Out of Court Settlements Have the Same Effect as In Court Settlements

A common experience for an attorney representing a landlord against a tenant in Housing Court is to reach an out of court settlement with the tenant in which the tenant will agree to surrender possession of a rent stabilized apartment in consideration of a cash payment and/or a rent waiver. With the matter resolved the tenant will not want to take off from work to return to Housing Court to sit for a couple of hours just to let the judge know that the case has in fact resolved itself. The landlord's attorney will however bring the out of court written settlement to the court on the next return date seeking to file it as a final resolution of the pending case. In almost every instance the judge will refuse to accept or "so order" the agreement.The reasoning for the refusal to "so order" the out of court settlement is that because the unrepresented tenant is not physically standing before the judge, the judge cannot ensure that the landlord's attorney has not engaged in some abhorrent unethical conduct to induce the tenant to give up the apartment. A frustrated landlord's attorney will then have to choose whether to mark the case off calendar or to adjourn the case repeatedly until the agreed upon surrender actually arrives.The inability of a landlord's attorney to have this type of a stipulation of settlement "so ordered" is disappointing in light of a few things seemingly true about the law both as written and in practice. First, the Court retains continuing jurisdiction over its judgments and settlements so if the landlord's attorney did do something improper the Court could always correct the injustice when the landlord sought to enforce the agreement. Second, and more importantly, the law has long been settled that out of court settlements have the same effect as those reached in court. A recent decision from Queens County Supreme Court discusses the enforceability of such out of court settlements. Oshy v. Koufa Realty Corp., 35 Misc.3d 1207(A) (N.Y.Sup.Ct., Queens Co. 2012).In Oshy a rent stabilized tenant had reached an out of court settlement with his landlord to surrender his apartment in consideration of a rent waiver and the payment of $5,000. When it came time for the tenant to surrender the apartment the tenant sought to vacate the agreement and to remain in possession. The landlord wanted the apartment. Justice Bernice Siegal investigated the facts surrounding the reaching of the agreement and determined that because there had been no conduct on the part of the landlord that could be described as coercion the out of court settlement entered into by the unrepresented tenant was fully enforceable. Justice Siegal recounted the history of the law on this issue and found that in all of the relevant appellate cases it had been held that a rent stabilized tenant could agree to sell his/her apartment back to the landlord and that an out of court agreement to do so would be enforceable so long as the tenant was not coerced into entering into the agreement (which of course is no different than an in court agreement).Given that the law on this issue is so settled it is a bit frustrating that when a summary proceeding is settled out of court that the presiding judge will rarely (which means never) accept the agreement. Landlords should take comfort (and tenants should beware) in knowing that the out of court agreement is enforceable even if not "so ordered" by the judge.