Recitation, as required by CPLR 2219(a), of the papers considered in review of; Respondent’s motion for a stay and petitioner’s cross motion for use and occupancy.Papers NumberedMotion To Dismiss 1Opposition And Cross Motion For U&O 2Reply Affirmation And Opposition To Cross Motion 3Reply Affirmation In Further Support Of Cross-Motion 4DECISION AND ORDER This matter is brought by petitioner as what is commonly referred to as a “no grounds” or “no fault” summary holdover proceeding. Petitioner seeks possession alleging that the subject premises are unregulated and respondents do not have a current lease. Respondents, by counsel, move to dismiss the proceeding pursuant to CPLR 3211 (a)(7) for failure to state a cause of action, on the basis of their claim that they have a current five year lease (Exhibit B to the moving papers). The purported lease runs from June 1, 2016 through May 31, 2021, for a monthly rent of $1,700. The lease is between respondents and petitioner’s predecessor deed holder-Angel Fund Group LLC.1 Annexed as Exhibit C is a copy of the deed indicating Angel Fund Group LLC’s ownership on June 1, 2016 when it entered into the lease with respondents. Ownership was transferred from Angel Fund Group to petitioner on or about May 18, 2017. Respondents have been in actual, open and notorious possession of the subject premises since their lease began on June 1, 2016.The only issue before the court on this motion to dismiss is whether the purported five year lease is binding and enforceable as against petitioner, the subsequent purchaser. If the lease is valid then this proceeding based upon a purported month-to-month tenancy would not lie and would be dismissed for failure to state a cause of action.It is undisputed that the lease is unrecorded. Leases for three years or longer are conveyances. RPL §290(3). The parties agree that generally, in order for a lease in excess of three years to be valid and binding against a subsequent purchaser, it must be recorded in accordance with RPL §291. Where the parties disagree is in regard to respondents’ assertion that there is one exception to this general rule which applies in the circumstances herein.Respondents cite 1644 Broadway LLC v. Jimenez, 51 Misc 3d 867 (Civ Ct, Kings County) to support that there is one exception to the general rule:(W)hen a subsequent purchaser for value has actual notice of a tenancy, the failure to record the lease with a term of three or more years will neither impact the lease nor the tenancy. The rationale for such exception is that actual possession of real estate is notice to all of the world of the existence of any right which the person in possession is able to establish.Respondents also cite to Maiorano v. Garson, 65 AD 3d 1300 (2d Dept 2009). The court in Maiorano quoted the holding in Williamson v. Brown, 15 NY354 (1857):[W]here a purchaser has knowledge of any fact, sufficient to put him on inquiry as to the existence of some right or title in conflict with that he is about to purchase, he is presumed either to have made the inquiry, and ascertained the extent of such prior right, or to have been guilty of a degree of negligence equally fatal to his claim to be considered as a bona fide purchaser.Petitioner states that it was advised by the prior owner that the occupants of the subject premises (herein the respondents) were month-to-month tenants and that there was no lease for respondents’ apartment.Respondents posit that although petitioner may have been misinformed by the prior owner as to the status of the tenancy, it was nevertheless aware that their tenancy existed before the closing of the sale and, as a result, this put petitioner on notice to do further inquiry as to the status of respondents’ tenancy, as actual possession of the real estate was notice to all of the world of the existence of any right which the person in possession is able to establish. Phelan v. Brady, 119 NY 587 (1890), 1426 46St. LLC v. Klein 60 AD3d 740 (2d Dept 2009). Maiorano v. Garson. As may be relevant here, the Court of Appeals in Phelan went on to state,It may be true, as has been argued by the plaintiff’s counsel, that when a party takes a conveyance of property situated as this was, occupied by numerous tenants, it would be inconvenient and difficult for him to ascertain the rights or interests that are claimed by all or any of them. But this circumstance cannot change the rule [that actual possession is sufficient notice to the world of any right which the person in possession is able to establish].Petitioner’s opposition papers indicate that petitioner did not make any inquiry of respondents — the actual possessor of the subject premises-as to the status of their tenancy until after the building was purchased. Thus, respondents argue that as petitioner had notice of respondents’ tenancy and did not prior to the transfer of title inquire further of respondents in regard to the status of their tenancy, petitioner is not a bona fide purchaser and the exception to RPL §291 applies. As a result, respondents conclude that their five year lease is enforceable and binding on petitioner.In opposition petitioner argues that the case law cited by respondents only deals with unrecorded leases vis-à-vis a mortgagee which is not the fact pattern here and that it took title to the building without any notice of the lease in question, despite due diligence. The court finds that the case law respondents cited is not limited to unrecorded leases and a mortgagee and that the holdings as to the exception to the general rule regarding unrecorded leases applies to the circumstances herein. 52 Riverside Realty Co v. Ebenhart, 119 AD2d 452 (1st Dept 1986) did not involve a mortgage but, rather, whether the agreement between the tenant and petitioner’s predecessor-in-interest that payment of rent was waived until the building was electrically wired, was binding on the petitioner. The court held:It is well recognized in this State that the transferee of real property takes the premises subject to the conditions as to tenancy, including any waiver of rights, that his predecessor has established if the transferee has notice of the existence of the leasehold (citations omitted). Moreover possession of premises constitutes constructive notice to a purchaser of the rights of the possessor (citations omitted).As a result, the court agrees with respondents’ analysis that the unrecorded five year lease in question herein is binding and enforceable on petitioner. According, this proceeding based upon a purported month-to-month tenancy without a lease does not lie and the petition is thereby dismissed for failure to state a cause of action.2This constitutes the decision and order of the Court.Dated: Brooklyn, New YorkAugust 30, 2018
