Opinion
55235/06.
Decided May 5, 2006.
Cornicello Tendler, LLP, BY: David B. Tendler, Esq. New York, NY, Petitioner's Attorney.
Laurence Reinlieb, Esq., BY: Lawrence Reinlieb, Esq., New York, NY, Respondent's Attorney.
Respondent moves to dismiss this summary non-payment proceeding pursuant to CPLR 3211(a)(1) on the basis of Petitioner's failure to offer a preferential rent in the most current lease renewal in violation of the preferential rent rider of the initial lease. Respondent, further, seeks attorney's fees if she prevails.
Respondent resides in the rent stabilized Apartment No. 1-B located at 56 West 65th Street, New York, NY 10023, pursuant to an initial lease term of 12/1/02 through 11/30/04. The initial lease dated January 8, 2003, included a preferential rent rider. See Respondent's Exhibit #A. The preferential monthly rent for the initial lease was $1,200.00 with a legal regulated rent of $1,337.50. The second lease renewal for the term 12/1/04 through 11/30/05 was renewed on the same terms and conditions of the initial lease with a preferential rent renewal option.
On or around August 2005, Petitioner sent Respondent the third lease renewal. This third lease renewal, unlike the prior leases, did not offer the preferential rent but the higher legal regulated rent. On or around September 14, 2005, Respondent signed, dated and returned the renewal lease to Petitioner for a two-year term with a check for the increased security deposit. No changes were made by Respondent to the offered renewal lease. Sometime prior to December 1, 2005, Respondent sought to rescind and reject the offered renewal lease. She sent a letter to Petitioner advising that the rent increase which Petitioner had offered was in excess of statutory limits. She enclosed a rent check representing what she calculated to be the lower preferential rent for the renewal term and requested the return of her additional security deposit. While Respondent's letter to Petitioner is undated, it is undisputed that Respondent notified Petitioner of her rejection prior to the renewal lease effective date of December 1, 2005. Petitioner, by letter dated December 1, 2005, returned Respondent's check for the preferential rent and enclosed a DHCR fact sheet explaining a landlord's right to abandon a preferential rent. Thereafter, Respondent served and filed this motion to dismiss.
The 2003 Amendment of the Rent Stabilization Law § 26-511(c)(14) provides:
. . . where the amount of rent charged to and paid by the tenant is less than the legal regulated rent for the housing accommodation, the amount of rent for such housing accommodation which may be charged upon renewal or upon vacancy thereof may, at the option of the owner, be based upon such previously established legal regulated rent, as adjusted by the most recent applicable guidelines increases and any other increases authorized by law.
The 2003 Amendment does permit owners to discontinue a preferential rent and to assume charging the legal regulated rent upon a renewal lease. See, Colonnade Mgt., LLC v. Warner, 11 Misc 3d 52, 53 (App Term, 1st Dept 2006). While the 2003 Amendment makes preferential rents revocable, the Court must carefully review the terms of the original lease and preferential rent rider to determine the intent of the parties when entering the contract. A lease is a contract and by its terms forms the conditions of the tenancy. If the landlord and tenant agree in an original lease with a preferential rent rider to a preferential rent to last for the duration of the tenancy, then, both parties are bound to the original lease agreement in its entirety. Id. at 53 citing, Aijaz v. Hillside Place, LLC, 3 Misc 3d 754 (Civ.Ct. Queens 2004) aff'd as modified 8 Misc 3d 73 (App Term 2nd 11th 2005); See also, Scherer, Residential Landlord and Tenant in New York § 4:117. The entire initial agreement is the basis upon which the landlord and tenant relationship is formed with justifiable reliance of enforcement and continuance of all four corners of the agreement throughout the tenancy.
