Can an owner evict a "life tenant," who is paying a very low (submarket) rent, when that individual is not primarily residing in the apartment unit? According to the Appellate Division, First Department, the answer will depend on what the terms of that life estate provide and whether the unit is subject to regulation.
In Aurora Sportswear Group Ltd. v. Eng, the defendants conveyed the building to the Plaintiff's predecessors pursuant to a "duly recorded" 1982 contract which provided that defendants could "remain in the apartment presently occupied by them...for the remainder of their lives at a monthly rent of $120.00." This agreement, which was to "survive passage of title," prohibited subleasing and further provided that no rent increases were to be charged to the tenants. In 1984, the apartment was registered with the State Division of Housing and Community Renewal (DHCR) as "exempt" from rent control or rent stabilization.
Aurora Sportswear Group Ltd., (Aurora), purchased the building in 2001 and filed suit in the New York County Supreme Court to evict the apartment's occupants. Aurora argued that the former owners (now tenants) could not keep their unit because it no longer comprised their primary residence. The Supreme Court dismissed Aurora's claim and determined that the tenants could remain in the unit for the rest of their lives at a rent of $120 per month and that they did not need to primarily reside in the space.
On appeal, the Appellate Division, First Department, agreed with the Supreme Court and found that there was no requirement--in the parties' agreement or otherwise--that the tenants needed to use the unit year-round. Additionally, the court did not agree with Aurora's argument that the 1982 agreement violated "public policy" considerations, noting that the caselaw cited by Aurora in its appellate briefs pertained to housing units which remained subject to rent regulation, and Aurora's own submissions concededly described the subject unit as "exempt."
Clearly, this case suggests that private agreements which govern free-market or exempt units (like owner-occupied apartments) will be enforced. That outcome stands in stark contrast to the position taken by the Appellate Division in Drucker v. Mauro, where regulated tenants sought to retain the benefits of stabilized-tenancy status but none of the attendant obligations.
In Drucker, the parties' 1995 agreement provided for perpetual renewals. In 2002, when the rent exceeded $2000 per month, and landlord sought to deregulate the unit (by way of luxury deregulation), the tenants commenced suit in the New York County Supreme Court seeking to enjoin the deregulation process. Although that injunction was denied, and the unit deregulated by the DHCR, the Supreme Court declared that the parties' agreement (which provided for perpetual renewals) was enforceable.
Noting that the apartment was subject to the Rent Stabilization Law at the time the parties entered into the disputed arrangement, the Appellate Division, First Department, reversed the Supreme Court's determination, citing to established authority which provides that, "Any lease provision that subverts a protection afforded by the rent stabilization scheme is not merely voidable, but void...and this Court has uniformly thwarted attempts, whether by mutual consent or by contract of adhesion, to circumvent regulated rent maximums...."
Seeking to discourage the selective application of the laws pertaining to regulated housing, the appellate court refused to enforce the terms of the parties' agreement citing to broader policy implications:
Quite apart from any impact of this Court's decision on the immediate parties, there is the far greater concern for its impact on the enforcement of the Rent Stabilization Law. If the parties to a stabilized lease are free to pick and choose, by agreement, those aspects of the regulatory scheme to which they will adhere and those they will avoid, the salutary effect of the statute will be frustrated.
In view of these considerations and concerns, both landlords and tenants must proceed with caution when negotiating residential-lease terms and conditions, since agreements for regulated units will be subject to a more exacting standard and a higher degree of scrutiny than those arrangements governing free-market or "exempt" apartments.
For a copy of the Appellate Division's decision in Aurora Sportswear Group Ltd. v. Eng, please click on the following link:
For a copy of the Appellate Division's decision in Drucker v. Mauro, please click on the following link: