New York Law Review

Tag: Loft Law

  • Chazon, LLC v. Maugenest, 19 N.Y.3d 410 (2012): Loft Law Compliance Required to Maintain Ejectment Action

    Chazon, LLC v. Maugenest, 19 N.Y.3d 410 (2012)

    A landlord of a New York City loft who has not complied with the Loft Law and has not received an extension of time to comply may not maintain an ejectment action based on nonpayment of rent.

    Summary

    Chazon, LLC, the landlord of a loft building, brought an ejectment action against Maugenest, a tenant who had not paid rent since 2003. The landlord had not complied with New York’s Loft Law, which governs the conversion of commercial buildings to residential use, nor had it obtained an extension for compliance. The New York Court of Appeals held that because the landlord was not in compliance with the Loft Law, it could not maintain an action for ejectment based on non-payment of rent, as explicitly barred by Multiple Dwelling Law § 302(1)(b). The court reversed the lower court’s decision, emphasizing the statutory requirement of compliance for landlords to collect rent or pursue eviction for non-payment in interim multiple dwellings.

    Facts

    Chazon, LLC owned a loft building in Brooklyn. Maugenest occupied an apartment in the building and had not paid rent since 2003. The building lacked a residential certificate of occupancy, making its residential use a violation of Multiple Dwelling Law § 301(1). The landlord had not met the deadlines for compliance with the Loft Law (Multiple Dwelling Law art 7-C), designed to legalize residential occupancy in former commercial buildings, nor had it obtained an extension from the Loft Board. The Loft Board had specifically rejected the landlord’s claim that compliance was hindered by circumstances beyond its control in 2006.

    Procedural History

    Chazon, LLC initiated an ejectment action against Maugenest in the Supreme Court. The Supreme Court granted summary judgment to the landlord, awarding possession of the apartment. The Appellate Division affirmed this decision. The New York Court of Appeals granted permission to appeal and reversed the Appellate Division’s order, dismissing the complaint.

    Issue(s)

    Whether a landlord who has not complied with the Loft Law (Multiple Dwelling Law art 7-C) and has not received an extension of time to comply, can maintain an ejectment action against a tenant for nonpayment of rent.

    Holding

    No, because Multiple Dwelling Law § 302(1)(b) explicitly bars an action for possession of premises for nonpayment of rent when the building is occupied in violation of section 301 (i.e., lacks a residential certificate of occupancy), and Multiple Dwelling Law § 285(1) only provides an exception for landlords who are “in compliance with” the Loft Law.

    Court’s Reasoning

    The Court of Appeals based its decision on the plain language of the Multiple Dwelling Law. Section 302(1)(b) states that “no rent shall be recovered by the owner of such premises…and no action or special proceeding shall be maintained therefor, or for possession of said premises for nonpayment of such rent” if the dwelling is occupied in violation of section 301. Section 285(1), part of the Loft Law, provides a narrow exception, allowing landlords of interim multiple dwellings to recover rent and maintain actions for possession, but only if they are “in compliance with this article.” The Court emphasized that because the landlord was not in compliance with the Loft Law, the general prohibition of Section 302(1)(b) applied. The court acknowledged that prior intermediate appellate court decisions, such as Le Sannom Bldg. Corp. v. Lassen and 99 Commercial St. v. Llewellyn, had reached different conclusions, but found those decisions irreconcilable with the statute’s clear text. The court stated: “Multiple Dwelling Law § 302 (1) (b) bars not only an action to recover rent, but also an ‘action or special proceeding . . . for possession of said premises for nonpayment of such rent.’ This is such an action, and it is barred.” The Court concluded that any alteration to this outcome would require legislative action.

  • Bikman v. 595 Broadway Associates, 14 N.Y.3d 375 (2010): Estate’s Right to Loft Improvements Reimbursement

    14 N.Y.3d 375 (2010)

    The estate of a deceased loft tenant is entitled to recoup the value of improvements made by the tenant pursuant to Multiple Dwelling Law § 286(6).

    Summary

    This case addresses whether the estate of a deceased loft tenant can recover the value of improvements the tenant made to the loft under Multiple Dwelling Law § 286(6). The tenant, Minda Bikman, improved her raw loft space. After her death, the landlord sought possession. Bikman’s estate argued it was entitled to reimbursement for the improvements. The Court of Appeals held that the estate was indeed entitled to recoup the value of the improvements, emphasizing that the statute aimed to prevent unjust enrichment of the landlord at the tenant’s expense, and denying reimbursement would be unfair.

