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Thereafter the landlord served a five day notice of default that the warrant of eviction would be executed on grounds that the sister visited the apartment after the stipulation was signed. The tenant obtained an order to show cause staying the eviction and a hearing was on the matter and on tenant's request that the stipulation be vacated. A neighboring tenant testified that the sister did come to the apartment and blasted music and had an altercation with that tenant. The neighbor testified that he heard her voice on at least ten separate occasions, meaning ten visits to the apartment. The brother, however, testified that his sister only came to the apartment twice, both times without his consent, although one of the times he wanted her to retrieve her belongings. The police were called to the premises, and the sister left ten minutes later.

The court concluded that the tenant knowingly signed the stipulation and the overwhelming evidence indicates that the stipulation was violated. The court found credible the neighbor's testimony. The court believed that the tenant would violate the stipulation again and allow his sister to return. Therefore, the court ruled that the tenant be evicted but a four month stay was granted.

The court denied the husband's motion since the husband, although vacating the apartment, has not returned full possession to the landlord since he left his wife in there. It is the leaseholder's responsiblity to surrender an apartment clear and clean of occupants. The husband could have commenced a holdover proceeding against the wife or raised the issue in the divorce action. Hence, the husband is not off the hook. The court also rejected the wife's argument since no new independent rights were created when the lease expired, criteria which could create a tenancy at sufferance. Since the husband was not entitled to a thirty day notice of termination, then likewise neither was the wife. The court granted the landlord's motion for summary judgment since neither the husband or wife proved any evidence that an issue of fact exists so as to require a trial. The court granted the landlord a judgment of possession and allowed the landlord to submit a motion for legal fees.

There was some dispute as to the facts at trial, including the extent of renovations undertaken by the tenant. She claimed that she only installed a wood counter in the kitchen area and that there was already a refrigerator, stove and shower. The super testified that he saw her move her possessions down to the ground apartment and that sometimes at night he'd knock on her door and remind her she was parked on the wrong side of the street. Tenant testified that she and the landlord agreed that she was just exchanging one residential space for another, and even her security deposit was transferred to the new lease. The landlord testified there was never an intent to give her a stabilized lease, despite the rider's reference to all things residential. The landlord disputed tenant's claim that two other residential tenants lived in the ground floor space before her.

The court observed that where a landlord knew or acquiesced in the tenant's residential use of a storefront, a commercial holdover proceeding must be dismissed. The court reviewed a number of cases which supported this conclusion. The court looked at the four corners of the residential lease and discerned absolutely no reference to a commercial tenancy. Further, the court held that no commercial activity occurred. The court acknowledged that the lease itself does not make the apartment subject to rent stabilization laws. The court, however, analyzed those cases where a rent stabilized lease was inadvertently given for residential units which were for various reasons exempt and stated that those owners came to court with clean hands. This case is distinguishable to the court.

The distinguishing feature is that the Multiple Dwelling Law precludes an owner from collecting rent on an apartment which is not in conformity with the certificate of occupancy (and thereby invariably not in accord with building code standards for a residential unit). The court held: "There is an unambiguous implication that a property owner who rents a unit to someone that is not legal (and presumably not safe) for habitation, has committed a wrong to the tenant and to society, and for public policy reasons, should be punished." The court regarded this landlord as coming to court with unclean hands and that the illegal leasing of the storefront requires the dismissal of the petition. Since the landlord totally knew, in the court's opinion, that the ground floor would be used for residential purposes, this landlord has no business commencing a commercial proceeding. There was no testimony whatsoever that the premises were used as a storefront art studio (sculpturing, painting and carpentry), as the petition falsely alleged.

The court refused to make a finding as to whether the storefront must be converted into a legal dwelling unit, whether an ejectment action would be proper, whether a declaratory judgment action by the tenant would be found to have merit, or whether the landlord would have to amend the certificate of occupancy to convert the storefront to a residential unit. The tenant filed a complaint at DHCR for failure to renew lease and the court opined that perhaps DHCR's outcome would guide the parties. The court acknowledged that a tenant cannot be permitted to confer stabilized status on herself, but the case law is clear that such is the result if the landlord has knowledge for the residential use of a nonresidential space, allows the occupant to expend significant sums to convert the property into a residence and acquiesces or looks the other way with knowledge of what is going on.

