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It Is the Lives of the Illegal Subtenants That Are Often the Most Impacted By Non-Primary Residence Cases

August 12, 2018

This is a story about another non-primary residence case. In this one, we represented the landlord. The apartment was no longer tenant’s primary residence. Tenant was living and working, very publically (tenant was a performance artists) in another state. [1] Tenant had simultaneously sublet the unit to three different people.

The notice of non-renewal we prepared and served was eight pages long. It included: press articles about the tenant’s work in the other state; anticipated testimony of the managing agent about her observations (she was in the 12-unit building 5 to 7 days per week); the results of a private investigator’s report (demonstrating that tenant had moved her driver’s license to and voted in another state); the post-mark on the monthly rent payment that always came from the other state; evidence from tenant’s public social media showing that tenant was embracing the other state as home; and, of course, the camera data (we never do one of these cases without a camera). The camera showed that the tenant was never at the apartment and showed the three illegal subtenants coming and going daily. My notice included stills from the footage of the subtenants. Unfortunately for the subs, there was also evidence that tenant was grossly overcharging them and, thus, profiteering on the apartment. Once the tenant received the non-renewal notice, she very quickly realized that she needed to hand in the keys, and did so without the landlord needing to resort to expensive litigation. We saw footage on the camera in the ensuing month of all three subtenants moving out.

It is not often written about or focused on, but the illegal subtenants in these non-primary residence situations are so often the biggest victims. Certainly, the landlord is a being cheated by the non-primary resident tenant. Of course, the people of the City of New York, which is in need of affordable housing, are also being cheated by the non-primary residence tenant. It is the lives of the illegal subtenants, however, that are often the most impacted. First, they find themselves suddenly faced with either having to move quickly or to being named as a respondent in a Housing Court lawsuit. Second, they are often chagrined to find out how much of a mark-up the non-primary resident tenant was making on them. The sub-rent is often at or near market, while the Rent Stabilized rent paid by the tenant is far below market.

In my practice, I have often been consulted by and represented the illegal sub-tenants in non-primary residence and illegal Airbnb cases. When I do so, the goal is to transition the sub out as easily as possible, or if possible, to negotiate with landlord for a way for them to remain, and to attempt to recover any overcharge the sub has paid to the non-primary resident tenant.

Respectfully submitted,

[1] Some details changed to protect the innocent.

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Tenant Paying $4/Day for Rent Stabilized Apartment Makes $255 Per Night on Illegal Short-Term Sublets

July 22, 2018

This is a story about one of the craziest illegal Airbnb cases I have worked on so far.[1]

In this case, the Rent Stabilized tenant, who had moved to Westchester, was simultaneously listing his apartment as three different rooms as short-term sublets. Indeed, he was simultaneously renting the apartment to three groups of guests at once. Tenant frequently had up to nine people staying in the apartment at a time. Over a 15-month period, tenant managed to get 78 reviews on the platform. Surveillance camera footage revealed that over the span of 29 days, unknown guests were seen exiting and entering the apartment 185 times.

But here is the insane part. According to the Airbnb data, tenant rented the three rooms of the apartment for nightly rates of $90, $88, and $77, plus cleaning fees. Sometimes he rented all three rooms simultaneously. Therefore, tenant often collected $255 per day. Tenant himself, however, was a recipient public assistance. Tenant’s portion of the rent for the apartment was a mere $125 per month; his per day cost for the apartment was $4.16. Therefore, tenant turned a profit of $250.84 a day, a 5929%.

It should not have surprised me when this tenant actually had the temerity to fight the case! The case did not go very far, however, before the tenant agreed to vacate. Even in situations where a tenant’s behavior is as egregious as this, I still favor settlement and mutually beneficial solutions for both sides. When the tenant moved out, the apartment was re-rented to a new Rent Stabilized tenant, someone who lives in the apartment and who follows the rules.

I will let you draw your own conclusions on the lessons garnered from this one.

Respectfully submitted,

[1] Some details changed to protect the innocent.

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Lux Apartment Turned into a Thumping Night Club May Require Injunctive Relief

July 1, 2018

This is a story about our representation of a landlord in a situation in Brooklyn where some entitled young tenants of a luxury loft apartment decided to turn the place into a nightclub.[1] Literally.

There were a dozen wild parties in a six-month period. Each party lasted until approximately 6:00 a.m., sometimes longer. The parties took place in the apartment and on the roof of the subject building and, unfortunately, in the common hallways throughout the building. Surveillance of the situation revealed that these parties were being advertised and were attended by paying guests. The tenants actually hired a bouncer for the main entrance of the building, who hassled other tenants trying to get to their apartments! You can’t make this stuff up. The parties were big, with up to thirty attendees. At the parties, tenants blasted music from a powered speaker system, which caused not only noise, but vibrations in neighboring apartments. Party guests screamed and shouted. The atmosphere at each party was that of a thumping nightclub. The common areas of the building and other tenants’ apartments filled with the odor of cigarettes. The skylight of the building was broken by tenants’ party guests, causing glass to rain down on other tenants of the building below. There were bottles, cans, trash, and smoked cigarettes in the common areas and/or on the roof after each party.

The landlord was particularly concerned because the roof had no decking, no lighting, and no railing. This was not a commercial building. It is not equipped with the ingress and egress, sprinkler systems, or lighted exit signs that would be required for a bar or a nightclub. It was only a matter of time before one of these large-scale weekend parties resulted in a tragedy. The parties were getting progressively crazier. Other tenants of the building were threatening to leave.

In a case such as this, the typical notice of lease termination, followed by a holdover, seemed inadequate. We prepared an application for an immediate injunction in Supreme Court; but never needed to be signed by a judge. Once alerted to landlord's intentions, tenants came quickly to the table. The matter was settled.

What’s the lesson? The lesson here is that the landlord probably waited too long to consult counsel. Landlord should not have been a dozen parties into this saga before taking action. Landlords need to be proactive in these situations. Ignoring terrible tenant behavior such as this does not make it go away; it makes it worse.

Respectfully submitted,

Michelle Itkowitz

[1] Some details changed to protect the innocent.

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Building Owner Absorbs Tenant's Co-Working Subtenants and Business

June 10, 2018

Here, we represented a commercial landlord who had a lease with a company that licenses space to various subtenants for their small business needs. When the tenant was unable to keep up with its rental obligations, it surrendered the space to the landlord.

The landlord then had to decide what to do with all of the subtenants in the space. Evicting each subtenant would take a significant amount of time and money. Then again, it’s not every landlord that wants to take over a defaulting tenant’s co-working business.

The subtenants were actually making timely rental payments to the master tenant under their various subleases. Therefore, the landlord decided to completely take over the tenant’s business. The landlord created a new entity and assigned each license from the previous tenant to its new entity. Our office helped make the transition as smooth as possible by handling the agreements and assignments of the deal. We had to make sure that each subtenant was properly notified of the assignment, that the security was carried over properly, and that the landlord was as protected as possible from any liability that could have been incurred by the previous tenant. We also had to engage in a due diligence project to ensure that the tenant had the right to assign each license and all of the equipment and fixtures related thereto.

This story began with landlord suffering a defaulting tenant, but the story ends with the landlord not only getting the rent it wanted per square foot, but it got a new business venture as well. 

Respectfully submitted,

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Long Predicate Notices Make for Short Landlord and Tenant Litigations

May 27, 2018 

This is a story about a non-primary residence case where we represented the landlord. The tenant had long ago moved out, and was only using the apartment for her brownstone landscaping business[1]. The apartment had been reduced to an office and a warehouse.

The notice of non-renewal we prepared and served was 19 pages long. It included: data from the tenant’s business website; anticipated testimony of the managing agent about his observations; pictures; the results of a private investigator’s report (demonstrating that tenants owned a home, had registered cars, and voted in another state); the post-mark on the monthly rent statement that always came from the other state; and, of course, the camera data (we never do one of these cases without a camera). The camera showed that the tenant was only at the apartment 35% of the time, and, when she was, it was only to haul supplies in and out. My notice included the excel spreadsheet where we analyzed the camera data and still from the footage. There is a picture of tenant standing outside of her apartment door, fumbling for keys, surrounded by contractor bags and a leaf blower.

Once the tenant received the notice, she very quickly realized that she needed to hand in the keys. Her problem was that the landscaping business made sense in New York City when her overhead was the rent for a Rent Stabilized apartment, as opposed to a real commercial rent. I actually felt bad for her. My landlord-client, however, was not shedding any tears. And it really was not cool that she was storing chemicals in the apartment. In any event, tenant was nice about it and we did a quick settlement and avoided litigation.

Preparing a detailed, thorough, and comprehensive predicate notice can make all the difference in the success of a landlord and tenant case. This tenant was a business woman. My notice let her know that the game was over, that it was not worth hiring a cheap tenant lawyer and trying to hold on for another six months, through the summer landscaping season. Yes, my landlord-client paid me a lot for the preparation of the notice of non-renewal. But he got the apartment back without litigation. My last three non-primes have gone that way. This is, of course, not only shameless self-promotion, but its legal advertising, which I hope works.

It is worth ending the story by saying that this landlord-client was not a developer-sort. She was going to do some renovations to the apartment, but the unit was going to remain a Rent Stabilized unit for its next occupant.

Respectfully submitted,

[1] Some details changed to protect the innocent.

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