Weinreb v. Stodolink, 71 N.Y.2d 449 (1988)

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An estate cannot claim the “insider’s price” for a cooperative conversion of a rent-stabilized apartment if the tenant of record died before the conversion plan was accepted, because neither the deceased tenant nor the estate were “tenants in occupancy” as required by law.

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Summary

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The Weinreb case addresses whether an estate can exercise the right to purchase an apartment at the insider’s price after the tenant of record dies but before a cooperative conversion plan is accepted. The New York Court of Appeals held that the estate could not. The decedent was the sole tenant of a rent-stabilized apartment. After her death, the landlord offered the building for cooperative conversion, granting special purchase advantages to “Tenant-Purchasers.” The estate attempted to accept this offer, but the landlord refused. The court reasoned that the controlling statute requires “tenants in occupancy” to be eligible for the insider’s purchase option and that neither the deceased tenant nor the estate met this requirement at the time of the offering.

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Facts

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The decedent was the sole occupant and tenant of record for a rent-stabilized apartment.

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She died on August 22, 1986, with 10 months remaining on her lease.

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The estate continued to pay rent and used the apartment to store the decedent’s personal property.

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In December 1986, the landlord’s cooperative conversion plan was accepted, offering special prices for “Tenant-Purchasers.”

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The estate tried to accept the offer as a “Tenant-Purchaser,” but the landlord refused.

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Procedural History

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The estate initiated a proceeding in Surrogate’s Court to compel the sale.

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The Surrogate’s Court ruled in favor of the estate.

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The Appellate Division reversed the Surrogate’s Court decision and dismissed the petition.

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The New York Court of Appeals granted leave to appeal.

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Issue(s)

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Whether an estate can qualify as a “tenant in occupancy” and thus be eligible for the insider’s purchase price in a cooperative conversion plan, when the tenant of record died before the conversion plan was accepted.

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Holding

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No, because the deceased tenant and the estate were not “occupying” the apartment at the time of the offering within the meaning of the statute, and the estate’s entitlements were limited to winding up affairs and did not include a right of occupancy.

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Court’s Reasoning

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The Court relied on the controlling statute, General Business Law § 352-eeee [2] [d] [ix], which makes “tenants in occupancy” eligible for the insider’s purchase option. The court cited De Kovessey v Coronet Props. Co., 69 NY2d 448, 457, stating that a ” ‘tenant in occupancy’ must be in actual possession and occupying the unit at the time the conversion plan is accepted for filing in order to qualify at all”. The court emphasized that at the time of the offering, neither the deceased tenant nor the estate was “occupying” the apartment. The court noted that the landlord-tenant relationship was fundamentally changed by the tenant’s death, and the estate’s rights were limited to winding up affairs, not occupying the apartment. Allowing estates to hoard apartments for potential quick profits from cooperative conversions would be inconsistent with the tenant protection purpose of General Business Law § 352-eeee. The court distinguished Consolidated Edison Co. v 10 W. 66th St. Corp., 61 NY2d 341, because that case involved a corporation that was the actual party to the lease and actively used the apartment for its directors, officers, and guests, whereas an estate is transitory. Also distinguished was Manolovici v 136 E. 64th St. Assocs., 70 NY2d 785, 787-788, as that case involved a party with a “sufficient connection to the apartment” that was actually being used “for the purpose of raising and sheltering [the plaintiffs] family.” The court concluded, “the prong of De Kovessey’s conjunctive qualifying definition, that a tenant be ‘occupying the unit’, is unfulfilled in this case because the apartment here has no ‘tenant in occupancy’ as legally contemplated under the statute.”