    Facts

    Minda Bikman became a resident of a Manhattan loft in 1974 and was a protected tenant under Article 7-C of the Multiple Dwelling Law. During her tenancy, she made improvements, including installing a kitchen and bathroom, valued at over $40,000. In 1981, 595 Broadway Associates purchased the building. After Minda’s death in 1997, Broadway sought a judgment of possession, which it obtained in 2001. Broadway then applied to the Loft Board for an abandonment order.

    Procedural History

    Broadway applied to the Loft Board for an abandonment order after obtaining a judgment of possession. An Administrative Law Judge (ALJ) recommended granting Broadway’s application and denying the estate’s claim for reimbursement, which the Loft Board affirmed. Supreme Court annulled the Loft Board’s determination, citing Matter of Moskowitz v Jorden. The Appellate Division affirmed the Supreme Court’s order, concluding it was error to grant the abandonment application without requiring a sale of the improvements and compensation to the estate. The case then went to the Court of Appeals.

    Issue(s)

    Whether Multiple Dwelling Law § 286(6) permits the estate of a deceased tenant to recoup the value of fixtures and improvements made to a loft property.

    Holding

    Yes, because Multiple Dwelling Law § 286(6) was enacted to prevent owners from receiving unearned enrichment, and it would be unfair to deprive the estate of the value of property that would have benefited the tenant had she lived.

    Court’s Reasoning

    The Court of Appeals agreed with the lower courts that the Loft Board’s interpretation of Multiple Dwelling Law § 286(6) was not entitled to deference because the issue was solely a matter of statutory interpretation. The court emphasized that in construing the statute, it looked to the legislative intent. The court stated that section 286(6) was enacted to prevent an owner from receiving unearned enrichment, thereby depriving compensation to the tenants who paid for the improvements. The court cited 577 Broadway Real Estate Partners v Giacinto, stating that it would be unfair to deprive the estate of the value of property which would have enured to the benefit of the tenant, had the tenant lived. The court held that the estate of a deceased tenant is permitted to recoup the value of fixtures and improvements made to the property.

  • Wolinsky v. Kee Yip Realty Corp., 2 N.Y.3d 487 (2004): ETPA Protection and Illegal Loft Conversions

    Wolinsky v. Kee Yip Realty Corp., 2 N.Y.3d 487 (2004)

    The Emergency Tenant Protection Act (ETPA) does not extend to protect tenants residing in illegally converted commercial loft spaces when those conversions occurred after the eligibility period defined by the Loft Law.

    Summary

    Wolinsky v. Kee Yip Realty Corp. addresses whether tenants who illegally converted commercial loft spaces into residential units long after the Loft Law’s eligibility period can claim protection under the ETPA. The New York Court of Appeals held that the ETPA does not protect such illegal conversions. The Court reasoned that the Loft Law’s closed eligibility period aimed to address a specific historical problem and was not intended to encourage future illegal conversions or undermine zoning regulations. Extending ETPA protection to these tenants would contradict the intent and purpose of both the Loft Law and municipal zoning.

    Facts

    Kee Yip Realty Corp. owned a commercial building in Manhattan zoned for light manufacturing. Beginning in 1997, Kee Yip leased raw loft space to tenants who then converted the spaces into residential units at their own expense. These conversions violated the City Zoning Resolution because the building lacked a residential certificate of occupancy, and the tenants were not certified artists who could legally reside in the M1-5B zoning district. The tenants sought to invoke the protection of the Rent Stabilization Law and Rent Stabilization Code through the ETPA as their commercial leases neared expiration.

    Procedural History

    The Supreme Court granted Kee Yip’s motion for summary judgment and dismissed the tenant’s complaint, holding that the ETPA could not legalize commercially-zoned property for residential use. The Appellate Division modified the judgment to declare that the tenancies were not covered by the ETPA and otherwise affirmed. The Court of Appeals granted the tenants leave to appeal.

    Issue(s)

    Whether the Emergency Tenant Protection Act (ETPA) extends to protect tenants who illegally convert commercial loft spaces into residential units when those conversions occur after the eligibility period defined by the Loft Law.

    Holding

    No, because reading the ETPA and Loft Law together, the Legislature did not intend for the ETPA to protect illegal residential conversions that occurred outside the Loft Law’s specified eligibility period; such an interpretation would undermine the Loft Law’s purpose and municipal zoning regulations.