Further, if the prior landlord failed to turn security posted by the tenant over to the landlord, the old landlord remains liable to the tenant for the return of the tenant's security and the new landlord has no liability.

In the case before the court, the landlord is aware of the identity of the tenant and the alleged subtenant, the latter being the son of the former. The landlord does not dispute this and does not need discovery to ascertain the identity of the alleged subtenant nor his relationship to the prime tenant. The landlord, however, claims that discovery is needed solely on the issue of the tenant's primary residency. The court found that the landlord's request was directed at establishing the factual basis for a future nonprimary residency case. In fact, a nonprimary residence action was commenced but discontinued due to a technicality. Hence, this court regards the current request for discovery as nothing more than a fishing expedition. Accordingly, the court denied the landlord's discovery request.

In this case, the occupant claims co-occupancy with the deceased tenant for 35 years. The occupant's affidavit states that he initially moved in 40 years ago as a boarder, but when the tenant's husband died he and the tenant became intimate and he moved into the master bedroom. He submitted in his affidavit that for 35 years the coupled shared all household expenses which the tenant paid and he would reimburse her for his half of the bills. Only the renter's insurance policy had both their names on it. They maintained separate bank accounts but he had a power of attorney over the tenant's account since 1993. There were money markets where they designated each other as joint tenants with right of survivorship. There were other finances the court examined and ultimately concluded that the couple had their own money and were not required to be dependent on one another financially for daily expenses, yet if either one needed financial assistance, the other would gladly help out. A key indicator of their financial interrelationship is the fact that the tenant left a substantial portion of her estate to her partner and bequeathed $5,000 to his sister, "a good indicator" that there was indeed a family-type relationship between the occupant and the tenant. In addition to the financial interrelationship, the court also examined the emotional interrelationship, another requirement for the occupant to prove in claiming that a nontraditional family relationship existed. In this instance, affidavits from the tenant's two children and grandson attested to the close relationship. Other evidence, such as photographs and correspondence, helped the court to conclude that a nontraditional family relationship existed.

The primary relevant law is Section 27-2107(b) of the Housing Maintenance Code which provides that "An owner who is required to file a statement of registration under this article and who fails to file as required shall be denied the right to recover possession fo the premises for nonpayment of rent during the period of noncompliance and shall in the discretion of the court, suffer a stay of proceedings to recover rents, during such period." The court interpreted the statute as meaning that by its terms the section bars the recovery of possession during the period of noncompliance and provides for a stay of proceedings to collect rent during that period, but does not provide for an abatement of the rents which accrue during the period of noncompliance.

An earlier draft of this law explicitly authorized the court to grant an abatement of rents and such abatement would be discretionary with the court, not mandatory. The omission from the final draft of the law to award even such a discretionary abatement clearly indicates a legislative intent that there be no abatement of the rent which accrue during the period of noncompliance. Multiple Dwelling Law 325(2) does not, according to the Appellate Term, result in a contrary conclusion. That statute states that " . . . no rent shall be recovered by the owner of a multiple dwelling who fails to comply with such registration requirements until he complies with such requirements." Standing alone this provision may be ambiguous as to whether a stay or an abatement of rents is intended. However, the fact that this provision was enacted at the behest of the City to "clarify and confirm the power of the City to enact" Section 27-2107 of the Housing Maintenance Code indicates that the Legislature intended only to confirm the power of the City to preclude the recovery of possession and to provide for a stay of proceedings to collect rent during the period of noncompliance. The court concluded that upon registering an owner is entitled to recover the rents which accrued during the period of noncompliance and can recover possession based on such nonpayment.

The issues before the Appellate Division were (1) where a tenant openly and notoriously harbors a pet for three months, with the actual knowledge of servants and employees at the building who are not required by the landlord to report this harboring, does the non-resident managing agent, nevertheless, by ordinance, have imputed knowledge of such harboring? (2) Where the managing agent has such imputed knowledge but fails to commence a proceeding to enforce a no-et covenant within the three month time limitation of the ordinance, has the landlord thereby waived its right to enforce the covenant? The Appellate Division answered both these questions in the affirmative, and therefore upheld the dismissal of the petition.

