New York Law Review

Tag: Tenant in Occupancy

  • Manolovici v. Manolovici, 69 N.Y.2d 775 (1987): Defines ‘Tenant in Occupancy’ for Cooperative Conversion Rights

    Manolovici v. Manolovici, 69 N.Y.2d 775 (1987)

    A tenant of record to a rent-stabilized apartment, even if not residing there full-time, can qualify as a ‘tenant in occupancy’ and thus retain the right to purchase the apartment at the insider’s price during a cooperative conversion if they maintain a sufficient legal and factual nexus to the apartment.

    Summary

    This case addresses the question of who qualifies as a ‘tenant in occupancy’ with the right to purchase an apartment at a favorable insider’s price during a cooperative conversion. The Manolovicis, a divorcing couple, were co-tenants on a rent-stabilized apartment lease. While Ms. Manolovici lived in the apartment with their children, Mr. Manolovici resided elsewhere but continued to support the family. The court held that both parties, as co-tenants with equal rights and a sufficient connection to the apartment, were entitled to purchase the shares allocated to the apartment. This decision emphasizes that legal rights and continued financial support, rather than exclusive physical occupancy, can establish ‘tenant in occupancy’ status.

    Facts

    Diana and Gerard Manolovici were co-signatories to a rent-stabilized lease for a three-bedroom apartment.
    The apartment served as their marital home.
    During the lease term, a cooperative conversion plan was accepted for filing by the Attorney-General.
    The plan gave the “tenant in occupancy” on September 6, 1979, the right to purchase the apartment at a discounted price.
    At that time, the Manolovicis were in divorce proceedings.
    Mr. Manolovici lived elsewhere but supported the family; Ms. Manolovici lived in the apartment with the children.
    Their divorce judgment did not address possessory rights or who could purchase the apartment.

    Procedural History

    Both parties sought a declaratory judgment on their rights to purchase the apartment.
    Ms. Manolovici claimed exclusive right to purchase; Mr. Manolovici argued for co-equal rights as tenants in common.
    The trial court found that Mr. Manolovici maintained a sufficient nexus to qualify as a tenant in occupancy.
    The Appellate Division’s decision was appealed to the New York Court of Appeals.

    Issue(s)

    Whether Mr. Manolovici, despite not residing in the apartment on the critical date, maintained a sufficient connection to the apartment to qualify as a “tenant in occupancy” entitled to purchase the apartment under the cooperative conversion plan.

    Holding

    Yes, because Mr. Manolovici retained a sufficient connection to the apartment, maintaining his landlord-tenant relationship and legal right to occupy the apartment, making him a “tenant in occupancy” entitled to purchase the apartment on a coequal joint basis with Ms. Manolovici.

    Court’s Reasoning

    The court emphasized that the critical date for determining tenant in occupancy status is when the offering plan is accepted for filing by the Attorney-General. Although the term “tenant in occupancy” is not explicitly defined in the statutes, prior cases established that a tenant of record may qualify even without using the apartment as a primary residence. The court stated that “a tenant of record may qualify as a ‘tenant in occupancy’ of a rent-stabilized apartment without actually using the apartment as his primary residence”. The court found that Mr. Manolovici retained a sufficient connection to the apartment, specifically noting that “Regardless of any informal agreement the parties may have had regarding possessory rights, Mr. Manolovici retained the legal right to occupy the apartment. He maintained his landlord-tenant relationship as of the date the plan was accepted for filing.” Because both parties had an equal right of possession and were using the former marital residence for their family, the court concluded that Mr. Manolovici qualified as a tenant in occupancy. The court distinguished this case from situations where a tenant completely relinquished their rights to the apartment. The court highlighted that neither party asserted the right to possess or purchase the apartment in the divorce proceedings, further solidifying Mr. Manolovici’s claim. This decision reinforces that legal rights and financial responsibilities, rather than solely physical presence, are crucial factors in determining tenant in occupancy status in the context of cooperative conversions.

