Background

The underlying summary holdover proceeding was commenced by Petitioner on or about November 2006, and seeks possession of apartment No.C, described as the First Floor Rear Apartment at 465 Prospect Place, Brooklyn, New York 11215, from Luz Cardona, the last tenant of record. The petition alleges that Respondent is a month-to-month tenant, and that the "premises are not presently subject to either the Rent Control and/or Rent Stabilization Laws of the City and State of New York by virtue of the fact that the premises became vacant after 1971 and is located in a building containing less than six (6) legal residential units."

The subject building was built on or about 1910, and the current legal use for the premises provides that it is a three family house. On or about September 2005, Petitioner purchased the subject building. At the time Petitioner purchased the building, Petitioner states that there were six occupants living in the building, who shared a kitchen and bathroom.^[FN1] On or about October 27, 2005, New York City Department of Buildings Environmental Control Board issued a violation, described as a "Quality of Life" Violation, which provided in pertinent part:

Residence altered for occupancy as a dwelling for more than the legally approved number of families. Note: Bldg Dept computer records indicate residence to be a 3 family dwelling. Now [*2]the 1st floor has been altered for a total of 3 SRO's, 2nd floor has been altered for 4 SRO's, 3rd floor has been altered for 3 SRO's. Also there is one kitchen and bathroom on the 1st floor, on the 2nd floor and the 3rd floor that are share (sic) with those rooming on the same floors. Each Rm is numbered and has its own lock on door.

The violation further provides that the condition is hazardous and the illegal use is to be discontinued forthwith.

On the same date, ECB issued a second violation for work done without a permit, specifically the erection of partitions on each floor to create the SRO units. The violation provides that the condition is hazardous and that a permit should be obtained if needed to restore the premises to its prior condition.

The Code provision violated includes  27-118.1 of the Housing Maintenance Code which provides:

"No person except in accordance with all requirements of this code, shall convert, knowingly take part or assist in the conversion, or permit the maintenance of the conversion, of a residence which is legally approved for occupancy as a dwelling for one or more families, to a residence for occupancy as a dwelling for more than the legally approved number of families. Any person who shall violate or fail to comply with the provisions of this section shall be liable for a civil penalty which may be recovered in a proceeding before the environmental control board..."

Similarly,  27-2077 of the Housing Maintenance Code provides that no rooming unit not classified as such prior to 1956 shall be created in any dwelling with certain inapplicable exceptions.

Respondent has appeared in this proceeding through counsel, and has asserted an answer which alleges inter alia that because the building has six or more units, that are being or have been used for residential purposes, the premises are subject to rent stabilization, and the underlying proceeding must be dismissed. Respondent moves for summary judgment on the basis that she lives in a "de facto" rent stabilized building. Petitioner opposes arguing that the illegality of the current use precludes a finding that the premises are subject to rent regulation.

Question presented: Does an illegal conversion of a three family building into a 10 unit SRO subject the premises to rent stabilization?

Respondent argues that the Rent Stabilization Laws constitute broad remedial legislation intended to cover all units not expressly exempt, and that the Court should broadly read the law to apply the protections afforded as widely as possible.

The Rent Stabilization Code exempts buildings with less than six "housing accommodations" and defines housing accommodations in pertinent part as "[t]hat part of any building or structure, occupied or intended to be occupied by one or more individuals as a residence, home dwelling unit..." R.S.C.  2520.11(d). Respondent relies primarily on the holding of the Court in Wilson v. One Ten Duane Street Realty Co. 123 AD2d 198 (1st Dept., 1987) for the proposition that the creation of a sixth dwelling unit after the 1974 base date subjects the premises to rent regulation.

Wilson held that the fact that there were less than six residential units on the 1974 base date did not preclude the applicability of Rent Stabilization coverage, if six units were created subsequent to that date. The Court thus found that coverage under Rent Stabilization, in that case, would hinge on whether the premises qualified for a substantial rehabilitation exemption.

