An Assault on Landlords Seeking to Occupy Apartments in Buildings they Own

A week old decision of the Appellate Term, First Department severely limits the ability of a landlord to recover a rent stabilized apartment for his/her own personal use and may call the constitutionality of the Rent Stabilization Law into question. The case of Nestor v. Britt, 2012 NY Slip Op 22034 (1st Dept. App.Term) discusses and interprets Rent Stabilization Code 2524.4(a)(2) and that interpretation will make it all but impossible for landlords - when certain situations are present - to recover apartments for their own personal use.The Rent Stabilization Law authorizes the enactment of the Rent Stabilization Code. The Law is an enabling statute. The Code is the nuts and bolts of what is permitted and what is not in all aspects of rent stabilization. One aspect of the Code is that regardless of how onerous rent stabilization might be for a landlord, that landlord will have the right to recover a rent stabilized apartment for his/her own personal use. The drafters of the Code limited that right in situations where the rent stabilized tenant in possession of the desired apartment was a senior citizen or disabled. When a landlord wishes to recover a rent stabilized apartment occupied by a senior citizen or disabled person, the landlord must first offer the tenant a superior or equivalent rent stabilized apartment in the same neighborhood at the same or lower regulated rent. When this portion of the Code was enacted there were vacant rent stabilized apartments that were close to market value - and so - when a landlord sought to avail himself/herself of this right compliance was possible. As time has gone by the rents landlords can charge for rent stabilized apartments long held by one tenant are much, much lower than could be collected for the same apartment as a fair market unit. This means that should a landlord want to recover a rent stabilized apartment in Manhattan that rents for less than $1,500/month, finding a vacant rent stabilized apartment in the same neighborhood of equivalent (or superior) quality is impossible. I have chosen the figure of $1,500/month. Imagine a situation where what is often the case is presented - the tenant pays $600/month. Finding a vacant $600/month rent stabilized apartment is impossible. Let's say a landlord has purchased a building for the express purpose of turning it into a single family residence and that to do so the landlord must rid himself/herself of the rent stabilized tenants in possession. Should one of those rent stabilized apartments be occupied by a senior citizen and rent for a below market amount then recovering the apartment becomes nearly impossible. What might a landlord do? A landlord might purchase a condominium and offer it to the tenant by contract with all of the protections of rent stabilization. A landlord might offer a rent stabilized apartment in another building (assuming that there is such a building) and offer a preferential rent for the life of the tenancy. After the holding in Nestor v. Britt, buying and then offering a condominium no longer seems possible. In Nestor v. Britt the landlord tried to be creative. The landlord offered a series of unregulated apartments with the apparent promise that the tenancy would be treated as a rent stabilized one. The Appellate Term noted that parties cannot contract into or out of rent stabilization and so notwithstanding the landlord's offer to treat the tenancy as a rent stabilized one, such an offer did not comply with the Code. The appellate attorney in Nestor v. Britt representing the landlord argued that finding a vacant rent stabilized apartment at the very below-market rent paid by the tenant was impossible. The Appellate Term summarily rejected this claim of impossibility and ruled that the landlord would not be able to comply with the Code by taking an unregulated apartment and treating it as a regulated one even if compliance with the Code was practically and literally impossible. It seems to me that if a landlord offered a rent stabilized apartment at a preferential rent that apartment would still qualify under the Code. However, as time passes the rights of landlords under the Code continue to diminish.