De Christoforo v. Shore Ridge Associates

• Decision Date: 31 March 1986
• Citation: 500 N.Y.S.2d 528,116 A.D.2d 123
• Parties: Richard De CHRISTOFORO, etc., Respondent, v. SHORE RIDGE ASSOCIATES, et al., Appellants.
• Court: New York Supreme Court — Appellate Division

Page 528

500 N.Y.S.2d 528

116 A.D.2d 123

Richard De CHRISTOFORO, etc., Respondent, v. SHORE RIDGE ASSOCIATES, et al., Appellants.

Supreme Court, Appellate Division Second Department.

March 31, 1986.

Norman S. Langer, Brooklyn (Irving Lederman, of counsel), for appellants.

Kalman Kaplan, Richmond Hill, for respondent.

Before LAZER, J.P., and MANGANO, BROWN and KOOPER, JJ.

MANGANO, Justice.

Does the unexercised right of a deceased lessee of a rent-stabilized apartment to purchase the shares allocated to the apartment, pursuant to an offering plan in existence at the time of the lessee's death, pass to the lessee's estate, or does the right expire upon the lessee's death? This is the crucial issue to be resolved upon this appeal.

We conclude that the right passes to the estate of the deceased.

I.

On June 15, 1981, the plaintiff's decedent, Elaine De Christoforo, entered into a lease with the defendant landlord Shore Ridge Associates, for the rent-stabilized apartment no. 5E, at 9411 Shore Road, Brooklyn. The term of the lease was for three years, beginning July 1, 1981, and ending June 30, 1984, and the rental was $453 per month.

The defendant Shore Ridge Associates and the defendant sponsor, Shore View Corporation, submitted a noneviction plan for the cooperative conversion of the building at 9411 Shore Road, which was approved by the Attorney-General. Thereafter, while the plaintiff's decedent was still alive, an offering of conversion to cooperative ownership was made to the tenants of the building, pursuant to General Business Law § 352-eeee.

On March 31, 1984, the plaintiff's decedent died without having exercised her right to purchase the shares allocated to her apartment. The plaintiff, who is the decedent's son, was appointed the executor of her estate on May 29, 1984. The plaintiff continued to pay rent for the apartment for May and June 1984. These rental payments were accepted by the defendant landlord. The plaintiff also attempted, within the requisite time period, i.e., prior to the expiration date of the offering, to tender a deposit for the purchase of the shares allocated to his mother's apartment at the insider's price. However, these attempts were consistently rejected by the landlord on the ground that the right to purchase the cooperative apartment at the insider's price lapsed on the death of the tenant named in the lease. In addition, the defendant landlord instituted a proceeding in the Civil Court, Kings County, to evict the executor as a squatter.

The instant action was commenced by the plaintiff for (1) a judgment declaring that the estate had the right to purchase the shares allocated to the apartment formerly occupied by his mother, (2) an injunction prohibiting the defendants from disposing of, in any way, the shares allocated to apartment no. 5E, except to the plaintiff, and (3) an injunction staying the Civil Court proceeding.

In conjunction with the action, the plaintiff moved for a preliminary injunction. In several opposing affidavits, the president of the defendant Shore View Corporation, and the defendants' counsel again alleged that the offering had been made solely to the tenant, i.e., to the plaintiff's decedent, and not to the plaintiff, who was the executor of the decedent's estate.

After all of the affidavits in support of, and in opposition to, the plaintiff's motion for a preliminary injunction were submitted, the defendants served an answer on September 24, 1984.

Thereafter, Special Term, in effect, treated the plaintiff's motion for a preliminary injunction as one for summary judgment, granted the motion, and directed the defendants to:

"convey and transfer the shares of stock of the Cooperative Apartment # 5E located at 9411 Shore Road, Brooklyn, New York to the Estate of Elaine De Christoforo provided plaintiff comply with all payments required to be paid to defendant in the same manner and in the same amount that the said Elaine De Christoforo, deceased, would have had to pay".

Special Term also stayed the eviction proceeding pending in the Civil Court, Kings County.

