Many a landlord of rent regulated apartments has all too frequently encountered the factual scenario where there is a potential successor to a rent regulated apartment (either because the tenant of record has died or has permanently vacated the apartment) and there are arrears owed to the landlord (i) for the rent that had accrued during the prior lease term, and/or (ii) for use and occupancy that was never paid by the potential successor for that period of time subsequent to the expiration of the prior lease and prior to the landlord actually offering a succession lease (which, if there is litigation concerning the potential successor’s right to succeed to the apartment, can be a year or more).

Indeed, many a landlord has been compelled by the Housing Court to settle a holdover case with an occupant claiming succession rights by offering a succession lease, and leaving the landlord “holding the bag” with respect to much of the arrears owed.

Although a landlord may maintain a proceeding to try to evict an occupant of a rent regulated apartment after the death of, or permanent vacature of the apartment by, the tenant of record, (in response to which the occupancy will many times raise the defense of succession rights), the law is that a landlord may not sue the occupant for rent accrued before the expiration of the prior lease of the deceased or vacating tenant of record because the occupant is not a party to the lease agreement with landlord.

The occupant only becomes liable for rent when he has succeeded to the apartment and entered into a succession lease. Indeed, the Housing Court has vacated stipulations holding a successor tenant responsible for rent arrears prior to the deceased tenant’s death holding that the landlord’s proper remedy for collecting these arrears is a plenary action against the estate of the statutory tenant of record.

In an effort to address these decisions of the Housing Court which unjustly enrich the successor tenants who very often reap the benefit of residing in the apartment for years rent free, this office recently commenced a Supreme Court action against the successor tenant for all of the arrears at issue based upon the legal theory of unjust enrichment and quantum meruit (i.e. use and occupancy). In other words, DNCT argued that the successor tenant was enriched at landlord’s expense, and received a benefit at the landlord’s expense, by being permitted to reside in the apartment for several years “rent free” and that it was “against equity and good conscience” to permit the successor tenant to do so.

In awarding the landlord summary judgment on its Supreme Court complaint seeking a money judgment against the successor tenant for all of the arrears at issue, the Supreme Court held that it was undisputed that the successor tenant resided in the apartment during the period of time that no payments were made to the landlord and thus “there are no triable issues of fact as to [the successor tenant’s] liability, and awarded landlord summary judgment on both landlord’s unjust enrichment claim and quantum meruit (i.e. use and occupancy) claim.

Obviously, the amount of arrears at issue will dictate the advisability of pursuing such arrears in Supreme Court; the same action can, however, be brought in non-housing Civil Court if the sum at issue is below the jurisdictional threshold of $25,000. Whether brought in Supreme Court, or non-housing Civil Court, landlords now have another way to proceed other than the unacceptable binary choice of either tolerating the blatantly unjust orders of the Housing Court or spend more money in legal fees to appeal the Housing Court order and wait years for a decision.

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