In this holdover proceeding, petitioner alleges that respondent Burbach violated the lease for the premises by subletting it without obtaining petitioner's consent and by charging a rent significantly in excess of the legal maximum. Respondent defends on the grounds that the violation has been cured and that the violation was not so egregious as to justify termination of the tenancy. Now, the parties move and cross-move for summary judgment and attorney's fees. As set out below, petitioner's motion is granted and respondent's motion is denied.

THE FACTS

The premises at issue is a rent-stabilized apartment. Petitioner is the landlord and respondent Burbach has been the tenant since 1993. At all times [*2]pertinent, the rent was $881.30 per month.

By a written agreement dated June 10, 2005 Burbach sublet the premises to respondent Silleg at a rent of $1,200.00 per month. As set out therein, the sublease began on August 15, 2005 and was to run until May 14, 2007; however, the agreement also specified that either party might terminate it on 60 days notice. The agreement recited that the apartment was being sublet furnished and that the security deposit would be $2,000.00. Burbach did not seek either pursuant to Real Property Law § 226-b or otherwise petitioner's consent to sublet.

Roughly a year later, on or about August 3, 2006, petitioner's agent Ruhl became aware of Silleg's occupancy of the premises. Ruhl telephoned Burbach, told her that the sublet was illegal, and stated that if she did not surrender possession forthwith, petitioner would sue to terminate her tenancy. Later the same day, Burbach had the lock (or locks) to the premises changed so that Silleg could not gain entry thereto. Still later that day, Silleg had the lock (or locks) changed so that he could regain entry to the premises.

Shortly thereafter, by a notice dated August 11, 2006 Burbach advised Silleg that pursuant to their agreement, she had elected to terminate his subtenancy as of October 31, 2006. Also by letter dated August 11, 2006 Burbach advised Silleg that it had just come to her attention that she had charged him an excessive rent and that a check refunding the excess, in the amount of $2,536.00, was enclosed.

Petitioner served a 7 day notice of termination dated August 21, 2006 and began this proceeding by serving a petition and notice of petition dated September 12, 2006. Burbach interposed an answer dated September 26, 2006. Neither Silleg nor anyone else has appeared herein.

Thereafter, by a petition and notice of petition dated November 1, 2006 Burbach sued to oust Silleg from the premises. That proceeding, in this court under index number 98634/06 but in a different part, was settled by a stipulation "so ordered" on December 14, 2006. It provided, in essence, that Silleg would vacate the premises by January 15, 2007, that petitioner would waive any rent due through that date, and that Silleg might deposit Burbach's August 11, 2006 check for $2,536.00 or, if it were stale, have a replacement. By letter dated January 19, 2007 Burbach's counsel advised the court that Silleg had vacated the premises timely; it is now more than two weeks later and petitioner has not notified the court [*3]to the contrary.

DISCUSSION

"Rent-stabilized tenants who charge a subtenant more than the legal required rent are subject to lease termination. (See Rent Stabilization Code [9 NYCRR] § 2525.6 [b], [f]; Continental Towers Ltd. Partnership v Freuman, 128 Misc 2d 680 [App Term 1st Dep't].) Specifically, Rent Stabilization Code § 2525.6(b) prohibits a tenant from charging a subtenant more than the legal rent, plus a 10% surcharge if the apartment is fully furnished. Where the tenant is in violation of this prohibition, Rent Stabilization Code § 2525.6(f) entitles the owner to terminate the tenancy." BLF Realty Corp. v Kasher, 299 AD2d 87, 90-91 (1st Dep't, 2002), lv dismissed, 100 NY2d 535 (2003).

The public policy served by this rule is evident. "The integrity of the rent stabilization scheme is obviously undermined if tenants, who themselves are the beneficiaries of regulated rentals, are free to sublease their apartments at market levels and thereby collect the profits which are denied the main landlord." Continental Towers Ltd. Partnership v Freuman, 128 Misc 2d 680, 681 (App Term, 1st Dep't, 1985). Here, Burbach charged $1,200.00 per month but the maximum legal rent (i.e., increased by 10% for the alleged furnishings) was $969.43. Thus, for roughly a year Burbach charged Silleg 24% more than the maximum legal rent.

Respondent contends that she cured the violation by promptly refunding the excess payment and terminating Silleg's subtenancy. She argues as well that even if the foregoing did not constitute a cure, the violation was not so egregious as to warrant termination of her tenancy. In support respondent relies heavily on four cases in which courts did not terminate tenancies even though the tenants charged more than the legal rent. Two of the cases concerned subtenants and two concerned roommates; respectively, they are: Ariel Associates v Brown, 271 AD2d 369 (1st Dep't, 2000), lv dismissed, 95 NY2d 844 (2000), Husda Realty v Padien, 136 Misc 2d 92 (Civ Ct, NY Co, 1987), Roxborough Apartments Corp. v Becker, 11 Misc 3rd 99 (App Term, 1st Dep't, 2006), and 54 Greene Street Realty v Shook, 8 AD3rd 168 (1st Dep't, 2004), app den, 4 NY3rd 704 (2005).

Petitioner argues that the violation was not curable and, alternatively, that even if it was cured the tenancy should be terminated. Petitioner relies heavily on [*4]four cases in which rent-stabilized tenancies were terminated because tenants charged subtenants more than the legal rent. The cases are: West 148 LLC v Yonke, 11 Misc 3rd 40 (App Term, 1st Dep't, 2006), 151-155 Atlantic Ave. Inc. v Pendry, 308 AD2d 543 (2nd Dep't, 2003), Kasher, supra, and Freuman, supra.

