Over the past several years, property owners have become increasingly concerned about court decisions which expanded the rights of unregulated tenants in the City. In particular, Housing Court Judge David Cohen had ruled in favor of unregulated tenants in two cases where property owners were attempting to convert their rental properties to condominiums. In those cases, the unregulated tenants were in occupancy as of the date the proposed offering plan (also known as the “red herring”) was submitted for approval to the Attorney General’s office. However, the property owners sought to evict the unregulated tenants prior to the next stage in the conversion process, the date that the conversion plans were accepted for filing by the Attorney General’s office, based upon the expiration of their leases prior to that date. Judge Cohen ruled that because the unregulated tenants were, in the words of the applicable State law, “tenants in occupancy” as of the date of the “red herring,” the unregulated tenants were entitled to remain in occupancy and were protected against eviction, despite the expiration of their leases prior to the date that the plans were accepted for filing.
The Appellate Term, First Department, reversed Judge Cohen in both cases. In MH Residentail 1, LLC v. Barrett, the unanimous Court held that even though the 29 unregulated tenants in this case remained in possession after their leases had expired and were residing at the building as of the date that the conversion plan was accepted for filing, they were not “tenants in occupancy” within the meaning of the Martin Act, which governs conversions. The Court also reversed Judge Cohen’s finding that the owner had violated the anti-harassment provisions of the Martin Act.
Similarly, the Court also reversed Judge Cohen in 322 West 57th Owner, LLC v. Penhurst Productions, Inc., a case involving the same factual circumstances. Interestingly, the Court highlighted an unusual action by the Attorney General Cuomo’s office in support of the tenants in this case. The Court noted that “The informal opinion letter issued (at respondents’ request) by the New York State Attorney General’s office was belatedly submitted to this Court and is not properly considered on appeal.” While it is not surprising that Attorney General Cuomo took this pro-tenant position, the rebuke by the Court for his “too little, too late” submission was unusual and noteworthy.
The impact of the Appellate Term’s rulings has already been felt. Shortly after the issuance of those decisions, New York County Housing Judge Laurie Lau ruled similarly in the case of 25 Fifth Avenue Holdings LLC v. Waitman, in a decision issued on December 4th. Again, because of the expiration of the unregulated lease prior to the date that the conversion plan was accepted for filing by the Attorney General’s office, the unregulated tenant had no vested rights under law protecting them from eviction. The owner in this case was represented by Gerald Shapiro, Esq., from the firm of Mitofsky, Shapiro, Neville & Hazen. |
