NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS. In the Matter of 67 VESTRY STREET LLC Petitioner REPORT AND RECOMMENDATION

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1 Matter of 67 Vestry Street LLC OATH Index No. 1419/09 (April 30, 2009), adopted, Loft Bd. Order No (Sept. 17, 2009) [Loft Bd. Dkt. No. LB Vestry Street, N.Y., N.Y.] Petitioner seeks deregulation of unit because the unit was abandoned by tenant, who sublet the unit without permission. Owner brought holdover proceeding against tenant and subtenant and obtained judgment of possession. Because protected tenant had vacated the unit before a warrant of eviction was executed, application should be granted. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of 67 VESTRY STREET LLC Petitioner REPORT AND RECOMMENDATION FAYE LEWIS, Administrative Law Judge This is an application brought by 67 Vestry Street LLC ( 67 Vestry ), the owner of the interim multiple dwelling at 67 Vestry Street, New York, New York, pursuant to the Loft Law, section 282 of the Multiple Dwelling Law ( MDL ), and section 1-06 of the Loft Board rules. Petitioner seeks a finding that unit 3SW was deregulated because the premises was abandoned by Raz Degan, the tenant of record. The application was filed with the Loft Board on January 26, 2006, and served upon interested parties by mail on February 7, An answer was filed by the current tenants of unit 3C, Veronique Nguyen and Paul Klein, on March 14, On October 16, 2008, the Loft Board referred the matter to this tribunal for a hearing and report. On November 13, 2008, this tribunal directed petitioner s counsel to make a diligent search to locate Mr. Degan, and file an amended application with alternative addresses for Mr. Degan. The owner filed the amended application on December 4, The Loft Board served a copy of the amended application on all interested parties on December 18, After no additional answers were received, a combined notice of trial and notice of default was served on all affected parties on January 23, The notice of default informed those who failed to answer the application that they would

2 - 2 - be barred from participating in the proceeding unless they moved to vacate their default within 30 days. No party moved to vacate the default and no one appeared at the hearing other than petitioner. Accordingly, on February 25, 2009, the hearing proceeded as an inquest. Petitioner presented the testimony of Neil Ritter, Vice-President and General Counsel of Classic Realty, LLC ( Classic ), the agent for petitioner; and Stanley Leibowitz, an employee of Classic charged with overseeing the management of the building. The record was left open until March 13, 2009, for petitioner s attorney to submit a memorandum of law on the effect of an order of eviction on an abandonment application. ANALYSIS Petitioner 67 Vestry purchased the subject building on April 1, 2005, from David Ellis Real Estate, L.P. (Pet. Ex. 5). At the hearing, Mr. Leibowitz explained that whenever there is a change of ownership of a building, Classic s policy is to provide notice of the change to all tenants within the building and to inspect each unit. In May 2005, Mr. Leibowitz sought to inspect unit 3SW, which had been leased to Mr. Degan. A woman opened the door to the apartment and introduced herself as Leslie Porter. Mr. Leibowitz told her that he was there to see Mr. Degan. She told him that Mr. Degan had left the apartment approximately one year earlier, taking with him all of his personal belongings and property, and that he had given the apartment to her (Tr. 10). Ms. Porter added that Mr. Degan had gone to Italy to participate in the production of a movie and did not intend to return (Tr. 20). Mr. Leibowitz testified that Ms. Porter never paid rent for the unit (Tr. 14). Mr. Leibowitz subsequently spoke to the building s superintendent, Mr. Kamaro, whose employment at the building predated the April 2005 transfer of ownership. Mr. Kamaro confirmed that Mr. Degan had left the building approximately a year to a year and a half earlier and had not been seen since (Tr ). Petitioner initiated a holdover proceeding against Mr. Degan and Ms. Porter in September 2005 (Pet. Ex. 7). While Ms. Porter made an appearance in court, Mr. Degan did not, and petitioner obtained a final judgment of possession. On December 6, 2005, the marshal evicted Ms. Porter from the unit and delivered possession to the landlord (Pet. Ex. 8). 1 Ms. Porter left no 1 Petitioner marked both exhibit 8 (the marshal s notice of possession) and exhibit 9 (the to vacate form ) for identification at trial, but failed to move them into evidence. They are hereby admitted, sua sponte.

