LANDLORD/TENANT UPDATE
Failure to Name Subtenant is Fatal
In Becker v. Atwell 1the landlord commenced a nonpayment summary proceeding against a nonpaying tenant. The parties entered into a stipulation for the payment of the back rent. When the tenant defaulted, the landlord moved for possession and the issuance of a warrant of eviction. The subtenant, not named in the original action, sought to vacate the judgment and stay execution of the warrant claiming that payments of rent had been made by the subtenant to the tenant.
The court never reached the merits of the action inasmuch as the landlord’s failure to name the subtenant in the original petition was fatal since the landlord was aware of the subtenant’s name and presence in the apartment.
Landlord Cannot Reap Windfall
In Rudd v. 176 West 87th StreetOwners Corp.,2 a declaratory judgment action, the tenant sought to have the court determine whether the tenant had a right to receive a rent credit for a real estate tax refund that the landlord received on tax payments that the tenant had made as part of its rent under a rent escalation clause.
The landlord argued that the tenant was not entitled to a refund because the lease did not contain a provision requiring it to return to the tenant any taxes later refunded by the taxing authority to the landlord.
Relying on an Appellate Division, First Department3 case, the court rejected the landlord’s argument and held that the landlord was not entitled to a windfall inasmuch as the tenant was only required to pay taxes that actually came due. Inasmuch as the tenant had actually made the real estate payments required under the escalation clause, the refund by the taxing authority to the landlord would have resulted in an impermissible windfall to the landlord. Consequently, the court required the payment of a refund to the tenant.
Filing a Chapter 7 Petition May Not Stop Eviction
In B.N. Realty Associates v. Lichtenstein4, the Southern District held that even after abandonment, a landlord may be entitled to relief under the Bankruptcy Code.
The tenant filed a Chapter 7 voluntary petition in bankruptcy; at the time, the landlord had a pending action against the tenant for rent owed during the period 1988 through 1993 in the amount of $42,544 as well as a non-payment proceeding filed in 1998 for $12,600 in rent. The filing of the petition in bankruptcy resulted in a stay of the landlord’s proceedings.
Thereafter, the landlord moved for relief from the stay. The bankruptcy judge denied the landlord’s motion holding that the rent-stabilized lease, when not assumed by the Chapter 7 trustee, was abandoned back to the debtor and that to permit the lifting of the stay would undermine the purposes of the Bankruptcy Code to the give the debtor a fresh start.
On appeal, Judge Sweet held that the lease had been abandoned back to the debtor but that the stay could be lifted if the landlord could establish that it lacked adequate protection and that the tenant had no equity in the property � such findings could result in the stay being lifted “for cause”. Judge Sweet remanded the case for consideration of whether the landlord was entitled to such relief.
Surrender by Operation of Law??
In SLG 17 Battery, L.L.C. v. Broderick5, the petitioner commenced a commercial nonpayment proceeding alleging that the tenant vacated the premises prior to the lease ending date thereby remaining liable for all rent, additional rent and charges as provided in the lease.
The respondent conceded that they vacated the premises prior to the lease termination date but claimed to have done so with the consent of the landlord, or, in the alternative, that the landlord accepted the surrender by operation of law.
Since there was no document signed by the landlord to establish that the surrender was with the landlord’s consent, the question before the court was whether a surrender by operation of law had occurred.
Surrender by operation of law occurs “when the parties to a lease both do some act so inconsistent with the landlord-tenant relationship that it indicated their intent to deem the lease terminated”.6 The burden of proof is on the tenant.
While significant evidence was presented at trial that the parties intended a surrender by operation of law to occur, including negotiations referring to the surrender that the tenant reduced to a writing and presented to the landlord, the court found striking that the landlord never signed the writing and continued to bill the tenant for the monthly rent.
The fact that the tenant actually vacated the premises, the court held, was only representative of one party’s act inconsistent with the landlord-tenant relationship � and that, the court held, was not enough to effect a valid surrender.
Successor-In-Interest has Same Remedies Against Tenant
At issue in Ballesteros v. Rosello7, was whether the petitioner, who had commenced two summary holdover proceedings against the respondents, had a landlord-tenant relationship with the respondents. Undisputed were the facts that (i) the respondents were neither rent stabilized nor rent-controlled tenants; (ii) had never tendered rent nor use and occupancy to the current petitioner; and (iii) never executed a lease with the current petitioner. Also undisputed was that the respondents and petitioner’s predecessor-in-interest entered into rental agreements for respondents’ respective apartments and had a landlord-tenant relationship
Respondents alleged that since they did not have a landlord-tenant relationship with the present petitioner, the appropriate predicate notice to have been served upon them should have been a ten-day notice to quit rather than the thirty-day notice of termination which the petitioner had served.
The court held that since the present petitioner was the successor-in-interest to the prior landlord, having purchased the building from the landlord, the present petitioner had succeeded to all of the prior owner’s rights � including remedies against the tenant. Inasmuch as there was no dispute that the landlord-tenant relationship had existed with the prior owner, the present petitioner, the court held, succeeded to that relationship and held the same remedies against the respondents. The respondents’ motion to dismiss was denied and a final judgment of possession was granted to the petitioner against each respondent.
Lease Provision on Manner of Service Will Prevail
In Power Authority of State of New York v. Ken II Cafeteria Inc.8, the petitioner commenced a commercial holdover proceeding after the respondent’s written lease expired and respondent remained in possession as a month-to-month tenant. The petitioner personally served the respondent with a thirty-day notice at the premises.
The question before the court was whether that notice of termination was sufficient to end the tenancy inasmuch as the lease called for the service of a notice of termination to be served upon the tenant’s attorney as well.
The court held that the lease controlled the service method of the notice of termination inasmuch as it was a more stringent service method than the statute required and all parties had agreed to the method contained in the lease. Having failed to make service in accordance with the lease, the petitioner’s action was dismissed.
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1 N.Y.L.J., Dec. 29, 1999 at p 31, col. 2 (Dec. 29, 1999 Kings Civil Court). 2 N.Y.L.J., Jan. 5, 2000, at 27, col. 4 (Jan. 5, 2000 N.Y. Supreme). 3 Fairfax Co. v. Whelan Drug Co., Inc., 105 AD2d 647 (1st Dep’t 1984). 4 99 Civ. 2158 (U.S.D.C. Southern District)(Sweet). 5 N.Y.L.J., Jan. 19, 2000 at 27, col. 3 (Jan. 19, 2000 N.Y. Civil Court). 6 Id. at 27 (citations omitted). 7 N.Y.L.J., Jan. 19, 2000 at 30, col 4 (Jan. 19, 2000 Kings Civil Court). 8 N.Y.L.J., Feb. 16, 2000 at 32, col. 6 (Feb. 16, 2000 Westchester City Court).