Many cases after Wilson have also found that the addition of a sixth unit after the 1974 base date, even if the units are not legal, subjects the entire building to rent regulation. See e.g. White [*3]Knight Ltd. v. Shea, 10 AD3d 567 (1st Dept., 2004)(eight residential units lacking windows were subject to rent stabilization); 128 Central Park South Associates v. Cooney, 119 Misc 2d 1045 (Civ. Ct., NY Co. 1983)(maids room without bath or kitchen and in violation of C of O subject to EPTA); Commercial Hotel Inc. v. White, 194 Misc 2d 26 (App. Term, 2nd Dept., 2002);

However, the case law provides that illegal renovations or conversions cannot be used as a basis to exempt a premises from rent regulation. Brown v. Roldan 307 AD2d 208 (1st Dept., 2003)(legal usage of the premises is the determining factor in considering status under rent regulation); Loventhal Managment v. DHCR, 183 AD2d 415 (2nd Dept., 1992)(illegal conversion cannot be used as a basis for exempting premises from ETPA); Rosenberg v. Gettes, 187 Misc 2d 790 (App. Term, 1st Dept., 2000); Rashid v. Cancel, 9 Misc 3d 130(A)(App. Term, 2nd & 11th Dept., 2005)(use of basement over multi-year period as sixth unit subjected entire building to rent stabilization, subsequent reduction in number of units even when to cure HPD violations did not exempt remaining units).

Approximately five years after the Wilson decision, in 2001 the Appellate Term, First Department, issued a decision in the matter of Tan Holding Corp. v. Wallace, 187 Misc 2d 687 (2001), which held in pertinent part that while ETPA was an inclusive regulation, covering all housing accommodations not expressly excepted, including previously unregulated accommodations, "(p)ermanent coverage under a rent regulatory scheme should not, however, attach to dwelling units which have not been legalized or are incapable of being legalized." Id at 689.

The holding that ETPA will not be applied to illegal units, even if they are not expressly excluded from the statute, was echoed by the Court of Appeals in 2004 in Wollinsky v. Kee Yip Realty Corp., 2 NY3d 487 (2004). The Court found that, in reading the ETPA and the Loft Law together, the illegal conversions of the subject units were not subject to ETPA. The Court held in pertinent part:

The statute was not intended to foster future illegal conversions or undermine legitimate municipal zoning prerogatives. If the prior-enacted ETPA already protected illegal residential conversions of manufacturing space, significant portions of the Loft Law would have been unnecessary. Thus, although such illegal conversions are not expressly exempted from ETPA coverage, it is evident that the Legislature did not view ETPA as safeguarding the interests of the "loft pioneers".

Id. at 493. (Citations omitted).

While Wolinsky involved illegal loft conversions by tenants, rather than illegal conversions of residential property by owners, two of the principles relied upon by the Court of Appeals are applicable to this proceeding. The first is that there are units which meet the definition of a dwelling unit under ETPA, and are not expressly excluded from the statute, which nevertheless are not subject to the protections of rent regulation. The second is that there is a public policy interest against illegal conversions of dwelling units, and rent regulatory statutes should not be interpreted or applied in such a manner as to foster future illegal conversions or to undermine municipal zoning.

This concern of construing rent regulation in a manner that affords rent protection to illegally converted dwelling units implicates serious public policy concerns. For example as early as 1986, the Appellate Term, Second Department, in Buck v. HPD, 133 Misc 2d 626 (1986), issued a decision sharply criticizing the attempts of the trial court to legitimize the illegal conversion of two family homes to SROs. In Buck HPD had commenced an enforcement proceeding against the [*4]landlord, who then commenced a "friendly" holdover proceeding and joined HPD. The trial Court ruled that the ordinances against rooming houses should be interpreted to permit the tenants to organize themselves into a household arrangement satisfying the definition of a private dwelling rather than having the premises be treated as a multiple dwelling. (The trial court's decision is at 126 Misc 2d 836). The Appellate Term, in reversing the ruling of the lower Court, held that the Administrative Code of the City of New York prohibited the creation of rooming units in buildings designed to be two family homes. The Court further noted that the existence of a housing shortage was a lesser policy concern then the illegal conversion, which created a potentially hazardous situation.^[FN2] Finally the Court concluded by stating "In examining the record before us, this court cannot avoid mention of the fact that the trial court exalted and legitimized illegal conversions by landlords to overcrowded residences without any consideration for the ensuing danger to life and health. Thru perverse logic, the trial court condoned this unspeakable greed without fully comprehending the consequences of its act." Id. at 627-628.

