This is a holdover proceeding in which petitioner seeks to evict respondent Ajit Dias, who petitioner alleges is a licensee. Dias argues that he is an illusory tenant of the subject rent-stabilized apartment.

A trial was held over two afternoons. One witness, Neva Patick, testified for petitioner. Testifying for Dias were John Donovan, Savithri Dias, and Dias himself. The court finds that all witness testified honestly, and the court credits their testimony in full.

Ms. Patick laid out petitioner's prima facie case.

Mr. Donovan, petitioner's doorman since October 1986, testified that he has known Dias for 12 or 13 years. Mr. Donovan stated that he has not seen Peter Franklyn, the tenant of record, for about 13 or 14 years. Mr. Donovan further testified that he knows that Dias has lived with Orly, his wife, and his two daughters and that he sees Dias in the building every day.

Ms. Savithri Dias, respondent Dias's daughter, testified that the Dias family has lived in the subject premises since 1992—or 14 years. Teresa Dias, Ms. Dias's mother and Ajit Dias's then-wife, moved out 6 or 7 years ago, and her stepmother, Orly (Ajit Dias's current wife), moved in "a couple of years later." She stated that Franklyn is her father's sister's husband and her uncle. She further stated that Franklyn never lived in the subject premises while she lived [*2]there and that she last saw him more than 10 years ago.

Ajit Dias testified that he has lived in the subject premises since 1992 and that he currently lives there with his two daughters and his wife. His first wife divorced him and moved out in 2000, leaving him with the custody of his two daughters. Dias testified that he moved into the premises, then furnished, upon a verbal agreement with Franklyn, his brother-in-law, by which Dias paid petitioner $5641.35 by a personal check dated April 30, 1992, to cover Franklyn's rental arrears through April 1992. Only the names of Dias and his then-spouse appear on that check. Thus began, Dias testified, a series of payments to petitioner, through its agent Helmsley-Spear, Inc., that Dias made over the course of his 14-year occupancy.

Dias kept most of the checks and introduced them and bank statements into evidence. The checks have pre-printed, on their upper-left-hand corner, Ajit and Teresa Dias's names in 1992; Franklyn's and Dias's names (sometimes printed; sometimes handwritten) from time to time over the span of some months; and, for most of the years, Dias's name alone.

Checks early in Dias's occupancy in 1992 had pre-printed, on their upper-left-hand corner, Dias's then-Glendale, New York, address. Thereafter, Dias used on the upper-left-hand corner of the checks, pre-printed, the address of the subject premises: 300 East 46th Street, Apt. 18D, New York, NY 10017-3000.

Dias explained—and the evidence corroborates his explanation—that the relatively few times he used checks pre-printed with Franklyn's name or when he added Franklyn's name at the top by hand on his own checks occurred when petitioner refused to accept checks without Franklyn's name. These brief periods occurred when petitioner served its two or three three-day rent demands. Dias further testified—and again the evidence corroborates his explanation—that when all arrears were paid and no litigation was pending or impending, petitioner went back to accepting checks with Dias's name alone.

Franklyn signed the renewal leases in his own name and was content to keep the arrangement until 2000, when Franklyn brought a holdover proceeding against the Diases. During that proceeding, Dias, asserting the defense of illusory tenancy, sought to join petitioner Envoy Towers. The Honorable Maria Milin denied that motion on March 15, 2001. Franklyn and Dias resolved that proceeding with a consent order dated February 27, 2002 (signed by the parties and their lawyers and so-ordered by the Honorable Larry S. Schachner), in which Franklyn and his spouse agreed to "relinquish forever any rights that may have existed in the subject premises and shall make no claims to possessory, tenancy, insider' or any other claims regarding the apartment."^[FN1] In return, Dias agreed to pay $5000 to Franklyn's lawyers. The [*3]consent order does not say whether the $5000 is for Franklyn, for his attorney fees, or for some other combination or purpose.

Another proceeding involving petitioner and Dias occurred when petitioner sued Franklyn as the tenant and Dias as the undertenant for nonpayment of rent by a petition dated August 22, 2001. In that proceeding, Dias himself paid the rent, but he did so without prejudice to any creation of tenancy rights.

