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Rent-stabilized tenants are not permitted to profit from their protected status by leasing out their units at rental rates which grossly exceed their proportionate share of their rent (or which exceed the rent paid by the tenants to their landlords).* Although these restrictions have not been appled to rent-controlled tenants, a case which reinforces the perils associated with engaging in such conduct was released yesterday (October 24, 2006) by the Appellate Division, First Department.
After a non-jury trial, a New York County Supreme Court Justice (Jane Solomon) concluded that Rena Stavrolakes, a rent-controlled tenant, had engaged in "profiteering and commercialization" by renting out parts of her three bedroom to students at "illegal" rents and terminated the tenancy. (Of course, it didn't help the defense of her case that Stavrolakes illegally converted the three bedroom apartment to a four-bedroom space.)
On appeal, the Appellate Division affirmed the Supreme Court's judgment, and noted (in two short sentences) as follows:

The judgment was supported by a fair interpretation of the evidence and should not be disturbed... Sufficient evidence, in the form of testimony and numerous exhibits, was presented for the court to find that the occupancy of this three-bedroom apartment (with dining room converted to a fourth bedroom) by numerous persons between 2001 and 2005--especially short-term transient students at illegal rents--was in the nature of subletting rather than taking in roommates, and constituted profiteering and commercialization of the premises, an incurable violation of the Rent Control Law....
Now, that's some hazing!
For a copy of the Appellate Division's decision in 220 W. 93rd St., LLC v. Stavrolakes, please click on the following link:
*For our prior blog post on "profiteering" (dated May 1, 2006), please click on the following link: