Philadelphia Skyline

Queue Ominous Music…the Co-Op Subtenant Who Would Not Pay or Leave

March 20, 2019

In this epic saga, my client was a shareholder in what used to be an affordable co-op in Queens.[1] We will call him “Shareholder”.

A few years ago, another shareholder on the same floor as the building, we will call her “Subtenant”, was getting divorced. Subtenant told Shareholder that she was in the process of buying another apartment within the complex. Shareholder was not in the apartment (he had gotten married and moved to Los Angeles), and Subtenant needed a temporary place to stay, so it seemed like a good match. Thus, Shareholder let Subtenant into his co-op apartment. Shareholder never made a written sublease with Subtenant. Queue ominous music, because our story is about to take a dark turn.

The problem was that Subtenant stopped paying Shareholder and refused to leave. In fact, Subtenant refused to leave, even long-after the co-op board (“the Board”) began assessing Shareholder a forty percent (40%) surcharge because the sublet approval period had run out. Subtenant, you see, became embroiled in a litigation (having nothing to do with the apartment we are talking about in this story) with the Board and her ex-wife regarding another apartment in the very same complex. Subtenant did not want to leave the building while her big litigation was going on, and the costs of that battle in her life meant she did not have enough left over for things like paying the sub-rent to Shareholder.

By the way, the sub-rent that Shareholder and Subtenant agreed on orally was a unclear. First it was the full maintenance payment. Then it was the maintenance plus half the surcharge. Then there was some formula the two of them had come up with regarding the electric bill. To make matters way worse (legally), the Subtenant paid rent at irregular intervals and always in different amounts.

By the time Shareholder contacted me, Subtenant had not paid Shareholder anything at all in five months.

When I sat down to analyze the case, I had to go through months of texts, emails, and letters, whereby Shareholder kept telling Subtenant, “You better pay me, or I will take legal action.” By the way…Every time one party tells the other party that they will “take legal action”, and then they do not take legal action, that just sends the message loud and clear to your adversary that you are afraid to take legal action. But I digress…

My challenge as the Shareholder’s lawyer here was two-fold. First, I had to decide whether the occupant really was a subtenant, or whether the proper legal designation for her was a tenant-at-will, since the rent was not typically paid monthly, there was no real agreed upon term, and there was no written lease. I decided that because Shareholder told me that the original agreement was for the Subtenant to pay monthly, and because Subtenant did do so for awhile in the beginning, that Subtenant was a subtenant with a month-to-month tenancy. In retrospect, I am still not sure that was the right decision (but – spoiler alert – it worked, so I guess it was the right decision). I always say when I teach a continuing legal education class on basic landlord and tenant law, that the hardest decisions are the very first ones you make in the case.

Once I decided that the Subtenant was a month-to-month tenant, then I had to decide whether it would be better to terminate her tenancy, or whether to sue her for the rent. I decided that the rent was too much of a moving target, so I just went with terminating the month-to-month tenancy pursuant to Real Property Law § 232-a.

By the way, the lack of a written lease gave rise to at least two other problems. Shareholder had no ability to recover legal fees from Subtenant. Generally, a litigant in New York State is not entitled to recover his or her attorneys’ fees in the absence of a statute that establishes such entitlement (and very few do), or a contract wherein the parties to the contract have agreed as such. Leases, on the other hand, often do call for attorneys’ fees under certain circumstances. Shareholder had no lease; thus, he couldn’t recover legal fees against Subtenant, even if Shareholder won.

Moreover, most leases contain a waiver of the right to a trial by jury, which is enforceable. No lease meant that Subtenant could ask for a jury in Housing Court. This could add considerable time and expense to what should be a simple proceeding.

We these challenges before us, we started the holdover proceeding. Queue more ominous music. You will recall that Subtenant was involved in a large litigation with the Board and her ex-wife. Subtenant, of course, had expensive private counsel in that case. Subtenant shows up in our holdover proceeding, however, with a Legal Aid attorney! How, I asked, did that happen? Turns out the co-op was in a zip code where every tenant gets a free attorney. It was so incongruous. Here was a wealthy, savvy occupant, who was engaged in litigation with private counsel over ownership of an apartment, in Housing Court with a Legal Aid attorney fighting over an apartment in the same building that she was freeloading in while fighting her case. Anyway…Legal Aid was not so sure what to do with the case, because there really were not any defenses. There was no argument that the unit was subject to Rent Stabilization and they were not finding any technical defects with my proceeding. Nevertheless, the entrance onto our stage of Legal Aid slowed things down by three adjournments while they got themselves together.

Ultimately, it was better that I had an experienced counsel on the other side to work with, and we settled the case and there was a vacate date on the horizon. Queue more ominous music. This case really was like one of those Netflix shows where they just throw one crisis at you after the next and the protagonist is always running from explosions and monsters. You get tired of it. But unlike binge-watching, my client and I could not turn this situation off.

Right before the vacate date, the Subtenant had a break down and was hospitalized. My client was compassionate, and when the family of Subtenant showed up on the scene asking for more time, we contacted Legal Aid and offered the time, as we simultaneously contacted Adult Protective Services. But, of course, three adjournments of the eviction date later, we had to insist that the family wrap it up, and they did. It was like a Netflix show that should have ended after three seasons, but went on for five.

What’s the lesson? There are several:

·  Never sublet your apartment without a written lease.
·         If a subtenant is not paying and/or leaving, do not wait six months to seek legal help.
·         Ensuring that everyone in a zip code has representation is great, but Legal Aid should have the ability to opt out if they find themselves representing someone that already has private counsel and who has no defenses; so that they can apply their resources to protecting people who really need Legal Aid's help to save their homes.
·         There are certain delays baked into the Housing Court process that it gives no ROI to fight about. Examples include adjournments for tenant to get a lawyer who is up to speed and adjournments of an eviction if a tenant is truly in crisis. Therefore, landlord’s counsel should be ready at other times, so that no delay is occasioned by landlord’s delay.
·         If you hate the fourth season of a Netflix show, do not watch it. Put down your phone and get some exercise instead.

Respectfully submitted,

[1] Some of the details have been changed to protect the innocent.

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