some time digging it up (perhaps you could). I think the ruling stood. And there are other cases that discuss this issue.

AD 1st Dept rules that stip waiving RSL violates public policy
Date: Mon, 9 Apr 2007 08:47:36 -0400

(The decision in Riverside Syndicate, Inc. v Munroe, __ AD3d __, 2007 NY Slip Op 02973, is online at http://www.nycourts.gov/reporter/3dseri ... _02973.htm

Stipulation Is Found to Violate Public Policy
By Daniel Wise
New York Law Journal
April 9, 2007

A court-approved stipulation entered 11 years ago, in which both sides agreed to ignore provisions of the Rent Stabilization Law, is void as against public policy, a unanimous panel of the Appellate Division, First Department, ruled last week.

The decision clears the way for the owner of the building on Manhattan's Upper West Side to try to evict the tenants, who have combined three apartments into one, on the ground that they do not use the apartment as their primary residence.

The dispute has its roots in a 1996 court-approved settlement entered into when the tenants, Eric Saltzman and Victoria Munroe, sublet a third apartment after the landlord had allowed them to combine two apartments in 1984.

The owner of the building, at 155 Riverside Drive, brought an illegal sublet case at the time against the couple, which was settled and approved as a so-ordered stipulation, on May 3, 1996.

The stipulation contained provisions in which the two sides, for their own separate reasons, agreed to set aside several requirements of the Rent Stabilization Law (Administrative Code of the City of New York §26-501 et seq.).

The tenants agreed to a rent increase of $675 a month over the legally allowed rent for the apartment to $2,000 a month. With the rent at that level, the rent stabilization law permitted the landlord to remove the apartment from the law's rent limitations if the couple's income was more than $250,000 a year. The couple also agreed not to challenge the new rent level as violating the law.

The owner, Riverside Syndicate, in turn agreed to accept the couple as the tenant of record in the apartment they had been subletting.

It also agreed not to evict the couple from the apartment on the ground that their primary residence was elsewhere. The owner further stipulated not to use non-primary residence claims to oust the couple from the two apartments they combined in 1984.

In 2004, after hiring a new manager for the building, Riverside Syndicate brought a declaratory judgment action asking that the agreement be set aside as violating the public policy expressed in the Rent Stabilization Law's provisions limiting rent increases and requiring that tenants use their apartments as their primary residences.

Warren Estis, of Rosenberg & Estis, who represents Riverside, said that the owner had a change of heart when it hired a new manager for the building who felt that the arrangement "did not seem right." After examining the situation at the owner's request, Mr. Estis said the law firm agreed and brought the declaratory judgment proceeding to overturn the 2004 settlement pact.

Neither the tenants nor their lawyer, Darryl M. Vernon, of Vernon & Ginsburg, could be reached for comment on Friday. But in their brief, the couple contended that they spent $150,000 consolidating the three apartments. The apartments combined in 1984 were a one-bedroom and a studio, they said. The size of the third apartment, which they had initially sublet, was not described in their brief.

In Supreme Court, Acting Justice Judith J. Gishe (See Profile) had sustained the 1996 stipulation, which had been approved by Civil Court Judge Saralee Evans (See Profile).

But on appeal, the First Department panel concluded in an unsigned opinion that the stipulation was void as being against public policy because its "main objective was illegal," specifically to "[waive] the benefits of the rent stabilization law."

Joining in the opinion in Riverside Syndicate v. Munroe, 109491/04, were Justices Angela Mazzarelli (See Profile), Richard T. Andrias (See Profile), David Friedman (See Profile), John W. Sweeny Jr. (See Profile) and E. Michael Kavanagh (See Profile). The opinion was published in Friday's Law Journal on page 31.

In voiding the agreement, the court freed the owner to move to evict the couple on the ground that the apartment is not a primary residence. Mr. Estis said the owner intends to do just that.

In its Appellate Division brief, the owner states it is "undisputed" that Mr. Saltzman works as an attorney at Harvard Law School and that Ms. Munroe works at Victoria Munroe Fine Art in Boston. A call to Harvard Law School on Friday revealed that Mr. Saltzman had been the executive director of the Berkman Center for Internet and Society from 2000 to 2002. According to the law school's communication's office, Mr. Saltzman is not currently listed in the school's online directory.

The owner's brief also asserts that the couple's primary residence is in Cambridge, Mass. and that they are both registered to vote in Massachusetts.