The Appellate Courts in both the First and Second Departments make clear that the 2003 Amendment to the RSL does not preclude the parties from charting their course of the landlord and tenant relationship in a lease and agree to a rent preference for a designated time period. See, Colonnade Mgt., LLC v. Warner, 11 Misc 3d 52 supra, at 53 citing, Aijaz v. Hillside Place, LLC, 3 Misc 3d 754, supra. See also, 448 W. 54th St. Corp. v. Doig-Marx, 11 Misc 3d 126A (App Term, 1st Dept 2006) affg 5 Misc 3d 405 (Civ Ct. NY 2004). In each case, the Appellate Court looks at the initial lease with the preferential rent to determine what was the promise made when offering the preferential rent and for what duration. Where the initial lease and the preferential rent rider state that the option is for a limited time period, the owner has the right to discontinue offering the preferential rent at the expiration of the limited term. However, where the initial lease and the preferential rent rider state that the option continues through the tenancy, the owner relinquishes the right to discontinue offering the preferential rent in renewal leases as long as the tenant remains in occupancy. Therefore, where the parties' intent is clearly and unambiguously manifested in the written agreement, the agreement controls and tenant is entitled to the benefit of the preferential rent provision throughout his tenancy if the agreement so provides. See, Colonnade Management, LLC v. Warner, supra.
In this proceeding, the original lease included the following preferential rent rider which states, inter alia, that . . .
"If Renter chooses to renew the terms of this lease, this preferential rent amount, plus all other lawful increases, shall be used to calculate all applicable increases to establish the renewal rent. Thereafter, each successive renewal rent shall be calculated based upon increases to the most recently established renewal rent for as long as the Renter remains in occupancy . . ."
This language in the rider is clear and unambiguous that Respondent is entitled to the benefit of the preferential rent through the duration of her tenancy. Petitioner opposes and relies on the section of the preferential rent rider clause which states ". . . the preferential rent, plus all other lawful increases, shall be used to calculate all applicable increases . . ." (Emphasis added) However, when interpreting the rider, the Court must look to the preferential provision in its entirety. The following sentence reads that ". . . each successive renewal shall be calculated based upon increases to the most recently established renewal for as long as the Renter remains in occupancy." The complete provision of the preferential rent rider, therefore, establishes Respondent's right to the benefit of the preferential rent throughout the duration of her tenancy. Assuming there is an ambiguity in this clause, which this Court does not find, the general rule is that any ambiguity in a contract is construed against the drafter. See, 151 West Associates v. Printsiples Fabric Corp., 61 NY2d 732 (1984). In this case, it would be Petitioner.
The fact that Petitioner offered and Respondent signed and returned the current renewal lease without the preferential rent is not deemed a waiver. The offered renewal lease without the same terms and conditions as the initial lease was not a proper offer to renew and is a nullity. See, Matter of Century Operating Corp. v. Popolizio, 90 AD2d 731 (1982), rev'd on other grounds, 60 NY2d 483 (1983). Second, Respondent timely rejected the alleged offer before commencement of the renewal lease term. Lastly, pursuant to Rent Stabilization Code (hereinafter "RSC") § 2520.13 an agreement by the tenant to waive the benefit of any provision of the RSC is void. See, Draper v. Georgia Properties, Inc., 94 NY2d 809 (1999). A tenant cannot waive the benefit of any provision of the RSC unless there is a negotiated settlement between the parties and with the approval of DHCR, or a Court of competent jurisdiction or where a tenant is represented by counsel. See, RSC § 2520.13.
Based on all of the above, the Court finds that Petitioner failed to offer a proper renewal lease on the same terms and conditions of the original lease with a preferential rent. Therefore, the offered renewal lease is deemed null and void.
Accordingly, Respondent's motion to dismiss the proceeding is granted. Petitioner is directed to offer Respondent a proper rent stabilized renewal lease based on the lower preferential rent for the lease term 12/1/05 to 11/30/07 within fifteen days from notice of entry.
This case is restored to the Part G calendar for June 7, 2006 at 2:15pm for an attorney's fees hearing.
This constitutes the decision and order of this Court.