A trial was held before Civil Court Judge Gerald Lebovits, who issued a judgment of eviction in favor of the landlord. The court found that the tenant had “lied and recanted his testimony” both at trial and at a post-trial hearing, and concluded that the tenant had engaged in profiteering in connection with his stabilized apartment. The tenant thereafter appealed.

Appellate Term

On March 30, 2007, the Appellate Term, First Department, by a 2-1 margin, affirmed Civil Court. The majority, consisting of Justices Douglas McKeon and Martin Schoenfeld, credited Civil Court’s factual findings, and held that “the tenant’s commercial exploitation of his stabilized apartment required eviction . . . .”2 In so holding, Appellate Term favorably cited West 148 LLC v. Yonke, 11 Misc.3d 40, 812 N.Y.S.2d 735 (1st Dept. 2006), one of several Appellate Term decisions affirming an owner’s right under §2525.7(b) to evict a tenant found to have engaged in profiteering at the expense of a roommate.

Justice William P. McCooe dissented, observing that while §2525.7(b) prohibited a tenant from overcharging a roommate, it did not authorize a landlord to evict such a tenant. Justice McCooe favorably cited SBR Assocs. LLC v. Diederich,3 a 2003 determination of the Appellate Term for the Ninth and Tenth Judicial Districts, wherein that court noted that DHCR had taken the position that the code provision in question was intended to vest the roommate with the right to file a complaint against the tenant, but not to create an independent cause of action for eviction.

The Appellate Division

The case then moved to the Appellate Division, First Department. In a per curiam opinion joined by Justices Angela M. Mazzerelli, Richard T. Andrias and John W. Sweeny, Jr., the majority reversed Appellate Term and found for the tenant. The majority, echoing Justice McCooe’s analysis, wrote:

Since it became effective December 20, 2000, Rent Stabilization Code §2525.7(b) makes it a violation to charge a roommate more than a proportional share of the rent. However, unlike RSC §2525.6(f), which permits an owner to terminate the tenancy of the tenant who charges his subtenant more than the legal regulated rent plus no more than 10 percent if the apartment is sublet fully furnished, RSC §2525.7(b) does not provide for termination of the lease. Prior to enactment of RSC §2525.7, it was the firm rule in this Department that ‘[t]here is no cause of action for rent profiteering with respect to a roommate’ ( Handwerker v. Ensley, 261 AD2d 190, 191 [1999])” (internal citations omitted).


The majority then addressed an Appellate Term decision, West 148 LLC v. Yonke, supra, which stated outright that a tenant’s violation of §2525.7(b) was grounds for eviction, as well as an Appellate Division, First Department case, 54 Green St. Realty Corp. v. Shook,4 which seemed to imply such a result.

While the 20-year tenant, who originally moved into commercial space and invested thousands of dollars in improvements in order to gain rent stabilized status, concededly advertised for roommates in the Village Voice and charged them more than their proportional share of the rent, this is not a case like West 148 LLC v. Yonke, where the tenant rented a portion of the stabilized apartment at double the regulated rent to a series of guests or ‘roommates’ and described the apartment, in both an Internet listing for ‘Affordable Hotels’ and on her business card, as the ‘Chez Sylvie Bed & Breakfast.’ It is closer to 54 Green St. Realty Corp. v. Shook, where the tenant erroneously, but not unreasonably, believed that he was entitled to some compensation for the improvements he made to the former loft space. In any event, to the extent that those cases presuppose a cause of action for eviction by the landlord, they should not be followed.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]