At trial the landlord's only witness was the managing agent and he testified that employees were not required to report tenant's harboring of a pet. Nor are the co-op board's members required to so report on this issue. The managing agent does not reside at the building nor maintain an office there, and has actually been to the building only once in the last 2 years. He testified that he had no knowledge, nor did the security guards, that the tenant had harbored Rocky. The tenants, and neighboring tenants, testified that they walked Rocky in and about the building three times a day since getting the dog, starting from the 19th floor and walking past all security guards and building workers. The trial court concluded that the overwhelming evidence at trial indicates that the dog was exposed to and seen by building personnel on a regular basis and therefore knowledge of the dog must be imputed to the owner.

The Appellate Division analyzed the legislative history of the Pet Law and concluded that it was intended to impute knowledge to an owner through the owner's employees or agents. The court also upheld precedent that the Pet Law applies to co-operative buildings, such as the one in this case. The Court held that if tenants had to prove actual knowledge on the part of the owner they might never be able to do so, and that common sense dictates that building owners have agents who regularly monitor the property. Thus, tenants need only show that they "openly and notoriously" harbored the dog in full and plain view of one and all, including the employees and agents of an owner. The Court found that the landlord "would have had to close its eyes, cover its ears and hold its breath to have remained ignorant of the presence of [tenant's] puppy."

There was, however, a vigorous dissent from Justice Friedman who argued that the Pet Law should not apply to co-ops and condos which conflicts with long-held case law that courts should generally not intrude into the business decisions of co-ops and condos. The dissent also made the point that the purpose of the Pet Law was to preclude landlords from using the no-pet provision of a lease as a retaliatory device to evict otherwise non-breaching tenants. In this case, argued the dissent, there was no reason to believe that the co-op board's decision to commence the proceeding were based on any ulterior motives.

The court dismissed the portion of the petition seeking owner occupancy on grounds that owner occupancy proceedings may only be brought by natural persons, and not, for example, corporations, partnerships or trustees. Further, an executor only acquires the rights of the estate in a representative capacity. In the court's view an executor is not acting in an individual capacity which is required in an owner occupancy proceeding. The Estate here is not a natural person. The court did, however, grant the landlord's motion to substitute Mr. Marcus as the executor. Hence, that portion of the proceeding dealing with nonprimary residency was not dismissed and will still continue. An executor is authorized to "take possession of, collect rents from and manage . . . any property or estate therein owned by the estate." Mr. Marcus can perform this role as executor regarding the nonprimary residency portion of the petition.

The landlord moved to dismiss the tenant's affirmative defenses. The court denied most of the motion. The court found that the building had at one time more than six residential units and was built after 1974. Therefore it was subject to the ETPA and thus qualified under rent stabilization. The landlord, however, argued that since the prior tenant sold the right to the unit to the prior owner, this act removed the unit from rent stabilization. The court, however, ruled that the sale of rights ended the unit's eligibility for rent stabilization under the Loft Laws only. If tenant's facts prove true, the unit's regulated status could arise via the ETPA. The ETPA contains a number of specific exceptions to its coverage, but lofts are not one of them. Moreover, sufficient case law holds that lofts are subject to the ETPA. Thus, the court ruled that tenant's defense of regulated status will not be dismissed.

The landlord also attempted to argue that since the rent was over $2,000 a month when the tenant took occupancy, the unit is automatically decontrolled as a result of the Rent Stabilization Law's luxury deregulation statute. The court, however, ruled that this is so only if the $2,000 is a "legal regulated rent," and it is unclear from the facts currently before the court in the motion papers whether the rent charged was a "legal regulated rent." Thus, the court preserved this defense as well.

