With Rent-Stabilized tenants, a prime tenant cannot charge a roommate a rent that exceeds “such occupants’ proportionate share of the legal regulated rent.”[1] The same applies when a Rent-Stabilized tenant overcharges a subtenant or a transient occupant.[2] When a tenant has overcharged a sub-tenant, roommate, or transient occupant, a tenant as profiteered. As such, when a Rent-Stabilized tenant profiteers, Courts have declared such conduct to be an “incurable ground for eviction.”[3]

Profiteering: Non-Curable & No Notice to Cure Required

The Rent Stabilization Code, requires a Landlord to provide a Predicate Notice and Notice to Cure when the Petitioner-Landlord initiates an eviction holdover-proceeding.

Respondent-Tenants may not cure when they collect more from subletting than they owe in rent.[4] Therefore, a landlord would not be required to provide the tenant with a Notice to Cure when the tenant is profiteering.

By contrast, when a Rent-Stabilized tenant does not profiteering and has cured any potential overcharge, the tenant is not subject to eviction[5] Therefore, if a tenant has not profiteered, the tenant is entitled to a Notice to Cure, which the Landlord must serve. The Court writes:

“Rent-regulated tenants who rent out their apartments to transient individuals at rates higher than allowed by applicable regulations are engaged in conduct in the nature of subletting rather than taking in roommates, and engaged in conduct in the nature of profiteering, which is an incurable violation, for which no notice to cure is required. Aurora Assocs. LLC v. Hennen, 157 A.D.3d 608(1st Dept. 2018) (Emphasis added).

 

Profiteering: Curable by Tenant

There are some additional instances where profiteering under the rent-stabilization code has been held curable. Courts have found that when a tenant either refunds or offsets overcharged rent to a subtenant, before the landlord initiates an eviction proceeding, the tenant has cured and therefore, the tenant is not subject to eviction.[6]

The information above is intended to provide limited information only and is not legal advice. The laws relating to eviction, rent-stabilization, and profiteering, in New York are complex. If you are a party to a matter concerning an eviction holdover proceeding and otherwise need further guidance in this or a related area of law, SINGH & RANI, LLP can assist you.


[1] RSC § 2525.7(b)

 

[2] 42nd and Tenth Assoc. v. Ikezi, 46 Misc 3d 1219(A) (Civ Ct 2015),

 

[3] Peck v. Lodge,2003 WL 26094731 (Sup Ct New York County), (finding that the tenant’s use of the apartment as a B&B constituted a violation of a substantial obligation of her tenancy. The court rejected the tenant’s claim that her guests were actually roommates, in that these guests were “numerous, short-term, and restricted in their use of the apartment’s space. The record indicated that these guests were “charged sums which in the aggregate exceeded the legal monthly rent,” resulting in the commercialization of the apartment and profiteering. The court concluded that “profiteering, in the context of rent control and rent stabilization, has been declared to be an ‘incurable ground for eviction.’”

 

[4] 230 E. 48th St. LLC v. Campisi, 59 Misc.3d 148(A)(App. Term 1st Dept.2018)(the tenant collected 400 percent of her aggregate rent liability), Brookford,LLC v. Penraat, 47 Misc. 3d 723, 725-26 (S. Ct. N.Y. Co. 2014) (Edmead, J.)(the tenant collected 212 percent of her aggregate rent liability), 335-7LLC v. Steele, 2015 N.Y. Misc. LEXIS 4315, at *1-2 (Civ. Ct. N.Y. Co.2015), aff’d, 53 Misc.3d 150(A)(App. Term 1st Dept. 2016). Cont’l TowersLtd. P’ship v. Freuman, 128 Misc.2d 680, 680-81 (App. Term 1st Dept.1985)(the tenants collected more than 200 percent of their aggregate rentliability), W. 148 LLC v. Yonke, 11 Misc.3d 40, 41 (App. Term 1st Dept.2006)(the tenant collected 200 percent of her aggregate rent liability),Goldstein, supra, 150 A.D.3d at 565 (the tenant collected 172 percent of her aggregate rent liability).

 

[5] 230 E. 48th St. LLC,supra, 59 Misc.3d at 148(A), 54 Greene St. Realty Corp. v. Shook, 8A.D.3d 168 (1st Dept. 2004), appeal denied, 4 N.Y.3d 704 (2005)(an overcharge on a subject was “small” and the record did not contain evidence of bad faith or intent to profiteer), Ariel Assocs., L.L.C. v. Brown, 271 A.D.2d 369,369-70 (1st Dept. 2000). Cf. Roxborough Apartments Corp. v. Becker, 11Misc.3d 99, 100 (App. Term 1st Dept. 2006)(a total overcharge of roommates totaling107.4 percent, collectively, of the rent did not rise to a level of profiteering requiring eviction of the long-term tenant without giving him an opportunity to cure).

 

[6] Cambridge Dev. v. Staysna, 68 AD3d 614 (1st Dept. 2009); Ariel Assoc.v. Brown, 271 AD2d 369 (1st Dept. 2000); 672 Ninth Ave. v. Burbach,14 Misc 3d 1236(A) (Civ Ct 2007).

 

 

 

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Bikram Singh

Mr. Singh has been practicing law in the New York State and Federal Courts for almost 10 years. He was a principal attorney at Bikram Singh Law, P.C., after graduating with honors from Touro College Jacob D. Fuchsberg Law Center in 2008.