In Riverside Syndicate, Inc. v. Munroe , Syndicate filed a suit back in 2004 seeking a declaration from a judge that a 1996 settlement agreement reached with its tenants -- waiving their rent stabilization protections in exchange for allowing them to use an apartment as their second home -- violated public policy and was void.
Victoria Munroe and Eric Saltzman rented three Riverside Drive apartments which were subject to rent-stabilization. According to the 1996 agreement, the tenants would lease the combined units at a monthly rate of $2,000.00, a sum which was well above the permissible "legal rent." However, as long as the tenants waived their rights to challenge the rent charged, Syndicate agreed that the tenants could keep the apartments, regardless of whether or not they actually lived there.
When the New York County Supreme Court denied the landlord's request to invalidate the agreement, Syndicate appealed to the Appellate Division First Department, which reversed and found the agreement "null, void, and of no force or effect."
Rent Stabilization Code § 2520.13 provides that, "An agreement by the tenant to waive the benefit of any provision of … this code is void, provided, however, that based upon a negotiated settlement between the parties and with the approval of … a court of competent jurisdiction … a tenant may withdraw with prejudice, any complaint pending before the DHCR."
In view of that regulatory provision, and since no dispute had been "pending before the DHCR," the Court of Appeals agreed that the parties' settlement was unenforceable.
Notwithstanding that unfavorable outcome, the tenants are not without a remedy. As our state's highest court observed, "the tenants may well have a strong claim, subject to any statute of limitations defense that may exist, to recover the excess rent they paid; they may also have a strong claim to rescind the deregulation of the apartments, if that deregulation was the result of the illegal agreement."
If nothing else, tenants must learn never to mess with the Syndicate.
To download a copy of the Court of Appeals's decision, please use this link: Riverside Syndicate, Inc. v. Munroe