The tenant also argues that the 1986 sale of the prior tenant's rights was ineffective because the owner never filed a record of the sale with the Loft Board. The court, however, referred to the law's penalty which is not nullification of the sale, but rather a fine by the Loft Board of up to $1,000. The record is unclear whether the unit was used for non-residential purposes after the sale which would have made it incumbent upon the owner to remove all residential fixtures and provide for a Loft Board inspection. Pending the outcome of the trial, the court directed the tenant to continue to pay ongoing use and occupancy.

Tenant thereafter retained counsel who sought to vacate the stipulation on grounds that the landlord is under an ongoing obligation to uphold the DHCR order and that the landlord's defense of the four year statute of limitations is inapplicable. In applying the DHCR order, tenant owes no rent and in fact has been overcharged. The landlord had in the meantime registered the higher rent every year and thus argued that the law precluded an examination of the rent registered more than four years ago.

The lower court and the Appellate Term both held that the rent reduction order remained in effect despite landlord's filing of subsequent registrations and that it is not part of the rent history. A rent reduction order imposes a continuing obligation on an owner to reduce the rent and to refrain from collecting increases until the owner obtains an order restoring the rent. Where the duty imposed prior to a limitations period is a continuing one, the statute of limitations is not a defense to actions based on breaches of that duty occurring within the limitations period. The court noted that here the tenant's claim is not predicated on an overcharge occurring prior to the registration statement filed four years before the most recent statement, but rather upon breaches by landlord within the four-year period of a duty which continued into that period and thus the statute of limitations does not bar the claim. The Appellate Term concluded that the Housing Court properly vacated the stipulation, but rejected the lower court's permitting the case to be marked off calendar to enable the landlord to go DHCR to obtain a rent restoration order.

A strong dissent argued that the law requires that an element of the landlord's burden of proof must be to show that the tenant in fact participated or acquiesced in the illegal business which led to the eviction proceedings. The dissent opined that the level of knowledge does not exist in this case in large part because the son's activity took place, not in the apartment, but rather in another unit in the building four floors below. Even though the police recovered a weapon and cocaine in that apartment, these illegal items were not found on the son's person. The dissent adamantly found that there was no evidence that the tenant knew of or acquiesced to her son's illegal activity and therefore should not be subject to eviction.

The landlord's attorney now seeks to vacate the stipulation on grounds that he made a mistake in stipulating to a monthly rent of $688.75 based upon a "miscommunication" with his client. The lawyer claimed that he thought his client meant this sum would be the base rent and that lawful increases would be allowed. The court refused to vacate the stipulation especially since both parties were represented by counsel and the agreement occurred three years after the initial settlement to set the rent took place. Further, the court regarded the attorney as having the authority to bind his client. Any "miscommunication" should have been done months ago. The court concluded, "He who snoozes, loses."

The tenant argues that only a good faith purchaser may take advantage of the fact that a lease is unrecorded and the owner is not a good faith purchaser. Since the property is a two- family dwelling the owner should have at least inquired about the existence of a lease. The failure to inquire negates the owner's status as a good faith purchaser. The court, however, rejected the tenant's argument and held that a lack of inquiry is irrelevant. The tenant's rights of possession are subordinate to the mortgage and are extinguished by the foreclosure sale. Since the lease (a conveyance of over three years) was not recorded, it is void as against this owner's subsequent purchase of the property. The court awarded the owner a possessory judgment, but held that a hearing was needed to determine the market rent of the apartment. Since the lease is void, the lease rent of $400 is no longer valid.

On appeal the tenant's sole argument was that a new predicate notice relating to the new illegal subtenancy was required. But the Court held that this argument had no merit because the stipulation gave the landlord the right to restore the proceeding and litigate tenant's compliance with the stipulation. The ongoing compliance of the stipulation was something the court was permitted to monitor and thus this new breach fell under the purview of the court.

Thereafter the tenant returned to court on a second post-eviction show cause alleging that the owner and rejected their tender of the rent and fees. The tenants remained out of possession pending the hearing of the motion and landlord's cross-motion to reargue the issue. At oral argument the landlord took the position that the court did not have the authority to restore the tenant to possession. But the court cited case law showing that where sufficient good cause exists, courts are allowed judicial discretion on this issue, and in this court's opinion sufficient cause exists to allow the tenant to be restored to possession upon payment of the arrears and costs.