  • Consolidated Edison Co. of New York, Inc. v. 10 West 66th Street Corp., 61 N.Y.2d 341 (1984): Corporate Tenant’s Right to Purchase Co-op Shares

    Consolidated Edison Co. of New York, Inc. v. 10 West 66th Street Corp., 61 N.Y.2d 341 (1984)

    A corporate tenant qualifying as a “tenant in occupancy” under the Rent Stabilization Code has the right to purchase co-op shares allocated to its apartment, even if the co-op plan restricts purchases to individuals and the apartment is not the corporation’s primary residence.

    Summary

    Consolidated Edison (Con Ed), a corporate tenant, sought to purchase co-op shares for an apartment it leased for its directors and guests. The co-op conversion plan limited purchases to individuals for personal occupancy. Con Ed, as a “tenant in occupancy” under the Rent Stabilization Code, argued it had the right to purchase. The New York Court of Appeals held that Con Ed, as the tenant of record, possessed the exclusive right to purchase the shares, notwithstanding the plan’s restrictions or the apartment not being a primary residence. The court emphasized that the General Business Law provides tenants in occupancy the right to purchase and the co-op plan could not override this statutory right.

    Facts

    Con Ed leased an apartment for its directors, officers, and guests in a building owned by Park Ten Associates. The lease, last extended in September 1979, was rent-stabilized. Park Ten filed a co-op conversion plan which stated that each tenant in occupancy had the exclusive right to purchase, but also limited share offerings to individuals for personal occupancy. Con Ed submitted a subscription agreement to purchase the shares, which Park Ten rejected based on the individual occupancy restriction.

    Procedural History

    Con Ed sued Park Ten and the co-operative corporation to compel the completion of the subscription agreement. Special Term granted summary judgment to Con Ed. The Appellate Division reversed, holding that a tenant without the capacity to compel lease renewal is not a bona fide tenant in occupancy. The New York Court of Appeals then reversed the Appellate Division and reinstated the Special Term’s judgment.

    Issue(s)

    Whether a corporate tenant, qualifying as a “tenant in occupancy” under the Rent Stabilization Code, is entitled to purchase shares in a co-operative conversion, despite plan restrictions limiting purchases to individuals for personal occupancy, and the apartment not being the corporation’s primary residence.

    Holding

    Yes, because the General Business Law grants tenants in occupancy the exclusive right to purchase their dwelling units or the allocated shares, without distinguishing between individual and corporate tenants. The co-op plan’s restriction is inconsistent with this legislative direction.

    Court’s Reasoning

    The Court of Appeals relied on Section 352-eeee (subd 2, par [d], cl [ix]) of the General Business Law, which states that “tenants in occupancy on the date the attorney general accepts the plan for filing shall have the exclusive right to purchase their dwelling units or the shares allocated thereto.” The court noted the absence of a definition of “tenant in occupancy” that excludes corporations in the General Business Law, Rent Stabilization Law, or Rent Stabilization Code. The court also cited McKinney’s Unconsolidated Laws § 8605, highlighting that a landlord must seek decontrol of a premises based on non-primary residence before offering a co-op plan. The landlord’s failure to do so, and their subsequent renewal of Con Ed’s lease, cemented Con Ed’s rights as a tenant in occupancy. The court dismissed the co-op plan’s restriction to individual purchasers as inconsistent with the General Business Law. The court also found unpersuasive the argument that Internal Revenue Code Section 216 necessitated individual tenant shareholders, citing Richards v. Kaskel, 32 NY2d 524, 540. The court emphasized that the statutory right of a tenant in occupancy to purchase cannot be restricted by the sponsor’s offering plan. The court stated, “[T]enants in occupancy on the date the attorney general accepts the plan for filing shall have the exclusive right to purchase their dwelling units or the shares allocated thereto…which makes no distinction between individual and corporate tenants.”

