10 N.Y.3d 943 (2008)
A so-ordered stipulation between a landlord and a subtenant for an unregulated lease with rent exceeding the legal limit under the Rent Stabilization Code is void as against public policy, even if the subtenant was not the tenant-of-record when the agreement was made.
Summary
After the tenant-of-record surrendered possession of a rent-stabilized apartment, the landlord entered into a so-ordered stipulation with the subtenant for an unregulated lease fixing rent above the legal limit. The New York Court of Appeals held that the stipulation violated the Rent Stabilization Code and was void as against public policy. The court emphasized that such agreements undermine the protections afforded by rent stabilization laws, regardless of whether the tenant was the tenant-of-record at the time of the agreement. The tenant was not required to bring their claim in housing court, as the illegal agreement was void from the start.
Facts
After the tenant-of-record vacated a rent-stabilized apartment, Roger Jazilek, who had been subletting the apartment, entered into a so-ordered stipulation with Abart Holdings LLC, the landlord.
The stipulation provided for an unregulated lease with rent exceeding the legal limit under the Rent Stabilization Code.
Jazilek was not the tenant-of-record when the stipulation was made.
Procedural History
The lower courts found that Jazilek should have brought his claim in housing court.
The Court of Appeals reversed the lower court’s order, holding that the so-ordered stipulation was void as against public policy and the tenant was not required to proceed in Housing Court.
Issue(s)
Whether a so-ordered stipulation between a landlord and a subtenant for an unregulated lease, with rent exceeding the legal limit under the Rent Stabilization Code, is void as against public policy when the tenant was not the tenant-of-record at the time the stipulation was made.
Holding
Yes, because the so-ordered stipulation violates the Rent Stabilization Code and is void as against public policy, regardless of whether the tenant was the tenant-of-record at the time of the agreement.
Court’s Reasoning
The court reasoned that the so-ordered stipulation circumvented the protections afforded by the Rent Stabilization Code, which aims to regulate rents and protect tenants from excessive rent increases.
The court cited Riverside Syndicate, Inc. v Munroe, 10 NY3d 18 (2008), and Rent Stabilization Code [9 NYCRR] § 2520.13, to support the holding that agreements violating the Rent Stabilization Code are void as against public policy.
The court stated that the tenant was not required to proceed in Housing Court, citing Teitelbaum Holdings v Gold, 48 NY2d 51, 54 (1979).
By entering into such an agreement, the landlord attempted to bypass the rent stabilization laws, which are designed to protect tenants from unfair rental practices. The court emphasized that such agreements are unenforceable because they undermine the public policy goals of rent stabilization.
This decision reinforces the principle that parties cannot contract around rent stabilization laws, and courts will not enforce agreements that violate these laws.