Landlord Wins Decontrol Dispute in First Department

233 E 5th Street. Image credit: GoogleMaps

Post-vacancy rent increase raised rent beyond $2,000 threshold and resulted in decontrolling a rent-stabilized apartment. In November 2003, Craig Smith and Elise Stone rented an apartment at 233 East 5th Street in Manhattan. Prior to their occupancy, the previous tenant resided in the unit as a rent-stabilized tenant. The previous tenant’s rent at the end of his occupancy was $1,836.20 per month. On renting the apartment Smith and Stone accepted a 20-percent vacancy increase. This increase in rent brought the apartment’s rent above luxury decontrol threshold of $2,000 in effect at the time.

The landlord, based on the increase of rent, asserted that the apartment became decontrolled on the date Smith and Stone signed the new lease with the 20 percent increase, and sued to retake possession. Smith and Stone opposed, contending the apartment was still rent-stabilized.

New York County Civil Court Judge Jack Stoller agreed with renters Smith and Stone, ruling that the apartment was still subject to rent stabilization because the previous tenant’s rent was less than $2,000 when he vacated the apartment in 2003.

The Supreme Court Appellate Term reversed, declared that the apartment was decontrolled, and granted possession to the landlord. The owner legally deregulated the apartment when the rent, with the legal increase, exceeded the threshold of $2,000. The court noted that consideration of post-vacancy rent increases was established case law in interpreting the rent stabilization regulations. In addition, a 1997 executive memorandum from the governor’s office issued on the signing of the rent Regulatory Reform Act had affirmed the legislative intent to consider post-vacancy rent increases in determining the deregulation threshold.

233 East 5th St. LLC v. Smith, 48 N.Y.S.3d 869 (Sup. Ct. App. Term. 1st Dep’t 2016) (Attorneys: Madga L. Cruz, for Landlord; John D. Gorman, for Smith).

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