3 - 3 - possessions in the unit, having arranged to have some items packed and moved prior to vacating (Tr. 14). At the time of the eviction, Mr. Degan owed $16,500 in past rent (Tr. 16; Pet. Ex. 9). In addition, the landlord incurred additional legal, marshal, and moving fees associated with the eviction, totaling approximately $4,400 (Tr. 16). According to Mr. Leibowitz, Mr. Degan did not contact petitioner after the eviction (Tr. 16). Mr. Degan initially entered into a lease for his unit with the building s prior owner in January The lease ran until January 31, 2004, at which time it was extended for an additional year, expiring on January 31, 2005 (Pet. Ex. 6). The lease provided that Mr. Degan would make at least $15,000 worth of improvements to the premises, including installing a new tub, sink, toilet, shower, and tiling in the bathroom area; a new sink countertop, cabinets, and appliances in the kitchen area; and removing walls and repairing the floor (Pet. Ex. 6 51, 55). The lease also provided that the landlord would paint the premises and install a new refrigerator and washer/dryer, or give the tenant a $4000 rent credit to perform this work (Pet. Ex. 6 50). Mr. Leibowitz testified that there was no evidence that Mr. Degan had performed any work on the premises after he had moved in. The appliances that were in the unit when petitioner retook possession looked to be between ten and fifteen years old, predating the time of Mr. Degan s lease. Considering the rent owed to petitioner by Mr. Degan, Mr. Leibowitz valued those fixtures as worthless (Tr ). He also testified that in order to re-rent, the entire premises would have to be scraped, plastered, primed and painted, and a new dishwasher, refrigerator, and stove installed (Tr. 18). Mr. Ritter provided copies of eight photographs he took of the unit the day before the hearing (Pet. Ex. 2a-h). None of these photographs are of the kitchen. One photograph is of the bathroom. This shows that one of the walls, above the sink, is partially demolished, with piping visible (Pet. Ex. 2d). Other photographs show broken or missing floor tiles (Pet. Ex. 2a), and planks and other pieces of wood leaning against a wall (Pet. Ex. 2b). Also depicted was a door in need of painting (Pet. Ex. 2c), and floors with small amounts of debris (Pet. Exs. 2a-b, 2f-2h). The Loft Board s abandonment rule, 29 RCNY 2-10(f), defines abandonment as the relinquishment of possession of a unit and all rights relating to a unit... voluntarily, with the intention of never resuming possession or reclaiming the rights surrendered. Under section 2-10(f)(4), the Loft Board may consider the following factors in determining whether a unit has been abandoned: (1) the length of time since the alleged abandonment; (2) whether the occupant

