Thornton v. Baron

In Thornton v. Baron (5 NY3d 175, 181 [2005]) in 1992, a landlord leased a rent-stabilized apartment, for which the previous tenant paid $ 507.85, to a new tenant for $ 2,400.00 per month. The landlord obtained a consent judgment from the Supreme Court, New York County, declaring that the apartment was exempt from rent stabilization, based upon a representation that the tenant did not intend to use it as his primary residence and that he would sublet it only to those who would not be using the apartment as their primary residence. The landlord then filed with DHCR annual rent registration statements, reflecting the agreed-upon rent with the tenant and listing the apartment as temporarily exempt from rent stabilization. The tenant meanwhile sublet the apartment for $ 3,250.00 per month to subleasees, who, despite statements to the contrary in their sublease, used the apartment as their primary residence. Subleasees brought an action claiming rent overcharges and seeking to compel the landlord to offer them a rent-stabilized lease at $ 507.85 per month. The landlord conceded that the apartment was rent-stabilized, but argued "that the legal rent was to be calculated from a base date rent of $ 2,496 -- the rent reflected in the annual registration statement filed in 1996, four years before [subleasees] filed their amended complaint" (Thornton, 5 NY3d at 179). The Thornton Court held that for the purposes of establishing the legal regulated rent, the apartment's rental history before 1996, or 4 years before filing the amended complaint, could not be examined, pursuant to Rent Stabilization Law 26-516 (a) (i). Accordingly, the Court disregarded the rent of $ 507.85, in effect in 1992. However , the Court refused to honor the rent of $ 2,496.00, declared the tenant's lease "void at its inception," and held that since the rent was illegal, the DHCR rent registration statement filed in 1996 was a nullity (Thornton, 5 NY3d at 181). Since no reliable rent records were available, the Court held that DHCR's default formula should be used to establish the base date rent (id.).