Is a Tenant Entitled to Remain As a Rent-Stabilized Tenant Despite His Breach of the Purchase Agreement ?
In Park W. Vil. v. Leonard, a tenant of a rent-stabilized unit decided to buy a bigger unit when the building was being converted to a condominium, and signed a contract of sale for the bigger unit, and an interim lease, which specifically stated that the lease was to be in effect until the closing, and that failure to purchase the unit would terminate the lease.
The landlord inadvertently used a preprinted rent-stabilization form lease for the interim lease, but the rider was unambiguous.
The Rent Stabilization Law exempted, at the time of this decision, by statute, coop and condo apartments. the tenant purchaser failed to close and purchase the unit, and claimed that because there was a rent-stabilization form lease, he was entitled to remain as a rent-stabilized tenant in the bigger unit despite his breach of the purchase agreement.
The court, on these facts, in a residential holdover, held that the use of the form lease did not bind the landlord to keep the tenant in the larger (and previously vacant) condo unit as a rent-stabilized tenant, explaining (at 32, col 1) "the parties clearly intended that [the] tenants forfeit the protections of the Rent Stabilization Law, following tenants' voluntary relocation from their prior rent stabilized apartment ... to the subject vacant apartment ... which [the] tenants ultimately failed to purchase."
The consideration for the forfeiture of the protections of the Rent Stabilization Law, which is not discussed in the case, would have been an "insider" price for the larger unit, instead of a market price, something of real value.
In Mayflower Assoc. v. Gray (NYLJ, Mar. 1, 1994), the premises were a legal apartment in a multiple dwelling containing fewer than six dwelling units, and thus not subject to rent stabilization.
The landlord used a form rent-stabilization lease, and when it expired, commenced a residential holdover, on the grounds that the lease expired and that the premises were not subject to rent stabilization.
The Appellate Term found (at 21, col 2) that "the use of rent stabilization forms or riders does not foreclose a claim, at the expiration of any given lease term, that the premises are exempt from or not subject to rent stabilization.
Nor would the use of such instruments impose a contractual obligation to perpetuate a tenancy as stabilized where the statutory criteria for coverage are absent."