Burns v. 500 East 83rd Street Corp., 59 N.Y.2d 784 (1983)

Under the Rent Stabilization Law, the right to purchase shares in a co-op conversion belongs to the tenant who is the lessee of record, even if that tenant does not reside in the apartment, so long as the occupancy is by immediate family members as permitted by the lease.

Summary

This case addresses who has the right to purchase shares allocated to an apartment under a co-op conversion plan when the husband is the sole lessee of record but does not reside in the apartment, while his wife and children do reside there. The court held that the husband, as the signatory to the lease, is the tenant with the right to purchase the shares, even though he doesn’t live there, because the wife’s occupancy is permitted under the lease as an immediate family member of the tenant. The court likened the wife’s position to that of a subtenant, whose presence does not strip the primary lessee of their purchase rights.

Facts

The husband signed the lease for the apartment and pays the rent.
The lease permits occupancy “only by Tenant and the members of the immediate family of Tenant.”
The wife resides in the apartment with the children, but the husband does not live there.
The building is being converted to cooperative ownership, and the issue is who has the right to purchase the shares allocated to the apartment under the Rent Stabilization Law.

Procedural History

The lower courts found in favor of the husband, determining that he, as the lessee of record, held the right to purchase the shares. The Court of Appeals affirmed the order without costs.

Issue(s)

Whether, under the Rent Stabilization Law, the right to purchase shares allocated to an apartment under a co-op conversion plan belongs to the husband who is the sole lessee of record but does not reside in the apartment, or to the wife who is not a signatory of the lease but resides in the apartment with the permission of the lease.

Holding

Yes, because under Section 61(5) of the Code of the Rent Stabilization Association of New York City, Inc., the right to purchase belongs to “tenants in occupancy and lessees of record of vacant or subleased apartments at the time of the offering,” and the husband is the lessee of record, and his wife’s occupancy is considered occupancy by the tenant-husband.

Court’s Reasoning

The court reasoned that the husband, as the signatory of the lease, is the tenant, and the occupancy by his wife and children, as permitted by the lease, constitutes occupancy by the tenant-husband, even though he is not physically present. The court emphasized that the relevant provision protects the rights of a lessee of record to purchase, even if the apartment is subleased and the sublessee is in actual possession.

Specifically, the court stated that the wife’s position is essentially no different than that of a subtenant. This analogy is critical because it reinforces the idea that the lessee of record maintains the primary right, irrespective of who is physically occupying the premises, as long as that occupancy is authorized by the lease.

The court distinguished this case from Cooper v. 140 East Assoc., noting that Cooper involved rent-controlled premises and regulations defining “tenant” to include subtenants. The court also distinguished Ian v. Wassberg, pointing out that in Wassberg, the “paramount right to occupy” arose “under the circumstances of this case” where the occupant was put in possession by the landlord in violation of a prior lessee’s rights. The court implicitly limited the reach of Wassberg to very specific factual scenarios, confirming the primacy of the lessee of record in most situations.

This case is significant because it clarifies the application of the Rent Stabilization Law in co-op conversions, specifically addressing situations where the lessee of record and the occupant are different individuals. The court’s decision provides a practical framework for determining who holds the right to purchase in such scenarios, focusing on the lease agreement and the authorization of occupancy. The holding reinforces the importance of the lease agreement and the rights it confers upon the lessee of record.