Opinion
6356/06.
Decided August 25, 2006.
Petitioners, acting pro se, commenced this proceeding seeking an order directing respondent Pacific Management Co. to provide gas, heat and hot water. HPD issued violations on July 3, 2006, June 22, 2006 and May 17, 2006, inter alia, for the lack of gas to the kitchen fixtures and lack of hot water in apartments 1C, 2B and 3A at the building located at 387 Shepherd Avenue in Brooklyn.
Respondent moved to dismiss the proceeding stating that it leased the building to Shadow Housing, and pursuant to the terms of the lease Shadow Housing was responsible for all utilities including heat, hot water and cooking gas. Respondent added that the building was constructed with individual gas meters and boilers for each apartment.
Petitioners are now represented by counsel and the parties agreed to a motion schedule with a return date of October 5, 2006. Petitioners orally moved for an interim order directing respondents to provide gas and hot water.
Petitioners are participants in the Housing Stability Plus Program which is run by the NYC Department of Homeless Services. The program is designed to assist the participants in moving from the shelter into permanent housing by providing rent supplements for the payment of market rate rents.
In its motion papers, respondent owner 387 Shepherd Realty LLC submitted a copy of its master lease with Shadow Housing dated June 17, 2005 for the subject property. The term of this lease was ten years. Petitioners submitted copies of their leases with Shadow Housing. Paragraph six of petitioners' leases with Shadow Housing provides that the landlord is responsible to provide services including heat and hot and cold water as required by law. However, pursuant to the terms of that provision of the lease the tenants are responsible for electric and gas and other utility services in the apartments. Petitioners' leases also contain a Housing Stability Plus Rider (HSP) which included provisions that the tenant's public assistance shelter allowance and rent supplement under the HSP program would be paid to the landlord under certain conditions including a provision that rent would not exceed the amount in the lease for a period of twenty four months.
In addition to the parties, Joe Wright, a principal of Shadow Housing and Ms. Morgan, counsel for the Department of Social Services appeared in court on August 24, 2006. Copies of checks, from January 2006 to the present, representing rent payments to the owner on petitioners' behalf were presented to the court. In addition, a termination agreement dated December 30, 2005 executed by Shadow Housing and the respondent owner was also presented. This agreement provided that the tenant would assign its rights to the subtenants and the owner accepted rights to the subtenants. The agreement also gave the owner the exclusive rights to receive payment of rent from the subtenants. The owner does not dispute that it has been accepting direct payments of rent from the City of New York for petitioners since January 2006.
At oral argument the owner argued that the total amount of rent received from all the tenants is less than amount that it contracted for in the lease with Shadow Housing. Further, the owner states that it cannot be held responsible for the services in question since the terms of its lease with Shadow Housing required Shadow Housing to pay for these services.
As a general principle, the sublease is dependent upon the master lease for its existence. However, this principle is not controlling in the event that there is a surrender of the master lease. (See Kottler v. New York Bargain House, 242 NY 28, [1926]). The terms of the agreement indicate that Shadow Housing voluntarily surrendered the master lease in the termination agreement, and the termination agreement was not made pursuant to any terms contained in the master lease. Petitioners were also not parties to the termination agreement. Although the agreement explicitly states that Shadow Housing agreed that rent was owed to the owner, there is nothing in the termination agreement that reflects that the owner cancelled the lease as a result of a breach of its terms. Consequently, the tenants' sublease was not terminated and petitioners became tenants of the lessor, Ocean Grille v. Pell, 226 AD2d 603 (2nd Dept. 1996).
"The effect of a voluntary surrender is equivalent to a transfer of the reversion, the interests of the landlord and the tenant merge, and what remains is the landlord's fee subject to the subtenancy. Such subtenancy remains because the landlord may not affect the rights of third parties who are not parties to their surrender agreement." Precision Dynamics Corp. v. Retailers Representatives Inc., 120 Misc 2d 180 (1983) citing Ashton Holding Co. Inc. v. Levitt, 191 A.D. 91 (1st Dept. 1920), Eten v. Luyster, 60 NY 252 (1875).
The owner's acceptance of rent, in the amount stated in the sublease, from the subtenant created a landlord tenant relationship pursuant to the terms and conditions of petitioners' leases. (Rasch, New York Landlord and Tenant (4th ed. 1998) § 9.68). The owner's argument that it is not responsible for the terms that Shadow Housing contracted for is contradicted by the principle that the sublease runs with the land, and the lessor becomes responsible for covenants of the sublease, even though such covenants were not a part of the master lease. (see Rhinelander Real Estate Co. v. Cammeyer, 117 Misc. 67 (1921), Rasch, New York Landlord and Tenant (4th ed. 1998) § 9.68).
Based on the foregoing, this court finds that petitioners have shown the likelihood of success on the merits of the petition based on the substantial credible evidence which would be admissible at trial. Accordingly, petitioners' request for interim relief is granted pending final determination of the petition. Unless the respondent owner is able to rebut any of the findings made herein, it is bound by the terms of the leases signed by petitioners with Shadow Housing and must provide services pursuant to terms of those leases. Accordingly, the respondent is directed to provide hot water as required under the lease within forty eight hours after service of a copy of this order.