II

It is well settled in New York, and in other jurisdictions as well, that:

"A lease for a term of years is not terminated by the death of the lessee prior to the expiration of the term; the lease passes as personal property to the estate which remains liable for payment of the rent (Schnee v. Jonas Equities, 109 Misc.2d 221 ). An executor is justified in holding on to the premises in his representative capacity until the expiration of his decedent's term and is under no duty to surrender possession prior thereto (Remford Corp. v. Rosenfeld, 274 App.Div. 769 )" (Joint Props. Owners v. Deri, 127 Misc.2d 26, 27, 488 N.Y.S.2d 948, revd. on other grounds, 113 A.D.2d 691, 497 N.Y.S.2d 658; see also, EPTL 13-1.1; 2 Rasch, New York Landlord and Tenant § 1016 [2d ed.]; 34 N.Y.Jur., Landlord and Tenant § 358; 49 Am.Jur.2d, Landlord and Tenant § 7, at p. 50).

As the Appellate Term stated in Schnee v. Jonas Equities, 109 Misc.2d 221, 222, 442 N.Y.S.2d 342:

"[T]he estate replace[s] the deceased tenant as a party to the lease by operation of law."

As a corollary to those well settled principles, both the courts of this State and several of our sister states have held that the personal representative of the deceased lessee takes the leasehold together with the benefit of any option to purchase contained in the lease, and the option may be enforced by the personal representative (see, Walker v. Bradley, 89 Misc. 516, 153 N.Y.S. 686; Gustin v. Union School Dist., 94 Mich. 502, 54 N.W. 156; Hagar v. Buck, 44 Vt. 285). As the court in Walker v. Bradley (supra, at p.p. 518-519), stated:

"Plaintiff's intestate held a lease for years which contained an option for purchase which, at his death, had not been exercised. This option was not a contract of sale, but simply a covenant running with the land (McAdam Landl. & Ten. [3d ed.] 465), and under well understood principles, in the absence of any limitation contained in the lease itself, it inured to the benefit of whomsoever might come in under the original lessee.

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"All such leases and all rights thereunder are to go to and belong to the personal representative, and this includes covenants contained in such instruments, whether running with the land, or otherwise. The ownership of a lease carries with it, of necessity, as has been above pointed out, the power to enforce same in accordance with its terms for the benefit of the estate of the decedent and those who are entitled to the proceeds thereof.

"It follows, therefore, that this plaintiff being the owner of a lease which contains an option for purchase of the land, is entitled to exercise that option for the benefit of the estate which she represents, and upon refusal of the lessors to comply with their covenant is empowered to, in her representative capacity, maintain this action for its enforcement."

In the case at bar, the option is not contained in the lease itself. Nevertheless, that distinction does not mandate a departure from the general rule heretofore set forth.

General Business Law § 352-eeee(2)(d)(ix) provides that "tenants in occupancy on the date the attorney general accepts the plan [for conversion to cooperative or condominium ownership] for filing shall have the exclusive right to purchase their dwelling units for the shares allocated thereto". This provision is "repeated in essence" (Consolidated Edison Co. of N.Y. v. 10 West 66th St. Corp., 61 N.Y.2d 341, 346 N.Y.S.2d 267, 462 N.E.2d 367) in section 61(4)(b) of the Code of the Real Estate Industry Stabilization Association of New York City, Inc. (Rent Stabilization Code), which provides that: "[a] tenant in occupancy at the time of the offering shall have the exclusive right to purchase his apartment or the shares allocated thereto". It has been consistently held that the phrase "tenant in occupancy" is defined, for the purposes of purchasing the shares allocated to an apartment upon a cooperative conversion thereof, as the lessee of record, whose name appears on the lease (see, Ian v. Wassberg, 80 A.D.2d 505, 434 N.Y.S.2d 416, affd 55 N.Y.2d 706, 447 N.Y.S.2d 137, 431 N.E.2d 622; Burns v. 500 East 83rd St. Corp., 90 A.D.2d 706, 455 N.Y.S.2d 742, affd. 59 N.Y.2d 784, 464 N.Y.S.2d 728, 451 N.E.2d 475; Spitalnik v. Springer, 87 A.D.2d 797, 449 N.Y.S.2d 502, mod. on other grounds 59 N.Y.2d 112, 463 N.Y.S.2d 750, 450 N.E.2d 670). The term "time of the...