Owner Fined For Tenants’ Illegal Sublets

132 East 45th Street in Manhattan. Image credit: CityLaw.

Tenants rented apartments for transient use without owner’s knowledge. Pamela Equities Corp. owns and operates a building with 94 apartments located at 132 East 45th Street, Manhattan.  On October 23, 2014, the Department of Buildings served Pamela Equities with a notice of violation for illegal conversion of apartments 4G and 9C from permanent residences to transient use.  Following a hearing, the Environmental Control Board imposed a civil penalty of $5,800 and an additional discretionary civil penalty of $45,000 against Pamela Equities.

Pamela Equities commenced an article 78 proceeding challenging the imposition of the additional discretionary civil penalty of $45,000. Pamela Equities argued that its employees were not aware of the tenants’ unlawful subleasing and Pamela Equities should not be penalized for the tenants’ conduct.

Supreme Court Justice Lucy J. Billings rejected Pamela Equities argument and upheld the additional discretionary penalty. Judge Billings ruled that the fact the tenant violators may be penalized did not absolve the owner of the affirmative obligation to maintain the building in a code compliant manner.  Judge Billings, however, reduced the penalty by $7,000 from $45,000 to $38,000.  Discretionary penalties may accrue at the rate of $1,000 a day for a total of 45 days from the date of the notice of violation or up until the date of correction.  Building’s served Pamela Equities with the notice of violation on October 23, 2014, and Pamela Equities showed that by November 30, 2014, the tenant and subtenants of apartment 4G had vacated.  Because Pamela Equities had corrected the transient use by that date, Judge Billings ordered Buildings to repay Pamela Equities $7,000.

Pamela Equities Corp. v. Envtl. Control Bd. of City of New York, 72 N.Y.S.3d 764 (Sup. Ct. 2017).


By: Thomas Columbia (Thomas is a New York Law School Student, Class of 2019.)