Petitioner filed the Notice of Petition and Petition for non-payment of rent commencing October 2004 and continuing with respect to Apt. N, 190 Washington Avenue, Hempstead, New York.

The Petition was amended during trial to include rent through June 2005; late fees and attorney fees are also demanded.

Introduced into evidence at trial was the initial September 23, 1999 Lease between petitioner and respondents Juan Velasquez and Maria Velasquez for the period of October 1, 1999 and ending September 30, 2000. The rent was established at $1,381.63; this amount constituted the legal regulated rent which is set forth on the Lease Rent Information Rider attached to the Lease.

The said Lease also contained a Rider entitled Rent Payment Option Rider which allowed the tenants to a rent discount of $531.63 if paid before the 5th day of the month; otherwise, the tenants were required to pay the legal regulated rent of $1,381.63 if the rent was paid untimely.

The Rent Payment Option Rider indicated that it was in effect from October 1, 1999 through September 30, 2000. The entire Rent Payment Option Rider states:

THE TENANT(S), understand that the rent being charged for this apartment is $1,381.63 which is the legal regulated rent as established herein, and is the agreed upon monthly rent for the apartment premises.

IT IS AGREED, that should the TENANT pay the monthly rent ON OR BEFORE [*2]the FIFTH [5th] day of the month in which it is due, The LANDLORD, will agree to issue a credit in the amount of $531.63 for that particular month's rent, and will accept the sum of $850.00 full payment for the monthly rent. The above credit will apply to the actual apartment rent only, and will not apply to other monies due under the Lease as added rent.

SHOULD, the payment of rent be received by the LANDLORD AFTER the FIFTH [5th] DAY of the month in which it is due, the full regulated rent in the amount of $1,381.63 becomes due and the TENANT is NOT entitled to a credit of any kind.

IN addition, should payment be received by the LANDLORD after the 10th day of the month in which it is due, a late charge will be incurred based upon the legal regulated rent.

SHOULD any payment accepted by the LANDLORD, be returned by the bank as uncollected, the legal registered rent automatically becomes due, in addition to any bank charges, and or late charges incurred pursuant to the provisions of the Lease.

IT IS ACKNOWLEDGED AND AGREED TO THAT THE ABOVE OPTION WILL BE IN EFFECT FOR THE PERIOD OCTOBER 01, 1999 THROUGH SEPTEMBER 30, 2000 THE TERM OF THIS LEASE ONLY.

UPON RENEWAL, THE LANDLORD, WILL AT HIS DISCRETION, HAVE THE OPTION OF REVOKING THE RENT PAYMENT OPTION OFFERED HEREIN, OR CONTINUING THE OPTION ON SUBSEQUENT RENEWALS WHICH WILL REFLECT THE ESTABLISHED GUIDELINE INCREASES IN EFFECT AT THE TIME OF RENEWAL.

THE LANDLORD RESERVES THE RIGHT TO MODIFY THIS OPTION IN ANY WAY HE SEES FIT ON SUBSEQUENT RENEWALS OFFERED.

AGREED TO AND ACCEPTED BY:

/s/ Juan Velasquez Date: 9-24-99 190 Washington Avenue

Tenant: Juan Velasquez Associates,LLC

By: Ben-Art Realty Corp.

/s/ Maria Velasquez Date: 9-24-99Managing Agent

Tenant: Maria Velasquez

By: /s/ Arthur Zagelbaum

Arthur Zagelbaum, President

The respondents renewed the Lease for the subsequent years of 2001, 2002, 2003 and 2004, with a rent discount if the tenant timely paid. [*3]

In December of 2002, the respondents failed to pay the discounted rent timely pursuant to the terms of the Lease. The landlord charged the respondents the legal regulated rent of $1,490.04 pursuant to lease for that year. The respondents filed a rent overcharge complaint with the State of New York Division of Housing & Community Renewal. After a hearing, the District Rent Administrator Eduviges Rasquin ruled in favor of the landlord that the rent charge was legal. The following, in part, states the finding of the Division of Housing:

(Order and Determination - continued)

$1,453.70

$ 36.342.5% guideline increase for a 2 year renewal lease

$1,490.04Legal Regulated Rent - Effective 10/01/2002 to 09/30/2004

Collectible Rent:

$ 917.55 per month if the rent is paid on or before the 5th day of the month

$1,490.44 per month if the rent is paid after the 5th day of the month AS AGREED BY THE OWNER AND THE TENANT

Considering all the evidence on record, it is found that the tenant agreed that he paid the rent for the month of December 2002 late. As the tenant could not abide by the agreement, late payment of rent constitutes a breach of contract. Accordingly, the owner charged him the actual legal regulated rent of $917.55 for the month of December 2002.

Based on the above, no evidence of rent overcharge is found in this proceeding.

Therefore, it is ordered that the relief request is denied, and/or the proceeding is terminated.

The lease renewal for the period of October 1, 2004 through September 30, 2005 offered the respondents a renewal of one or two years. The respondents opted for a one year term with a legal regulated rent of $1,553.37. However, no discount rent option was offered. The respondents refused to pay the legal regulated rent and instead continued to pay the discounted rent of $960.48 per month from October of 2004 and forward. Hence, petitioner commenced this non-payment proceeding to recover the rent due under the 2004 Lease.

Respondents contend basically that petitioner's rent "scheme" is illegal.

