Receiving Rent from Tenant of An Illegal Apartment (Basement Ostensibly for Storage)

In Hornfeld v. Gaare, 130 AD2d 398, 515 N.Y.S.2d 258 (1st Dept 1987) the plaintiff owned a multiple dwelling with a certificate of occupancy permitting residential use of the first through fifth floors. The basement was reserved for the "boiler room, storage and office of building." Defendant rented certain basement space ostensibly for storage. Thereafter, plaintiff commenced a non-payment summary proceeding. The court found that plaintiff had permitted defendant to occupy the premises for residential purposes and dismissed the proceeding on the ground that MDL 302(1)(b) prohibits the recovery of rent from the occupant of an illegal apartment. Plaintiff then hired a licensed professional engineer to see if the basement space could be transformed into a legal residence. However, "the requirement that the ceilings of a basement apartment be at least 4 feet six inches above the curb level could not possibly be resolved." Plaintiff then commenced a declaratory judgment action in Supreme Court seeking use and occupancy and surrender of the premises. Defendant sought a renewable, rent-stabilized lease and denial of any use and occupancy payments. The Appellate Division concluded that because defendant could not "be permitted to occupy the premises as his residence, judgment should be entered requiring that defendant surrender the premises to the landlord," but that as plaintiff had permitted the residential use, plaintiff could not recover use and occupancy.