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Posted by Anna on May 04, 1999 at 23:45:09:

or do we wait for part three?
In a decision in tomorrow's NYLJ, Judge Franke ignores the definitions of 'purchaser', 'non-purchaser', and 'holder of unsold shares' as defined by the Attorney General's office (quoted below from Paikoff v Harris), by common sense, and by standard, boiler-plate offering plans such as the one for my building in favor of a very strict reading of 352.eeee's definition of purchaser. The result: the tenant who rents from the sponsor (or other holder of unsold shares) after a conversion has no rights other than those in the sublease. Click to read the decision. Paikoff v. Harris, 679 N.Y.S.2d 251 (Kings Co., 1998) is no longer online, but a summary is on Tenant.net Housing Court Decisions.

The AG's words, as quoted in Paikoff:
...a tenant who is already living in a conversion cooperative at the time the plan becomes effective is a non-purchasing tenant. However, the term 'non-purchasing tenant' also includes a tenant who rents a vacant unit after the effective date of the plan, as long as the tenant does not sublet the unit from a purchaser under the plan. The position of the Office of the Attorney General is that a sponsor or holder of unsold shares is not a 'purchaser under the plan.' Therefore, the position of the Office of the Attorney General is that a tenant who rents a vacant unit after the plan's effective date from a sponsor or holder of unsold shares is a 'non-purchasing tenant' under G.B.L.§352-eeee. (emphasis in original.)...
This understanding of the meaning of 'non-purchasing tenant' makes sense, both as a matter of statutory construction and as a matter of public policy ...
With regard to statutory construction, the plain import of 'purchaser under the plan' is someone who purchases shares allocated to an apartment under the conversion plan. This would not include a sponsor. ...
Since shares still held by a sponsor are, by definition, 'unsold' shares, a sponsor would not be a 'purchaser under the plan.' ... Public policy likewise supports the Attorney General's view that the term 'non-purchasing tenant' includes tenants who rent from a sponsor after the plan's effective date. ... A landlord with a building containing six residential units (and therefore ordinarily subject to the Rent Stabilization Law) [as is the exact case herein] can convert the building to a cooperative merely by selling the shares for one of the six apartments. If vacancies occur in the other apartments, the landlord-as-sponsor can rent those apartments free of ordinary rent regulation. The General Business Law treats such tenants as 'non-purchasing tenants', precisely to afford these tenants a measure of protection against not-for-cause evictions and unconscionable rent increases, even though they are no longer subject to ordinary rent regulation.

• Pembroke Square Assoc v Coppola

Follow Ups:

• Re: Is Paikoff v Harris dead? MikeW 5/05/99 (1)
  • Re: Is Paikoff v Harris dead? wounded, not dead Anna 5/05/99 (0)

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Comments:
: or do we wait for part three?
: In a decision in tomorrow's NYLJ, Judge Franke ignores the definitions of 'purchaser', 'non-purchaser', and 'holder of unsold shares' as defined by the Attorney General's office (quoted below from Paikoff v Harris), by common sense, and by standard, boiler-plate offering plans such as the one for my building in favor of a very strict reading of 352.eeee's definition of purchaser.  The result: the tenant who rents from the sponsor (or other holder of unsold shares) after a conversion has no rights other than those in the sublease.  Click to read the decision. Paikoff v. Harris, 679 N.Y.S.2d 251 (Kings Co., 1998) is no longer online, but a summary is on Tenant.net Housing Court Decisions.

: The AG's words, as quoted in Paikoff:
: ...a tenant who is already living in a conversion cooperative at the time the plan becomes effective is a non-purchasing tenant. However, the term 'non-purchasing tenant' also includes a tenant who rents a vacant unit after the effective date of the plan, as long as the tenant does not sublet the unit from a purchaser under the plan. The position of the Office of the Attorney General is that a sponsor or holder of unsold shares is not a 'purchaser under the plan.' Therefore, the position of the Office of the Attorney General is that a tenant who rents a vacant unit after the plan's effective date from a sponsor or holder of unsold shares is a 'non-purchasing tenant' under G.B.L.§352-eeee. (emphasis in original.)...
: This understanding of the meaning of 'non-purchasing tenant' makes sense, both as a matter of statutory construction and as a matter of public policy ...
: With regard to statutory construction, the plain import of 'purchaser under the plan' is someone who purchases shares allocated to an apartment under the conversion plan. This would not include a sponsor. ...
: Since shares still held by a sponsor are, by definition, 'unsold' shares, a sponsor would not be a 'purchaser under the plan.' ... Public policy likewise supports the Attorney General's view that the term 'non-purchasing tenant' includes tenants who rent from a sponsor after the plan's effective date. ... A landlord with a building containing six residential units (and therefore       ordinarily subject to the Rent Stabilization Law) [as is the exact case herein] can convert the building to a cooperative merely by selling the shares for one of the six apartments. If vacancies occur in the other apartments, the landlord-as-sponsor can rent those apartments free of ordinary rent regulation. The General Business Law treats such tenants as 'non-purchasing tenants', precisely to afford these tenants a measure of protection against not-for-cause evictions and unconscionable rent increases, even though they are no longer subject to ordinary rent regulation.


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