  • Burns v. 500 East 83rd Street Corporation, 24 N.Y.2d 117 (1969): Defining ‘Tenant in Occupancy’ for Co-op Conversion Rights

    Burns v. 500 East 83rd Street Corp., 24 N.Y.2d 117 (1969)

    A subtenant in exclusive possession of a rent-controlled apartment for the entire term of the lease, with the landlord’s explicit consent to the sublet, qualifies as a ‘tenant in occupancy’ and is entitled to the exclusive right to purchase the co-operative shares allocated to that apartment during a co-op conversion.

    Summary

    This case addresses the rights of a subtenant in a rent-controlled apartment during a building’s conversion to cooperative ownership. Burns, a subtenant, sought to compel the building owners to offer her the co-op shares allocated to her apartment. The court held that because Burns was in exclusive possession for the entire lease term with the landlord’s explicit permission and treated as a tenant, she qualified as a ‘tenant in occupancy’ under rent control regulations, entitling her to purchase the co-op shares. This decision clarifies the definition of ‘tenant in occupancy’ to include subtenants with long-term, landlord-approved arrangements, preventing landlords from circumventing tenant protections during co-op conversions.

    Facts

    Burns was a subtenant occupying a rent-controlled apartment. The original tenant, Henderson, had a lease containing a clause that the landlord would grant permission for a sublet to Burns. Burns continuously occupied the apartment throughout Henderson’s two-year lease. The landlord accepted rent payments directly from Burns. During this period, the building’s owners initiated a cooperative conversion plan, which, under New York City rent regulations, gave ‘each tenant in occupancy’ the right to purchase the allocated shares. The landlord refused to offer Burns the shares, arguing she was merely a subtenant.

    Procedural History

    Burns sued the building owners and managers seeking an order compelling them to offer her the co-op stock allocated to her apartment. The trial court ruled in favor of the defendants. The Appellate Division affirmed the trial court’s decision. Burns appealed to the New York Court of Appeals.

    Issue(s)

    1. Whether a subtenant in exclusive and continuous possession of a rent-controlled apartment for the entire term of a lease, with the landlord’s express consent to the sublease, qualifies as a “tenant in occupancy” under Section 55(c)(3) of the Rent, Eviction and Rehabilitation Regulations, thereby entitling her to the exclusive right to purchase the co-operative shares allocated to the apartment?

    Holding

    1. Yes, because the rent regulations define “tenant” to include “subtenant” and “sublessee,” and the landlord’s explicit consent to the sublet, coupled with the subtenant’s continuous and exclusive occupancy, demonstrates that the subtenant is the “tenant in occupancy” for the purposes of the co-op conversion offering. The court found that Henderson was not a “tenant in occupancy” because he did not live in the apartment. The Court held, “It was for the protection of just such an occupant of rent-controlled accommodations that section 55 (subd. e, par. [3]) was promulgated.”

    Court’s Reasoning

    The Court of Appeals emphasized the broad definition of “tenant” in the relevant regulations, which explicitly includes “subtenant” and “sublessee.” It reasoned that Burns’s continuous and exclusive occupancy of the apartment, coupled with the landlord’s express consent to the sublease, established her as the “tenant in occupancy” within the meaning of Section 55(c)(3) of the Rent, Eviction, and Rehabilitation Regulations. The court noted that Henderson, the named tenant, did not occupy the premises during the lease term, further solidifying Burns’s claim. The Court stated, “It is not open to dispute, therefore, that plaintiff was for the entire period of the lease the ‘tenant in occupancy’ of the apartment literally within section 55 (subd. c, par. [3]) of the Regulations.” The court distinguished Burns’s situation from “casual occupation, or other kinds of relationships with landlords,” suggesting that the specific facts—long-term occupancy and landlord approval—were crucial. Furthermore, the court suggested that the subletting for the entire lease period, expressly approved by the landlord, may have had the legal effect of an assignment of the lease. The court ultimately decided it was unnecessary to reach the question whether she is also an assignee of the lease because she was found to be a tenant in occupancy.