ZB Prospect Realty LLC v. France
| Decision Date | 14 September 2020 |
| Docket Number | Index # 56349/2019 |
| Parties | ZB PROSPECT REALTY LLC, Petitioner, v. DENEICE FRANCE, Respondent. |
| Court | New York Civil Court |
DECISION AND ORDER
ZB Prospect Realty LLC, the petitioner in this proceeding ("Petitioner"), commenced this holdover proceeding against Deneice France,1 the respondent in this proceeding ("Respondent"), seeking possession of 846-48 Prospect Place, Apt. 4, Brooklyn, New York ("the subject premises") on the basis of a termination of a month-to-month tenancy. Respondent interposed a counterclaim of rent overcharge by an answer verified on April 1, 2019. Petitioner then discontinued this proceeding. The proceeding continues on Respondent's counterclaim. The Court held a trial of this matter on September 1, 2020.
Undisputed facts
A number of the pertinent facts to this case are undisputed. An I-card2 for the building in which the subject premises is located ("the Building") shows that it was constructed before certificates of occupancy were required. The I-card shows that the Building has four floors forresidential purposes, no basement, and a cellar for non-business storage purposes. A managing member of Petitioner ("Landlord") has either owned the Building in his own name or through corporate entities under his control since 2003. Landlord currently owns more than ten buildings, although he did not own ten buildings in 2012. At some point before 2012, Petitioner was the beneficiary of a tax abatement pursuant to N.Y.C. Admin. Code §11-243 known colloquially as a "J-51," which remained in effect through 2012.
Throughout this time and up to the present, the subject premises has been subject to the Rent Stabilization Law. In 2011, pursuant to 9 N.Y.C.R.R. §2528.3, Petitioner registered with the New York City Division of Housing and Community Renewal ("DHCR") a two-year rent-stabilized lease commencing February 1, 2010 with a monthly rent of $1,227.00, the last such registration Petitioner effectuated for this case until August 15, 2019, after Respondent's interposition of her counterclaim during the pendency of this matter. Three one-year leases for the subject premises ensued, none of which with any riders relating to the Rent Stabilization Law, all with different sets of tenants: the first commenced on October 15, 2012 with monthly rent of $3,700.00 ("the first lease"); the second commenced on October 1, 2013 with a monthly rent of $4,100.00 ("the second lease"); and a third commencing February 1, 2017 with a monthly rent of $4,200.00 ("Respondent's lease"). Respondent is one of five co-tenants on the lease commencing February 1, 2017.
Petitioner's rent history shows that the tenant of the second lease paid $3,285.00 from October through December of 2014, $3,141.00 in January of 2015, $3,100.00 in February of 2015, $4,100.00 from March through December of 2015, and $4,120.00 in January of 2016.
Both parties introduced evidence of individual apartment improvements ("IAI") pursuant to 9 N.Y.C.R.R. §2522.4(a)(1) that Petitioner purported to have effectuated in the subject premises in 2012. Respondent introduced into evidence an application that Petitioner had filed with the New York City Department of Buildings ("DOB") on June 14, 2012 ("the Application"). The Application states, inter alia, that the estimated total cost of the job would be $357,500.00' that the job consisted of an interior renovation of apartments and work on the basement as well as the first, second, third, and fourth floors of the Building; that the Building has twenty units; that the Building is not subject to the Rent Stabilization Law; and that DOB approved the Application on August 24, 2012. Respondent also introduced into evidence work permit data issued by DOB, which shows that a permit was filed on August 29, 2012 with a proposed start date of November 19, 2012, and that the permit issued on November 19, 2012.
Respondent introduced into evidence a document signed by Petitioner and a contractor, dated July 24, 2012, that purported to call for a gut renovation of the subject premises for $100,000, with "complete" demolition, new plumbing, new electricity, a new HVAC system, a new kitchen, new bathrooms, new wood floors, new framing and sheetrock, painting, a stairway, and door knobs. Respondent introduced into evidence canceled checks with no apartment number or address written on the checks that Petitioner paid the contractor, one dated September 23, 2012 for $50,000, one dated October 16, 2012 for $25,000, and one more dated October 20, 2012 for $25,000. Respondent introduced into evidence receipts for these payments that the contractor provided to Petitioner that refer to the subject premises, dated the same days as the checks are dated.
Petitioner introduced into evidence a work permit that DOB issued for the Building, a DOB letter of completion stating that the work done pursuant to the Application was completed on January 10, 2014 and that a new certificate of occupancy ("C of O") would not be required, and drawings that an architect submitted to DOB ("the drawings") that showed that the subject premises, along with one other apartment in the Building ("the other duplex apartment"), were to be a duplex apartments on the first floor. The drawings revealed that Petitioner was planning to renovate a total of nine apartments in the Building.
