Wednesday, March 26, 2014

Offer of Renewal of Rent Stabilized Lease Is Not Deemed Automatically Renewed

The Rent Stabilization Code sets forth that "Where the tenant fails to timely renew an expiring lease or rental agreement offered [by the landlord] pursuant to this section, and remains in occupancy after expiration of the lease, such lease or rental agreement may be deemed to have been renewed upon the same terms and conditions, at the legal regulated rent. . . had the offer of a renewal lease been timely accepted." Rent Stabilization Code § 2523.5(c)(2). Therefore, a landlord in a rent stabilized apartment would expect that if he timely delivered a notice of renewal to the tenant prior to the expiration of the lease term and the tenant remains in possession without signing the renewal, the landlord would be entitled to hold that the renewal lease to be deemed renewed for the year under the law, especially if the tenant remains in possession and pays the newly increased monthly rent.

Such were the facts of the case in Samson Management v. Hubert, 92 A.D.3d 932, 2012 NY Slip Op 01598, 939 N.Y.S.2d 138 (2d Dept. 2012). However, the Appellate Division in that case disagreed with the rule, upholding the Appellate Term's holding that Rent Stabilization Code § 2523.5(c)(2) is invalid to the extent it impairs a right granted to tenants by Real Property Law § 232-c. Real Property Law § 232-c provides that "[w]here a tenant whose term is longer than one month holds over after the expiration of such term, such holding over shall not give to the landlord the option to hold the tenant for a new term solely by virtue of the tenant's holding over."

Therefore, in the facts described above and similarly reflected in the Hubert case, the landlord does not have the right to deem the rent stabilized lease renewed for another year at the increased rent even though the tenant continues his occupancy without signing the renewal but continues to pay rent at the increased rental amount. In the event the tenant fails to continue to pay rent several months into the supposed new lease term, the landlord does not have grounds to commence a summary nonpayment proceeding pursuant to Rent Stabilization Code § 2523.5(c)(2) and risks a dismissal of the proceeding by the tenant.

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