Respondents contend that fair market rent must be taken into consideration in determining what petitioner can charge respondents. This Court is sympathetic to respondents' contention, but [*4]can find no basis in law to support their position.

This Court has already upheld the practice of landlords to offer a discounted rent, i.e. tenant can pay less than the legal regulated rent if rent is paid each month timely. See, Clinton Realty, LLC v. Beazen, 195 Misc 2d 786, 762 NYS2d 229 (Nassau Dis. Ct. 2003, J. Fairgrieve).

Respondents previously moved to have the Petition dismissed. Judge Pardes upheld the petitioner's practice of offering a discounted rent to respondents if payment was timely made, and rejected respondents' arguments that fair market rent should be the controlling standard. Judge Pardes further held that respondents were bound by the terms of the renewal, being aware that no discounted rent was being offered:

The respondents now move to dismiss the non payment petition based on their contention that the "legal regulated rent" as provided in the leases agreements since 1999 have exceeded the Department of Housing and Urban Renewal's (Hud) calculations of "Fair Market Rent" for Nassau and Suffolk County and are therefore "excessive". The respondents urge the court to dismiss the Petition and require "the Petitioner to offer the Respondents a new lease at a monthly rent not to exceed the fair market value..."

The petitioner's attorney accurately points out that the respondents have not offered any statutory or case law authority in support of this motion. Rather, counsel for the respondents urges the court to grant the respondents' application based on "fairness". The court must agree with the petitioner that this court does not have the authority to grant such a request. The court finds that had the legislature or the NYS Division of Housing and Community Renewal intended to link "legal regulated rents" to HUD's "Fair Market Rent" calculations, it would have done so.

This court has previously approved a "Rent Payment Option Rider" substantially the same as the rider in the instant proceeding. ( Clinton Realty, LLC v Beazer, 195 Mis 2d 786 [Nassau Dist Ct. 2003]). The respondents apparently enjoyed the benefit of this reduced rent from 1999 through 2003. Moreover, the respondents apparently chose to enter into a new lease in October, 2004 fully aware that they would no longer have the rent credit option. The respondents are bound by the terms of their agreement.

Accordingly, the respondents' motion to dismiss the petition is denied. The respondents are directed to serve and file an answer to the petition within five days after the service of this order with notice of entry pursuant to CPLR 404(a).

This Court in the recent case of New Haven v. Beaufort, 9 Misc 3d 1130(A), 2005 WL [*5]3079088 (Nassau Dist Ct, 2005, J. Fairgrieve) held that a landlord could renew a lease at the legal regulated rent. In New Haven, the Court further rejected any attempts by the respondent tenants to invoke fair market rent into the amount of rent that a landlord could charge upon renewal of the lease, for apartments regulated by the State of New York Division of Housing and Community Renewal Office of Rent Administration.

In the case at bar, this Court specifically rules that the rent structure set up by petitioner is legal and meets all requirements of law. Thus, upon renewal of the Lease in 2004, the petitioner was justified in raising the rent to the legal regulated amount without offering a discount. This Court has reviewed the Legislative history of the 2003 Amendment to EPTA Section 10 and finds that the intent of the Legislature was to allow the rent to be adjusted upwards to the legal regulated rent upon renewal of the lease. There is no intent expressed in the statute or in the history of same to indicate that fair market rent was to be the standard to be employed by a landlord upon renewal of a lease.

Furthermore, the evidence introduced at trial establishes that the petitioner made it crystal clear that the rent discount was only applicable during that period of the lease and could be discontinued at the end of each lease term. Thus, there is no contractual claim by respondents that support an obligation of petitioner to offer a discounted rent during the periods that respondents occupy the apartment from October 2004 and forward. See, Aijaz v. Hillside Place, LLC, 8 Misc 3d 73, 798 NYS2d 840 (App Term, 2nd Dept, 2005).

The Court further notes that respondents are bound by the said Order and Determination of the Division of Housing and Community Renewal, dated February 27, 2003 which upholds petitioner's rent charges, discussed herein. See, Timm v. Van Buskirk, 17 AD3d 686, 793 NYS2d 520 (App Div, 2nd Dept, 2005); Villas of Forest Hills Co. v. Lumberger, 128 AD2d 701, 513 NYS2d 116 (App Div, 1st Dept, 1987). No appeal was even taken from this determination.

Since respondents have failed to pay the rent agreed upon, they are in default pursuant to the terms of their Lease. Petitioner is hereby awarded judgment of $5,612.97 based upon the testimony of petitioner witness Arthur Zagelbaum, see page 27 of June 16, 2005 trial transcript. This Court declines to award any attorney fees to petitioner. This decision is based upon the nature of this dispute wherein respondents believed in good faith that they were entitled to a discounted rent based upon the past history of the relationship between the parties.

The Court has considered all arguments raised by respondents and finds same to be unpersuasive. Petitioner is also awarded judgment of possession with the warrant stayed for a period of 120 days to allow respondents time to pay the arrears due pursuant

to the terms of this decision. If respondents fail to pay all arrears due within 120 days from the date of this decision, then petitioner may proceed to evict respondents forthwith.

So Ordered:

DISTRICT COURT JUDGE

Dated:December 15, 2005

CC:Ezratty, Ezratty & Levine, Esqs.

Thomas H. Smigelski, Esq., Volunteer Lawyers Project

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