The hazards of such illegal conversions have been consistently recognized by the Courts and administrative agencies alike. For example in Chiang v. Environmental Control Board, N.YL.J. March 3, 2006, p. 20, col.1 (Queens Co. Sup. Ct.) where a multifamily home was illegally converted into SROs the Court held "...given the obvious public health and safety concerns" fines totaling $13,500.00 were reasonable and fair. Id.Since Wolinsky there has been a division between the First Department and the Second Department on the issue of illegal units not covered by the Loft Law, but capable of being legalized with the First Department cases finding that if legalization is possible then rent regulation applies [See e.g. Duane Thomas LLC v. Wallin, 35 AD3d 232 (1st Dept., 2006)(if unit is capable of being legalized it may be subject to rent stabilization); 142 Fulton LLC v. Hyatt 14 Misc 3d 1223(A)(Sup. Ct., NY Co., 2007); , and the Second Department cases holding that illegally converted units are not subject to ETPA [(Gloveman Realty v. Jeffreys 18 AD3d 812 (2nd Dept., 2005)(illegal conversions not entitled to the protections of ETPA); Corastor Holding Co. v. Masny, 12 Misc 2d 13 (App. Term, 2nd Dept., 2006)(Illegal loft conversions in the process of being legalized not subject to ETPA); Forrester American Package Co., Inc. 12 Misc 3d 1166(A), (Sup. Ct., Kings Co., 2006) (illegally converted spaces not entitled to ETPA protection even where capable of being legalized); cf 315 Berry Street Corp. v. Hanson Fine Arts 2007 WL 1085846 (App. Div., 2nd Dept.)(where units previously under loft law were deregulated and landlord knew of and consented to illegal reconversion by tenants and was attempting to have conversion legalized units were subject to ETPA).

In the case at bar, Petitioner has submitted an affidavit from David Y. Shteierman, an architect, who states that the current violation placed on the premises is deemed "highly severe" and that the owner has been fined $43,000.00 to date for the violation. Mr. Shteierman further states that the zoning classification for the building is R-5B a classification for low density residential neighborhoods. Mr. Shteierman alleges that Petitioner would need to apply for a variance in order to legalize the current use and that variances are only granted in cases of extreme hardship. In the case at bar it seems unlikely that all the units could be legalized, but that would be a questions of [*5]fact not capable of determination on these papers. Moreover, even if all of the units as presently configured could not be legalized when restored to its original use, at least three units would be legal.

Respondent argues that whether or not the premises can be legalized is irrelevant to the determination of the status of the premises and that Gloveman supra and Wolinsky supra only apply to loft units, and have no applicability to the unit in the case at bar. However Respondents do not explain why they argue the Court should rely on Wilson, also a loft case, in finding that the premises are subject to rent regulation, but not rely on other loft cases that would lead to a contrary finding. Moreover, there is nothing in the Court of Appeals decision in Wolinsky that specifically limits its holding to illegal conversions of loft units. However the Court does agree, that in the Second Department the issue of whether or not the units can be legalized is irrelevant to the determination of whether they are subject to ETPA based on Gloveman.

Were the Court to adopt Respondent's position and find that the premises are subject to Rent Stabilization, Petitioner would still have the right to seek the eviction of Respondent from the subject premises based on the outstanding violation and penalties that are accruing. 2524.3(c) of the New York City Rent Stabilization Code provides that a landlord may bring an eviction proceeding where "occupancy of the housing accomdation is illegal because of the requirements of law and the owner is subject to civil or criminal penalties therefor..".Here it is undisputed that a violation has been placed, and that the landlord remains subject to continued daily penalties until the premises are restored to their original condition. Thus no real public policy is served by requiring petitioner to commence a different kind of holdover proceeding while at the same time allowing admittedly hazardous conditions to continue to exist for an even longer period of time.