The tenants' appellate brief does not address the question of their current residence, but states that they resided in the apartment when the illegal sublet case was settled.

Their brief also states that Mr. Saltzman first rented an apartment in the building at West 88th Street in 1980 and rented the second apartment after marrying Ms. Munroe. The brief adds that, at the time they consolidated the third apartment, they had two children.

In addition to Mr. Estis, Riverside Syndicate is also represented by Jeffrey Turkel and Howard W. Kingsley of Rosenberg & Estis.

- Daniel Wise can be reached at dwise@alm.com.


Gotham Gazette - http://www.gothamgazette.com/article/la ... 28/13/2448

Court Rules Tenants Can't Waive Their Protections
by Emily Jane Goodman
28 Feb 2008

When a landlord and a pair of tenants enter an agreement that works for both sides but happens to be illegal, combat and litigation are sure to follow. And now , after a dozen years, the happy arrangement involving 155 Riverside Drive has been totally dissolved by the highest court in New York state as a violation of public policy.

When in 1996 Victoria Munroe and Eric Saltzman agreed to pay $2,000 a month or $675 more than the legal rent established for their rent stabilized apartment, the landlord, Riverside Syndicate, got a good deal. But it was a deal for the tenants too, and there was a reason for their willingness . Munroe and Saltzman, who occupied three apartments combined into one, had another residence in Cambridge, Massachusetts. Under New York's rent regulations, the landlord could have evicted the couple by establishing that they did not occupy the premises for more than 183 days (six months) a year. So the tenants were willing to overpay, if, in return, the landlord was happy to overlook the primary residence issue.

The agreement also resolved the parties' sublease dispute in Housing Court. There, a stipulation (agreement) provided that the tenants agreed to '"waive all right to challenge the legality of the rent," and that '"regardless of their primary residence, the tenants may remain as the rent stabilized tenants." The agreement also provided that "if the apartments were deregulated, the landlord offer a renewal lease every two years at no more than an 8 percent increase."

Four years after the stipulation was entered, the apartment was deregulated, and the parties agreed to a succession of two-year leases with increases of 8 percent, an amount in excess of the maximum allowable if the apartment had remained rent stabilized.

However, in 2004 the landlord sought a court declaration that the agreement was void and unenforceable. As rents continued to rise, Riverside may have reasoned that, if it could set aside the stipulated agreement by showing that it was never valid, the syndicate would reclaim the apartment and rent it for much more than what Munroe and Saltzman were paying.
Giving Up One's Rights

When the litigation reached the Court of Appeals, the fourth court to be involved and the state's highest court, the judges decided unanimously, "Agreements like the one at issue here distort the market without benefiting the people the rent stabilization laws were designed to protect." In other words, though the tenants had voluntarily waived the protection of rent stabilization, that waiver defeated the protective purpose of rent stabilization.

Although there are in law certain rights that can be waived, such as confession without lawyers, others, such as rent stabilization or child labor laws, cannot be surrendered. Judge Robert Smith wrote, "An agreement by tenants to pay an illegal rent for a rent-stabilized apartment, in exchange for an agreement by the landlord to let the tenants use the apartment as a second home, is void and cannot be enforced by either party."

In addition, Smith ruled for the entire court, "The agreement is, on its face, one to 'waive the benefit' of rent stabilization, and is therefore void. ... In exchange for an illegal rent, the landlord agreed ... not to enforce its rights under the Rent Stabilization Code, to 'recover possession' of a 'housing accommodation' ... not occupied by the tenant ... as his or her primary residence."

Discussing the public policy issue, the opinion said, "Such an agreement allows a tenant who already has one home, and who is able to pay more than the legal rent for a second one, to use the law as a means of getting that second home in perpetuity at a bargain price, ... and would violate the fundamental policies and purposes of the statutory rent regulation scheme."

The Court of Appeals concluded that the agreement as to both parties was invalid from the beginning and that neither party can rely on it. Without specifying what the next steps would be, the court indicated that this matter would be returned to the lower courts where further litigation might result in refunds to the tenants and also possibly to returning the apartment to rent stabilization. It seems clear, however, that unless the tenants can establish that the Riverside Drive home is their primary residence, they will lose the apartment. And the winner is: the landlord.
Emily Jane Goodman is a New York State Supreme Court Justice
Gotham Gazette is brought to you by Citizens Union Foundation. It is made possible by a grant from the Charles Revson Foundation and receives support from the Alfred P. Sloan Foundation, the Altman Foundation, the Fund for the City of New York, the New York Times Foundation, the Robert Sterling Clark Foundation, the Rockefeller Brothers Fund and readers like you. Please consider making a tax-deductible contribution.

