Paikoff v. Harris

In Paikoff v. Harris Paikoff v. Harris, 185 Misc2d 372 (App Term, 2d Dept 1999) the court found that tenants who rented a cooperative apartment from the sponsor and holder of unsold shares subsequent to a noneviction conversion plan were in fact nonpurchasing tenants and thus entitled to protection under the Martin Act. The Appellate Term affirmed the lower court's ruling holding that the landlord could charge a reasonable rent, but that such rental increase would not be unconscionable being defined as beyond ordinary rentals for comparable apartments during the period of their occupancy. The Appellate Term clearly indicated that the requirement to offer renewal leases applies to persons who "rent from sponsors." (Paikoff v. Harris, 185 Misc 2d, supra, at 376.) The Court held that a tenant who rents an apartment from a sponsor after a cooperative conversion qualifies as a "non-purchasing tenant" within the meaning of the Martin Act. In reaching this conclusion, we first looked to the language of General Business Law 352-eeee (1) (e), which defines a "non-purchasing tenant," in part, as a person "to whom a dwelling unit is rented subsequent to the effective date" of the conversion plan . Relying on the plain wording of the statute, the Court rejected the landlord's reading of the statute as requiring the tenant to have leased the apartment prior to the closing date of the conversion (Paikoff v. Harris, 185 Misc. 2d at 376). The court found no "distinction between tenants in possession at the time of the conversion and those who rent from sponsors after the conversion" (id. at 377-378). The Court reasoned that if, in response to market conditions, a sponsor chooses to rent an apartment after a conversion, rather than sell it, then the tenants who lease the apartment should be afforded the same protections as those in possession at the time of the conversion (id. at 378). The court held that the tenants were not prejudiced by the landlords' mistaken claim's in the petition that respondents were not "non-purchasing tenants." Even with an incorrect claim in the petition, respondents were still prepared to litigate the status of their tenancy and the misstatement in the petition provided no basis for dismissal.