Ms. Patick testified on rebuttal that a number of Dias's checks went to a lock box. Her testimony, scrupulously honest, was nonetheless too nebulous in terms of dates and other particulars to rebut Dias's suggestion that Helmsley Spear, petitioner's managing agent, was unaware that Dias was paying rent from his own account on checks with the address of the subject premises pre-printed on them.

Based on the testimony, the court makes the following findings of fact and conclusions of law.

Petitioner, directly or through its managing agent, has known about and tolerated Dias's tenancy since 1992. That knowledge came from the unchallenged testimony of the superintendent as well as from Dias and his daughter, together with the dozens of checks from Dias personally and the two disputes in court (the nonpayment proceeding and the holdover proceeding between Franklyn and Dias.) From that evidence, petitioner, again directly or through its managing agent, knew that Franklyn, the record tenant, had not resided in the subject premises for some 13 or 14 years.

The record also makes it clear that Dias paid Franklyn key money: $5641.35 at the start of their arrangement to pay Franklyn's arrears and another $5000 to settle their holdover and to cause Franklyn to relinquish any tenancy rights he ever might have had. (See Cont. Towers Ltd. Partnership v Freuman, 128 Misc 2d 680, 681-682 [App Term 1st Dept 1985, per curiam] [holding that paying key money is factor favoring illusory tenancy]; Juntikka v Metro. Life Ins. Co., NYLJ, Nov. 10, 1987, at 6, col 6 [Sup Ct, NY County 1987] [holding that paying "key money" creates basis for illusory-tenancy relief].) Whether the payment was for attorney fees or for some other purpose is irrelevant. The point is that Dias paid Franklyn to extinguish the latter's rights.

Because the consent order focuses on Franklyn's relinquishment of "insider" rights, the record further supports the view that the Franklyn-Dias arrangement was designed to secure the [*4]insider rights that Dias sold for $5000. (See Avon Furniture Leasing, Inc. v Popolizio, 116 AD2d 280, 283 [1st Dept 1986] [finding that sublease denying right to purchase shares in cooperative conversion suggests illusory tenancy], lv denied 68 NY2d 610 [1986]; 270 Riverside Dr., Inc. v Wilson, 195 Misc 2d 44, 50 [Hous Part, Civ Ct, NY County 2003] [finding that illusory tenancy might exist when prime tenant holds onto apartment to buy it at insider's price].)

Dias does not argue, and the record supports no inference, that petitioner colluded with Franklyn. But an illusory-tenancy defense does not require proof of collusion. (See Primrose Mgt. Co. v Donahoe, 253 AD2d 404, 405-406 [1st Dept 1998, mem]; Avon Furniture Leasing, 116 AD2d at 285 [holding that landlord's collusion or knowledge is not "essential prerequisite" for illusory tenancy].) Nor may Dias succeed to this rent-stabilized apartment by waiver or estoppel. (See 104 Div. Ave., HDFC v Lebovits, NYLJ, Mar. 30, 2001, at 22, col 1 [App Term, 2d Dept, 2d & 11th Jud Dists] [noting that petitioner's collecting money does not create landlord-tenant relationship].) Favoring Dias's illusory-tenancy defense, however, is that petitioner knew about Dias's presence and Franklyn's absence for 13 or 14 years (See Primrose, 253 AD2d at 405-406 [finding illusory tenancy when landlord and its agents knew that parties other than tenant were residing in premises for substantial period of tenancy]; David E. Frazer, Real Estate Update, Rent Regulation Protection: Illusory Tenancy, or When is a Tenant Not Really a Tenant, NYLJ, June 19, 1996 at 5, col 2 [noting that the longer subtenant's occupancy, the greater the chance that court will find illusory tenancy].)

Also favoring Dias's illusory-tenancy defense is that petitioner accepted dozens of checks from Dias alone since 1992. (See Vesky v Antunez, 191 Misc 2d 246, 247 [App Term, 1st Dept 2002, per curiam] [finding tenancy illusory when undertenant paid landlord monthly rent]; cf. 270 Riverside Dr., 195 Misc 2d at 47-48 [finding no illusory tenancy when undertenant paid no rent to landlord].)

The petition is dismissed. This opinion is the court's decision and order.

Dated: October 13, 2006

J.H.C.