    Court’s Reasoning

    The Court considered the interplay between the ETPA and the Loft Law, both enacted to address housing emergencies. The ETPA aimed to prevent unjust rents, while the Loft Law sought to manage the conversion of commercial buildings to residential use. The Court emphasized that the Loft Law established a specific eligibility window for conversions, indicating a legislative intent to protect existing residential tenancies rather than encourage new illegal ones. As the court noted, the Loft Law was designed “to finally balance the equities of the conflicting interests in the development and use of loft space.”

    The Court reasoned that extending ETPA protection to the tenants’ illegal conversions would contradict the Loft Law’s purpose and undermine municipal zoning regulations. The Court stated, “If the prior-enacted ETPA already protected illegal residential conversions of manufacturing space, significant portions of the Loft Law would have been unnecessary.” The Court also noted that the City had not amended zoning regulations to permit purely residential use in the area, nor had the Legislature extended the Loft Law’s eligibility period. The Court concluded that, in the absence of such changes, the ETPA could not be used to protect these illegally converted lofts.

  • Spring Realty Co. v. New York, 68 N.Y.2d 657 (1986): Constitutionality of Loft Law

    Spring Realty Co. v. New York, 68 N.Y.2d 657 (1986)

    Article 7-C of the Multiple Dwelling Law (the “Loft Law”), which legalizes interim multiple dwellings, is a valid exercise of the state’s police power and does not violate the Due Process, Equal Protection, or Takings Clauses of the United States or New York State Constitutions.

    Summary

    Spring Realty Co. challenged the constitutionality of New York’s Loft Law, arguing it violated due process, equal protection, and constituted a taking without just compensation. The Court of Appeals upheld the law, finding it a reasonable exercise of police power to address unsafe living conditions in converted loft buildings and the housing shortage. The court emphasized the legislative findings demonstrating the state’s legitimate concern for building code compliance, safety, and adequate housing. While the court affirmed the law’s validity, it struck down a portion of the lower court’s order that mandated hardship hearings by the Loft Board, clarifying that the Board has discretion on whether to hold such hearings.

    Facts

    Several loft buildings in New York City were converted to residential use without complying with applicable building codes. These buildings often lacked minimum safety standards, posing risks to occupants. The New York State Legislature enacted Article 7-C of the Multiple Dwelling Law (the “Loft Law”) to legalize these “interim multiple dwellings.” Spring Realty Co. and other plaintiffs, who owned loft buildings, challenged the law’s constitutionality.

    Procedural History

    The Special Term (trial court) upheld the constitutionality of the Loft Law but ordered hardship hearings. The Appellate Division affirmed the Special Term’s decision. The case was then appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether Article 7-C of the Multiple Dwelling Law violates the Due Process Clauses of the Fourteenth Amendment of the United States Constitution and Article I, § 6 of the New York State Constitution.
    2. Whether Article 7-C of the Multiple Dwelling Law violates the Equal Protection Clauses of the Fourteenth Amendment of the United States Constitution and Article I, § 11 of the New York State Constitution.
    3. Whether Article 7-C of the Multiple Dwelling Law constitutes a taking without just compensation in violation of the Fifth Amendment of the United States Constitution and Article I, § 7 of the New York State Constitution.
    4. Whether the lower court erred in ordering the Loft Board to conduct hardship hearings.

    Holding

    1. No, because the Loft Law is a reasonable means to address legitimate legislative concerns regarding unsafe living conditions and the housing shortage, and thus a valid exercise of the police power.
    2. No, because the plaintiffs failed to demonstrate that the statute violates the Equal Protection Clauses.
    3. No, because there was no showing that the statute, as applied to the plaintiffs’ properties, contravenes the state or federal constitutions as a taking without just compensation.
    4. Yes, because mandamus only compels a purely ministerial act, and the Loft Board has discretion on whether to schedule hardship hearings.

    Court’s Reasoning

    The Court of Appeals held that the Loft Law was a valid exercise of the state’s police power. The court noted the legislative findings indicated a legitimate concern about loft buildings being converted to residential use without complying with building codes and that many of these buildings did not conform to minimum safety standards. The court stated that the statute established a reasonable means to meet these concerns, citing Goldblatt v. Town of Hempstead, 369 U.S. 590, 594-595, and Suffolk Outdoor Adv. Co. v. Hulse, 43 N.Y.2d 483, 489. The court found no merit to the equal protection claim, citing McGowan v. Maryland, 366 U.S. 420, 425, and 8200 Realty Corp. v. Lindsay, 27 N.Y.2d 124, 137. The court also rejected the takings claim, citing Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 127-128 and Modjeska Sign Studios v. Berle, 43 N.Y.2d 468, 473-475, 477. The court emphasized that there was no showing that the statute, as applied to the plaintiff’s properties, constituted a taking without just compensation.