4 - 4 - owed rent at the time of the alleged abandonment and whether the owner attempted to collect that rent through court proceedings; (3) whether the occupant s lease had expired; (4) whether the occupant gave notice of intent to vacate or requested permission to sublet; (5) whether the unit contained improvements and whether the occupant was reimbursed for those improvements; (6) whether the Loft Board had made any harassment findings or whether any harassment application is pending; (7) whether the Loft Board had issued any violations of the minimum housing maintenance standards; (8) whether the owner had attempted to locate the occupant or purchase rights pursuant to MDL section 286(12) or improvements pursuant to MDL 286(6); and (9) whether an inspection of the unit by the Loft Board indicates that the unit is currently vacant. It is the owner s burden to prove abandonment by a preponderance of the evidence. Matter of 1314 Development, LLC, OATH Index No. 1804/07 at 4 (June 21, 2007), adopted, Loft Bd. Order No (Jan. 15, 2009). Respondents Klein and Nguyen, tenants in a neighboring unit in the building, assert in their answer that because petitioner s application alleges that Mr. Degan was evicted by the City Marshall [sic], the application should not be granted, as a finding of abandonment cannot be predicated upon an eviction under the Loft Board s eviction rules. This argument misconstrues the facts of this case. The Loft Board s eviction rules provide that [a]ny unit which becomes vacant as a result of the eviction of a protected occupant... shall remain subject to all the requirements of Article 7-C, and rules and orders of the Loft Board, including the legalization requirements of 284 of the Multiple Dwelling Law and rent guidelines issued by the Loft Board. 29 RCNY (b) (emphasis added). Thus, where a protected occupant still residing in the unit is evicted, rent regulation continues to apply and there is no deregulation of the tenant s unit. However, the eviction rules do not govern when the protected tenant voluntarily vacates the unit prior to the eviction. In this situation, the tenant has already relinquished his rights to the apartment, and the Loft Board s abandonment rules apply. The eviction is merely the final step required for the owner to legally regain possession of the apartment, pursuant to sections of the Administrative Code and 711 of the Real Property Actions and Proceedings Law. 2 See 2 Administrative Code section provides: a. It shall be unlawful for any person to evict or attempt to evict an occupant of a dwelling unit who has lawfully occupied the dwelling unit for thirty consecutive days or longer or who has entered

5 - 5 - Mitchell v. New York, 154 Misc. 2d 222 (Civ. Ct. Kings Co. 1992) (ordering tenant be immediately returned to possession after landlord resorted to self-help and locked tenant out of apartment without court involvement); 170 West 85th Street Tenants Assoc. v. Cruz, 173 A.D.2d 338 (1st Dept. 1991) (absent surrender of possession by tenant who no longer lived in the apartment, landlord was obligated to obtain judgment of possession against tenant and could not proceed directly against undertenant); P.S. 85 th Street F.L.P. v. Demos, 17 Misc. 3d 1139A (Civ. Ct. Kings Co. 2007). Therefore, where a protected tenant voluntarily vacates a unit prior to the execution of a warrant of eviction by the city marshal, the owner is still entitled to a finding of abandonment if the criteria set forth in the abandonment rule are satisfied. See Matter of Twenty-Nine Second, LLC, OATH Index No. 1431/01 (Apr. 3, 2001), adopted, Loft Bd. Order No (Apr. 24, 2001) (granting abandonment application where protected tenant vacated unit, leaving illegal subtenant, prior to execution of warrant of eviction); see also Matter of Mandara, OATH Index No. 1635/09 (Mar. 3, 2009); Matter of Vitale, OATH Index No. 1467/00 (Apr. 3, 2000), adopted, Loft Bd. Order No (June 29, 2000); Matter of Brady Properties, Loft Bd. Order No (Apr. 25, 1996). Here, the evidence demonstrates that Mr. Degan voluntarily abandoned unit 3SW in 2004 or early 2005, approximately one to one and a half years prior to the execution of a warrant of eviction by the city marshal. The evidence is clear that Mr. Degan did not reside in the unit since sometime in 2004 or early 2005 and allowed his written lease to expire on January 31, No one besides Ms. Porter knew where he went, and she was only able to provide a vague answer that he had gone to Italy and did not intend to return. There was no evidence that Mr. Degan intended to return to the unit, despite his having had multiple opportunities to answer the application. into a lease with respect to such dwelling unit... except to the extent permitted by law pursuant to a warrant of eviction or other order of a court of competent jurisdiction.... b. It shall be unlawful for an owner of a dwelling unit to fail to take all reasonable and necessary action to restore to occupancy an occupant of a dwelling unit who either vacates, has been removed from or is otherwise prevented from occupying a dwelling unit as the result of any of the acts or omissions prescribed in subdivision a of this section and to provide to such occupant a dwelling unit within such dwelling suitable for occupancy, after being requested to do so by such occupant or the representative of such occupant, if such owner either committed such unlawful acts or omissions or knew or had reason to know of such unlawful acts or omissions, or if such acts or omissions occurred within seven days prior to such request. Real Property Actions and Procedure Law section 711 provides that [a] tenant... who has been in possession for thirty consecutive days or longer... shall not be removed from possession except in a special proceeding.

