Accepting Rent from an Employee Leads to a Determination of Rent Stabilization

Many superintendents (hereinafter “super”) in New York City are compensated for their work by receiving “free” apartments in buildings that if on the open market would command a very high rent. In many owner-super relationships the landlord allows the super to reside in the subject apartment without charge and pays the super a nominal stipend. In such situations the apartment in question will be exempt from rent stabilization pursuant to the precise mandate of Rent Stabilization Code Section 9 NYCRR 2520.11(m).

When the relationship of owner and super comes to an end the super must immediately vacate the apartment. If he/she does not the owner can evict the super without the service of a predicate notice and by merely serving and filing a notice of petition and petition in the Civil Court.

The best defense a super can have is – if true- that he/she at one time paid rent for the apartment. If the super did in fact pay rent then the apartment will be subject to rent stabilization (assuming that the apartment is otherwise eligible to be). A recent case from the Appellate Term explains when such a set of facts can go horribly wrong for the landlord.

In 530 Second Street Co. v. Alirkan, 2012 WL 3892830 (2nd Dept. App.Term 2012) a super was found to be a rent stabilized tenant. There the super had paid a nominal rent to the landlord. It appears that the nominal rent was charged (rather than a more realistic rent) because the apartment was valuable and was to be part of the compensation. When the employment ended the landlord wanted the former super out. The super claimed he was rent stabilized because he had paid rent for the apartment. The Housing Court ruled for the landlord but the Appellate Term reversed.

The Appellate Term made clear that because the super had signed a lease in 1990 and had paid a nominal rent for that period that the super was entitled to the benefits of and protections of rent stabilization. Landlords should be aware that the pennies you charge your supers now could cost you a lot of dollars later.