    Regarding the hardship hearings, the court stated, “mandamus is an extraordinary remedy which lies only ‘to compel the performance of a purely ministerial act where there is a clear right to the relief sought’ (Matter of Legal Aid Socy. v Scheinman, 53 NY2d 12, 16).” Since the statute did not mandate the Loft Board to schedule hearings when resolving hardship applications, the lower court erred in ordering such hearings.

  • Lower Manhattan Loft Tenants v. New York City Loft Bd., 66 N.Y.2d 298 (1985): Validity of Loft Board Regulation on Primary Residence

    Lower Manhattan Loft Tenants v. New York City Loft Bd., 66 N.Y.2d 298 (1985)

    A regulation by the New York City Loft Board permitting landlords to evict residential occupants of interim multiple dwellings who do not use the unit as their primary residence is a valid exercise of the Board’s authority under Article 7-C of the Multiple Dwelling Law.

    Summary

    The case concerns the validity of Regulation J (1) (a), issued by the New York City Loft Board, which allows landlords of interim multiple dwellings to evict residential occupants without leases if the unit is not their primary residence. A tenants’ association and several loft occupants challenged the regulation, arguing it exceeded the Loft Board’s authority under Article 7-C of the Multiple Dwelling Law. The Court of Appeals upheld the regulation, finding that it aligned with the legislative intent of protecting residential use and addressing the housing shortage, not shielding tenants whose use is primarily commercial. The Court emphasized the importance of primary residence in determining eligibility for protection under the statute.

    Facts

    Several loft tenants in buildings owned by New York University and other landlords were served with notices of termination under Regulation J (1) (a). These tenants, along with a tenants’ association, initiated legal action against the Loft Board and the landlords, claiming the regulation was invalid. Evidence presented, including depositions and affidavits from prior litigation, indicated that at least some of the tenants did not use their loft spaces as their primary residences. The petition itself lacked any assertion by the individual tenants that the loft was their primary residence.

    Procedural History

    The Special Term converted the proceeding into a declaratory judgment action, declared Regulation J (1) (a) invalid, and voided the termination notices. The landlords were enjoined from pursuing possession based on the regulation. The Appellate Division modified this decision, upholding the validity of the regulation and reversing the Special Term’s ruling, except for the conversion of the proceeding.

    Issue(s)

    1. Whether Regulation J (1) (a), permitting eviction of residential occupants of interim multiple dwellings if the unit is not their primary residence, is a valid exercise of the Loft Board’s authority under Article 7-C of the Multiple Dwelling Law.

    Holding

    1. Yes, because the regulation aligns with the legislative intent behind Article 7-C, which seeks to protect residential use and address the housing shortage, rather than to protect tenants whose use is primarily commercial or incidental.

    Court’s Reasoning

    The Court reasoned that Article 7-C’s legislative findings emphasize the need to address a housing emergency created by conversions of commercial buildings to residential use. The purpose is to protect residential tenants facing hardship due to relocation, not to protect commercial use with incidental residential aspects. The Court highlighted the importance of the phrase “the residence or home” in the statute, arguing it implies a primary residence. The Court distinguished this case from others involving different statutes and purposes. Referencing the legislative history, including former Article 7-B, the Court found a purpose to protect the residential aspect of occupancy rather than shield tenants with primarily commercial use. The Court cited Delaware Midland Corp. v Incorporated Vil. of Westhampton Beach, 39 NY2d 1029, stating that statutes in pari materia should be construed together to fit into existing laws unless a different purpose is clearly shown, asserting that prioritizing non-primary residents would lead to an absurd result. Furthermore, the court stated, quoting Abood v Hospital Ambulance Serv., 30 NY2d 295, 298, that “the literal language of the statute, where it does not express the statute’s manifest intent and purpose, need not be adhered to.” Finally, the Court noted that § 286(13) makes the ETPA applicable to qualified residential tenants, and the ETPA contains a primary residence requirement. The Court rejected the argument that the primary residence requirement should only apply after a tenant receives a residential lease, finding that it would frustrate the intent to alleviate the housing shortage. The court stated that the statute must be construed to sustain its constitutionality; imposing obligations related to commercial space on property owners would not alleviate housing shortages and would raise constitutional questions about the burden imposed.