6 - 6 - Mr. Degan does not retain protection as a protected occupant merely because he purportedly gave the apartment to Ms. Porter. Mr. Leibowitz testified that the files of the previous building owner did not include any request from Mr. Degan to sublet or assign his unit (Tr. 18). Mr. Degan s lease prohibited him from subletting his apartment, assigning the lease, or permitting any person to use the apartment without first obtaining permission from the landlord (Pet. Ex. 6 12). The evidence establishes that he did not seek such permission before he permitted Ms. Porter to reside in his unit. Moreover, a subtenant, such as Ms. Porter, who takes possession without the consent of the landlord, is not protected. See Korn v. Batista, 131 Misc. 2d 196 (Sup. Ct. N.Y. Co. 1986), aff d, 123 A.D.2d 526 (1st Dep t 1986) (subtenants who come into residency after June 21, 1982, without landlord s consent are not protected occupants); Matter of McLean, OATH Index No. 105/96 (June 25, 1996), aff'd, Loft Bd Order No. 2000, 16 Loft Bd. Rptr. 277B (Sept. 26, 1996) (subtenants who take occupancy after June 21, 1982, are entitled to protection only if they take possession with the owner s consent). Thus, Ms. Porter s physical eviction does not preclude a finding of abandonment against Mr. Degan, the protected occupant. There was also credible testimony that the appliances in the unit appeared to predate Mr. Degan s lease and that major improvements would have to be made in the unit before it could be re-rented. Thus, the value of any fixtures installed by Mr. Degan, if any, is exceeded by the approximately $20,000 in rent arrears he owes and legal fees incurred by petitioner in evicting him. In these circumstances, where a tenant departs owing rent equal to or greater than the value of improvements made to the apartment, it would be inequitable for the landlord to lose both the unpaid rent and the right to deregulate the departing tenant s unit simply because the law requires the landlord to obtain a lawful eviction. See Matter of Sansone, OATH Index No. 1125/96 (Mar. 27, 1996), aff'd, Loft Bd. Order No. 1955, 16 Loft Bd. Rptr. 205 (Apr. 25, 1996); Matter of Swing, 180 A.D.2d 529 (1st Dep t 1992) (landlord entitled to decontrolled rent where tenant abandoned unit owing rent greater than the fair market value of the fixtures). Petitioner further submitted into evidence a February 12, 2009, letter from the Loft Board confirming that the Loft Board had not previously made any harassment findings against the unit or building, there are no harassment applications pending, and there are no outstanding violations pursuant to the Minimum Housing Maintenance Standards (Pet. Exs. 3, 4).

7 - 7 - Thus, considering the factors set forth in the Loft Board s abandonment rules, I find that Mr. Degan voluntarily relinquished his possession of unit 3SW and all rights relating to it prior to the execution of the warrant of eviction. I recommend that the Loft Board grant petitioner s application for a determination of abandonment as to unit 3SW of the subject premises at 67 Vestry Street, New York. FINDINGS AND CONCLUSIONS 1. Raz Degan was the protected residential occupant of unit 3SW at 67 Vestry Street, New York, New York. 2. Raz Degan voluntarily vacated the premises in 2004 or early 2005, which was before the warrant of eviction was executed on December 6, RECOMMENDATION I recommend that the Loft Board declare unit 3SW at 67 Vestry Street, New York, New York, to be abandoned. April 30, 2009 SUBMITTED TO: LANNY ALEXANDER Executive Director APPEARANCES: BORAH, GOLDSTEIN, ALTSCHULER, NAHINS & GOIDEL, P.C. Attorney for the Petitioner BY: DAVID R. BRODY, ESQ. No appearance by Respondent Faye Lewis Administrative Law Judge