Multiple Dwelling Law 2 provides

It is hereby declared that intensive occupation of multiple dwelling sites, overcrowding of multiple dwelling rooms, inadequate provision for light and air, and insufficient protection against the defective provision for escape from fire, and improper sanitation of multiple dwellings in certain areas of the state are a menace to the health, safety, morals, welfare, and reasonable comfort of the citizens of the state; and that the establishment and maintenance of proper housing standards requiring sufficient light, air, sanitation and protection from fire hazards are essential to the public welfare

While it is generally recognized that this section of the Multiple Dwelling Law was enacted "to protect tenants against unsafe living conditions not to provide a vehicle for landlords to evict tenants" (Sima Realty LLC v. Philips, 282 AD2d 394 (1st Dept., 2001), this line of cases

also makes that holding contingent on a showing of whether the premises can be legalized [Aron Realty v. Pollack , 2002 WL 1291358 ( App. Term, 1st Dept.); 625 West End Inc. v. Howard, 2001 WL 1682615 (App. Term, 1st Dept.)] a factor not relevant in the Second Department.

§ 27-2139 of the New York City Administrative Code (HMC) provides that any dwelling or part thereof, which, because ... any other violation of this code or any other applicable law, constitutes a danger to the life, health, or safety of its occupants, shall be deemed to be unfit for human habitation.

The Court notes that there are many similarities between the illegal conversions of loft units to residential units and the illegal conversions of a two or three family home to SROs. These include [*6]that the illegality of the conversions are in violation of numerous health and safety regulations, as well as applicable zoning regulations. Thus the policy concerns involved in determining these matters are similar to that in the loft cases, and therefore it makes sense to apply the holdings of Wolinsky and Gloveman to these types of proceedings.

Under the holding of Wolinsky, the Court finds that these premises are not subject to rent regulation as the conversion was illegal and to hold to the contrary would indeed "foster future illegal conversions" and "undermine legitimate municipal zoning prerogatives". Id at 493.

The Petitioner is not gaining financially from its conversion, as it has no right to seek rent from these respondents, and faces accruing substantial fines in addition to the cost of restoration.

To allow the unsafe and hazardous conditions to continue to exist puts at risk not only the respondents occupying the premises, but also to firefighters and other public servants, as well as the residential units neighboring the subject premises. These risks are too substantial to countenance and are not in any way a condition that rent regulation was designed to encourage or sustain. "In weighing the equities it is clear that public policy compels this Court to place first and foremost the well-being of the tenant, the public and any firefighters or other emergency personnel that might be called to the premises if calamity struck." Del Gigante v. Danilova 188 Misc 2d 240, 244 (Civ. Ct., 2001).

Civil Court Act  110(c) provides: "Regardless of the relief originally sought by a party the court may recommend or employ any remedy, program, proceeding or sanction authorized by law for the enforcement of housing standards, if it believes they will be more effective to accomplish compliance or protect and promote the public interest:...The court may retain continuing jurisdiction of any action or proceeding relating to a building until all violations of law have been removed."

To find that this illegal conversion was now subject to rent stabilization would do exactly the opposite of the mandate set out for housing court by the Civil Court Act.

CONCLUSION

Based on the foregoing the court holds that the subject premises are not subject to rent regulation and thus denies Respondent's motion for summary judgment. Furthermore the Court finds that there are no material questions of fact requiring a trial in this matter. A copy of the deed establishing that Petitioner is the owner is annexed to the moving papers. Respondents subject matter jurisdiction defense as well as the first affirmative defense are based on the allegation that the premises are rent stabilized and thus do not preclude the award of summary judgment to petitioner. Moreover, neither the second nor third affirmative defenses preclude an award of a judgment of possession to petitioner. Finally, the affirmative defense regarding a warranty of habitability is not applicable in this proceeding given that petitioner has no right to seek rent or use and occupancy for this illegal units. As such the Petitioner is awarded a final judgment of possession as against Luz Cardona. The warrant of eviction shall issue forthwith, execution is stayed through and including July 9, 2007 to afford Respondent an opportun ity ti vacate the premises.

This constitutes the decision and order of the Court.

_________________________

Hon. Sabrina B. Kraus

JHC

Dated:Brooklyn, New York

June 4, 2007

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