The cases cited by petitioner are instructive but not dispositive because the violations were more egregious than the one here. In Yonke the tenant engaged in a "commercial exploitation" (at 41) by advertising the premises on the internet as "Chez Sylvie Bed and Breakfast" (at 41) and renting at nearly double the stabilized rent only a portion of the premises to a series of guests. In Pendry, the court found that the tenant had engaged in "profiteering" (at 544) and that there had "been a substantial surcharge."^[FN1] (At 544). In Kasher, the legal monthly rent was $551.22 but the tenant charged $1,600.00 and then $1,700.00 for two-thirds of the space. In Freuman the tenant secured the landlord's consent to the sublet by falsely representing that the subtenant would pay no more than the legal maximum of $724.56 but then charged the subtenant $1,500.00. Here, respondent charged 24% more than the legal maximum.

The four cases relied upon by respondent are also instructive but not dispositive. Ariel concerned a sublet for a few months at a rent in excess of the legal maximum but not otherwise described ^[FN2]. The court declined to allow the landlord to evict because the "summer subletting complained of did not rise to a level of profiteering" (at 369) warranting termination of a 20 year tenancy. The court noted as well that the landlord had served a notice to cure and the tenant had cured before the landlord brought the holdover proceeding. Here in contrast the sublet lasted not for a summer but for nearly a year and a half and there was no cure prior to the commencement of the instant proceeding. [*5]

Husda concerned a sublet during which the tenant charged the subtenant $500.00 per month for a year and a half when the regulated rent was $243.62 per month. The landlord served a notice to cure; prior to the expiration of the cure period the tenant secured the subtenant's departure from the premises and refunded the excess payments. The court dismissed the proceeding, holding that since the tenant had complied with the notice to cure, the subsequent notice of termination was a nullity. Here, petitioner did not serve a notice to cure, respondent does not argue that the same was necessary, and this court has no ground to hold, as the Husda court did, that the termination notice was a nullity because the violation had been cured before the purported termination.

Shook concerned a roommate in a loft to which the tenant had previously made improvements. The tenant charged the roommate an amount not quantified in the court's opinion more specifically than as in excess of half of the stabilized rent. The court, conditioning relief on a refund of the excess, declined to allow an eviction of both the tenant and the roommate "since the amount of the overcharge was small and there was no evidence of bad faith or an intent to profiteer" (at 168)^[FN3] and "it was not unreasonable for the tenant to believe that he was entitled to some compensation for the improvements he made to [the] loft space * * *" (at 168).

Roxborough concerned three roommates. The tenant collected $2,100.00 per month from them although the stabilized rent was $1,954.00. The court affirmed the grant of a judgment of possession to the landlord but stayed execution of the warrant on condition that the tenant refund to each roommate any rent paid in excess of 25% of the legal regulated rent ^[FN4]. The court also vacated the lower court's award of attorney's fees, holding that the imposition of the same "would be unfair under the particular circumstances of this case, where tenant's roommate [*6]overcharges would not have triggered a possessory remedy at their inception (see 520 E. 81 St. Assoc v Roughton-Hester, 157 AD2d 199 [1990])and where the tenant's litigation position, albeit unsuccessful, was of colorable merit in an unsettled area of the law [citations omitted]." (At 101).

The roommate cases are not as analogous to sublet cases as they might appear. One reason is that tenants need not secure a landlord's prior approval to share an apartment with a roommate, RPL § 235-f, while leases typically and as was the case here require the same for a sublet. Very importantly, and as was the case in both Shook and Roxborough, an eviction in a roommate case may result in the eviction of the overcharged roommate as well as the tenant, while in a sublet case in which the subtenant has vacated, as was the case here, it is only the tenant's possession that will be terminated.

RESULT

Respondent sublet the premises without first obtaining petitioner's consent. Respondent also sublet the premises at an illegal rent. Each of these, the court holds, was a substantial violation of the lease. Accordingly, the court grants petitioner a judgment of possession; a warrant may issue forthwith.

However, the 24% overcharge here does not constitute "profiteering" or "commercial exploitation" as those terms were used in Yonke, Pendry, Ariel, and Shook. Further, respondent secured the subtenant's departure and refunded so much of the rent as was paid in excess of the legal maximum. Accordingly, should petitioner secure the issuance of a warrant, the court holds that its execution shall be permanently stayed.

Finally, the court holds that petitioner is the prevailing party here. The parties' lease provides that the prevailing party in litigation between them may recover attorney's fees as additional rent. Unlike the tenant in Shook who alleged that he had made $70,000.00 in improvements to the loft space ^[FN5], respondent does [*7]not attempt to justify the $1,200.00 charged or argue that she believed that she was entitled to the overcharge as additional compensation for furnishings or improvements. Unlike the tenant in Roxborough, respondent does not argue and does not have a basis to argue that her litigation position was of colorable merit in an unsettled area of the law. The court holds that it would not be "unfair under the particular circumstances of this case" Roxborough, supra (at 101) for the lease to be enforced as it is written and for petitioner to recover attorney's fees.

The court grants petitioner's motion to the extent of providing that a hearing on attorney's fees will take place at 2:00 pm on Tuesday March 20, 2007. If the parties prefer a different date, they may move for such relief, or submit for "so ordering" a stipulation providing for the same, or telephone chambers.

The court will mail copies of this decision and order to the parties.

DATED: February 9, 2007

New York, New York

Gary F. Marton, J.H.C.