520 East 86th Street, Inc. v. Leventritt

• Citation: 127 Misc.2d 566,486 N.Y.S.2d 854
• Parties: TH STREET, INC., Petitioner (Landlord), v. Frances LEVENTRITT, Respondent (Tenant).
• Decision Date: 11 March 1985
• Court: New York City Court

Page 854

486 N.Y.S.2d 854

127 Misc.2d 566

520 EAST 86TH STREET, INC., Petitioner (Landlord), v. Frances LEVENTRITT, Respondent (Tenant).

Civil Court of the City of New York,

New York County, Housing Part 49.

March 11, 1985.

M.S. & I.S. Isaacs, New York City (Edmund Dollinger and Cynthia R. Clark, New York City, of counsel), for petitioner.

Leventritt Lewittes & Bender, Garden City (Sidney Bender, Aaron Lewittes, and Janine L. Bender, Garden City, of counsel), for respondent.

DAVID B. SAXE, Judge.

The issue that I must decide is whether a cooperative proprietary lease provision that contains a conditional limitation operative upon a default in the payment of rent thereby allowing recovery of the residential premises in a holdover summary proceeding, is valid.

The premises involved is Apartment 15-C at 520 East 86th Street, New York, New York, a cooperative apartment house. The respondent here is the owner of shares allocated to her apartment which she occupies pursuant to the provisions of a proprietary lease.

From October 1983 through August 1984, the respondent withheld payment of her maintenance (co-op rent) due to her claim that the co-op has persistently refused to properly repair her apartment and maintain it in a habitable condition.

Instead of starting a non-payment summary proceeding, the petitioner-cooperative corporation has begun a holdover action predicated upon a lease clause in the renewal proprietary lease that provides for the immediate termination of the cooperators lease ("i)f the lessee shall be in default for a period of two months in the payment of any rent or additional rent or of any installment thereof, herein before provided for." Such a clause operates as a conditional limitation (2 Rasch, N.Y. Landlord & Tenant Summary Proceedings, Sec. 743), and upon its occurrence, the landlord may treat the offending tenant's lease as terminated. Id.

After the petitioner declared the lease terminated, a holdover summary proceeding was started based, in part, upon the termination of the renewal proprietary lease for defaulting in payment of the maintenance. The tenant's position is that she withheld rent on account of breaches by the co-op of the warranty of habitability.

The apparent forfeiture is attacked as violative of public policy on two principal grounds.

First, it is claimed that the creation of a conditional limitation based upon a rent default interferes with the tenant's right to cure rent defaults in non-payment proceedings pursuant to RPAPL Section 751 subd. 1. Second, it is claimed that the clause severely limits the statutory right to assert a breach of the warranty of habitability. For the following reasons, I agree, and hold that the conditional limitation is void as contrary to public policy.

In Park Summit Realty v. Frank, 107 Misc.2d 318, 434 N.Y.S.2d 73 (App. Term, 1st Dept.1980), aff'd. 84 A.D.2d 700, 448 N.Y.S.2d 414 (1st Dept.1981), aff'd. 56 N.Y.2d 1025, 453 N.Y.S.2d 643, 439 N.E.2d 358 (1982) the landlord attempted to evict a statutory "permanent tenant" (i.e. one who has resided in the hotel for six months under the Code of the Metropolitan Hotel Industry Stabilization Association, Inc. [Hotel Code] ) for non-payment of rent through the means of a holdover proceeding. Construing the words of the Hotel Code § 50 which forbids eviction of a "permanent tenant ... so long as he continues to pay rent", the landlord contended that the tenant, upon default in rental payments, lost his status as a permanent tenant and reverted to that of a month-to-month tenant which the landlord, at his pleasure, might terminate and proceed to evict through the use of a holdover proceeding. The court rejected the landlord's reasoning and held that the tenant's status was that of a statutory tenant and, since the failure to pay rent was the foundation for the summary proceeding, the use of the holdover action was an improper vehicle to effect an ouster. The court dismissed the holdover proceeding in favor of the commencement of a non-payment case in which the tenant is given the opportunity to cure the breach of his rent obligation.

The Appellate Term stated:

... the design of the emergency rent laws was to prevent unjust evictions by landlords eager to squeeze the highest possible rent out of housing-hungry tenants...

Rent, then, was viewed as the most sensitive element of the landlord-tenant relationship and the one that could most easily be turned into a weapon of abuse. It seems to us to be more in harmony with the legislative intent of the Rent Stabilization Law to afford the stabilized tenant the opportunity to cure a rent default which often may be the result of an oversight easily remedied.

The rule in the commercial setting appears to be otherwise. In Grand Liberte Cooperative, Inc. v. Bilhaud, 126 Misc.2d 961, 487 N.Y.S.2d 250 (App. Term 1st Dept.), the lower court's holding to the effect that a lease provision creating a conditional limitation for the non-payment of rent was void as against public policy because it vitiated the statutory right to cure a default in a non-payment proceeding as expressly provided for in RPAPL Sec. 751, subd. 1, was reversed by the Appellate Term. That Court held that such a clause in the commercial context was enforceable and noted that the tenant was not left without a remedy: he could have obtained a stay in the Supreme Court to toll the running of the cure period and the expiration of the lease under the rule enunciated in First National Stores, Inc. v. Yellowstone Shopping Center, Inc., 21 N.Y.2d 630, 290 N.Y.S.2d 721, 237 N.E.2d 868 (1968). The Appellate Term apparently did not give great weight to the argument that by permitting a holdover proceeding rather than a non-payment proceeding, the tenant lost an important right under R.P.A.P.L. 751 subd. 1 which permits a tenant in a non-payment proceeding to cure his rental default by paying or depositing the unpaid rent at any time prior to the issuance of the warrant of eviction. As to this, the Appellate Term stated:

"The fact that landlord could, at its option, have brought a nonpayment proceeding (RPAPL 711[2] ), in which event the tenant would have had the right to deposit the amount of the final judgment into court prior to the issuance of a warrant (RPAPL 751[1] ), did not preclude the landlord from terminating the lease in accordance with ... a holdover proceeding pursuant to RPAPL 711(1)" (Grand Liberte Coop. v. Bilhaud, supra, p. 963, 487 N.Y.S.2d 250).

It thus appears that the Appellate Term has conclusively determined the issue presented with respect to commercial premises. It would further appear that, in light of the Appellate Term's pronouncement in Grand Liberte, supra, that such conditional limitations are valid in the commercial context that two other cases...