Gotham Gazette - http://www.gothamgazette.com/article/la ... 28/13/2448
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Postby Cranky Tenant » Mon Mar 16, 2009 12:45 pm

I'd also like to point out that it isn't the tenant who seeks succession but rather the family of that tenant. So even if the tenant could waive his right to succession (which Tenant.net already demonstrated is illegal) s/he wouldn't be entitled to waive the rights of any spouse, children, brother, sister, etc.
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Postby Sky » Tue Mar 17, 2009 6:43 am

TenantNet, thank you for posting the ruling. I’ll see if I can find other decisions.
Cranky Tenant, your point is well taken.

If I am understanding this correctly, the succession rights are the rights of the qualified occupant, NOT the rights of the tenant? Does the tenant play no part in determining or choosing a successor? How far in advance does a successor need to notify the LL?

I want to understand this better.

I know some folks do not like hypotheticals, nonetheless:

1) Assume an RS apartment with a tenant and two occupants who would qualify as successors under the law. The tenant notifies the LL he is not going to renew his lease and will move out by the end of his lease term. The LL orders the tenant to surrender the apartment completely vacant at the end of the lease term (maybe via persuasion, threats, or offers of buyout cash). The tenant and one of the occupants do vacate, but one occupant refuses to leave and demands a lease offer as a successor. Does this fly?

2) What if in the above scenario the tenant owed arrears and a settlement was made between the tenant and the LL via a court stip stating the tenant would move out on XXX date on which it was agreed the lease would be terminated, in exchange for waiving payment of all rental arrears and waiving future rental payments for months remaining on the original lease term. Everyone is happy. Tenant and one occupant move out on XXX date. The other occupant (a qualified successor) decides not to vacate (he wasn’t the leaseholder and thus didn’t sign the stip) and he requests a lease claiming succession rights. Does this fly?

I ask because every manner of deceit is being used to empty RS units. The tenants and occupants need to be informed of their options and rights.

Postby TenantNet » Tue Mar 17, 2009 7:15 am

I don't recall this ever coming up, but it may be quibbling. A potential successor is not (yet) a tenant obviously, they are not a party to a lease and would not have tenancy rights per se. But they are a potential successor because of the person who is a tenant. A potential successor then would likely have rights to claim succession, but would not have standing to claim any other tenancy rights until they obtained tenancy.

A person is a successor in a rent regulated unit by virtue of being a certain type of relative and by virtue of simultaneous living with the tenant. The latter is two years (or one year if the tenant is 62 years of age or older, or disabled).

Succession claims may also be made by non-traditional family units.

I'm assuming the person makes a succession claim with the approval of the departing tenant (or deceased in some cases). I do not know of any cases where the departing tenant has opposed a claim, or if the estate of the deceased has opposed. That might come into play if there are more than one potential successors, but not the issue here.

For details on succession, see the DHCR Fact sheet #30 at http://www.dhcr.state.ny.us/Rent/FactSh ... afac30.htm

The form Notice To Owner Of Family Members Residing With The Named Tenant In the Apartment Who May Be Entitled to Succession Rights/Protection From Eviction. The form is at http://www.dhcr.state.ny.us/Forms/Rent/ra235.pdf

And although DHCR seems to have a dearth of information relating to non-traditional families, see http://www.dhcr.state.ny.us/Rent/Opinio ... L-1416.htm

Note: while a non-traditional family is often seen in the context of a gay/lesbian relationship, it is not limited to such relationships.

If the LL tries to tell the tenant to be out by a date certain with threats, that calls for a claim of harassment. In your scenarios, the #1 situation might fly depending on the fact pattern. The lease ends when the lease ends. Any succession rights depend on the facts. That the LL got nasty and ordered people out by a certain date is irrelevant.

In your No. 2 scenario, I do not believe a stipulation, even if court approved, can extinguish a claim of succession rights, even if the tenant's relative signed it. I can't imagine where a relative would sign a stip anyway as they are not a party to the litigation. However you're asking for litigation, which can be expensive.

But for more complete answers, one should seek a legal opinion from a tenant attorney who has had experience with succession cases. Fact patterns can vary widely.
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