Testimonial evidence
Landlord testified that he first learned that the Building had a J-51 tax abatement when his attorney told him that he did; that he did not understand what that meant; that he now understands what that means, that the Building has to be registered as rent-stabilized; that he did not register the Building when he started getting J-51 benefits; that he gut-renovated the subject premises; that a general contractor engaged in demolition, took everything out, put in brand new walls, new floors, new toilets, and new electric; that he spent $100,000 on the subject premises; that he added a vacancy allowance of 16.5% to the prior rent-stabilized rent, added $2,500.00 as one-fortieth the cost of the renovation, which he referred to as an "IAI," and was left with a rent was $3,700; that he thought that he was legally able to deregulate the subject premises and stopped registering the subject premises at this time; that he did not know when he had to provide riders for deregulated leases; and that he did not remember how he arrived at a rent of $4,100 for the lease that commenced in October of 2013.
Landlord testified on cross-examination that he has spent his adult life in the real estate business; that he did not know about a rider required for IAI's; that he did not remember what year he started getting a J-51 tax abatement; that he had to have applied for a J-51 tax abatement;that he knew that he had a J-51 tax abatement but that he did not know about restrictions on deregulation until his attorney told him about that; that he does not know the architect who prepared the drawings; that his expediter hired the architect; that there are three bedrooms in the lower level of the subject premises; that the cellar was used for storage before 2012; that there is no C of O for the Building; and that he changed the use of the cellar and created a new exit on the lower floor without getting a new C of O.
Preliminary rent overcharge analysis
Respondent interposed her counterclaim on April 1, 2019, before the passage of the Housing Stability and Tenant Protection Act ("HSTPA") on June 14, 2019. Respondent did not pay any rent after June 14, 2019 according to the rent history in evidence. The record therefore does not show that Petitioner collected any rent overcharges on or after the passage of HSTPA. Accordingly, the time frames in the law prior to the passage of HSTPA apply to this matter. Matter of Regina Metro. Co., LLC v. N.Y. State Div. of Hous. & Cmty. Renewal, 2020 N.Y. Slip Op. 02127 (Court of Appeals). Under pre-HSTPA law, the legal regulated rent for the purposes of determining an overcharge was the rent charged on the base date, plus subsequent lawful adjustments. 9 N.Y.C.R.R. §2526.1(a)(3)(i). The base date is four years prior to the filing of a rent overcharge claim. 9 N.Y.C.R.R. §2520.6(f)(1). Service and filing of an answer has the same effect for this purpose as the filing of a rent overcharge complaint. Autopark, Inc. v. Bugdaycay, 7 Misc.3d 292, 297 (Civ. Ct. N.Y. Co. 2004), citing 78/79 York Assocs. v. Rand, 180 Misc.2d 316 (App. Term 1st Dept. 1999). As Respondent's answer is verified on April 1, 2019, the base date would be April 1, 2015.
A landlord bears the burden of proving the base date rent. Matter of Mangano v. N.Y. State Div. of Hous. & Cmty. Renewal, 30 A.D.3d 267, 267 (1st Dept. 2006), Matter ofLexington House LLC v. N.Y. State Div. of Hous. & Cmty. Renewal, 31 Misc.3d 1215(A), (S. Ct. N.Y. Co. 2011), EMO Realty Partners v. Herrera, 2018 N.Y.L.J. LEXIS 1670, *5 (Civ. Ct. N.Y. Co.). Although no lease was in effect on April 1, 2015, the rent history shows that, as of April of 2015, the tenants on the second lease consistently paid $4,100.00 per month, which Petitioner accepted, which suffices to show the base date rent. Fink v. Ross, 1994 N.Y.L.J. LEXIS 9360, *25 (Civ. Ct. Kings Co. 1994). The monthly rent on the second lease also was $4,100.00, for what it's worth.
Respondent's lease that followed was a one-year lease commencing on February 1, 2017. The law in effect at that time permitted Petitioner to raise the rent by twenty percent less the difference between an increase for a one-year and a two-year renewal applicable to the previous lease. N.Y.C. Admin. Code §26-511(c)(5-a),3 9 N.Y.C.R.R. §2522.8(a)(2), Lirakis v. 180 Seventh Ave. Assocs., LLC, 12 Misc.3d 1173(A)(Civ. Ct. N.Y. Co. 2006). The Rent Guidelines Board ("RGB") sets the applicable...
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